Question

what are the basic problems of an economy ? How it will be solved

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Answer 1

Basic problems of economy are
What to produce
How to produce
For whom to produce

The decisions are taken as under:

a. What to Produce?

The producers will produce those goods which offer them high profits.

b. How to Produce?

The producers will always use that technology which maximizes efficiency and minimizes cost.

c. For Whom to Produce?

In a free economy, the producers will produce goods for those people who can afford to pay high price. Poorer sections of the society are often ignored. It causes the problem of Economic Divide (the gulf between the rich and the poor).

Answer 2

Mainly,the basic problems of an economy is the prize of the article.The public wants the articles at low rate but the shopkeeper wants to sell the articles at high rate.


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