what are the centeral problem of an economy?
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Answered by
23
Heya....
===== Answer =====
Central problem of an economy arises out of the fact that resources are scare and have the alternative uses for our unlimited demand...
So,, basically in an economy there central problem are :-
1 What to produce
This includes what goods are to be produced and in which quantity are to be produced , choice is between the capital goods and consumer goods...
2 How to produce
This include the economic problem of technology use, choice is between the use of high level or higher technologies...
3 For whom to produce...
The choice is to produce for richer section or poor section as per economy...
Thank you
===== Answer =====
Central problem of an economy arises out of the fact that resources are scare and have the alternative uses for our unlimited demand...
So,, basically in an economy there central problem are :-
1 What to produce
This includes what goods are to be produced and in which quantity are to be produced , choice is between the capital goods and consumer goods...
2 How to produce
This include the economic problem of technology use, choice is between the use of high level or higher technologies...
3 For whom to produce...
The choice is to produce for richer section or poor section as per economy...
Thank you
Answered by
4
Heya user ✨✨
Central Problem Of An Economy ⤵️⤵️
⏺️ What To Produce❓
What Goods are to be produced ?
Broadly,Goods are classified as capital good and consumer good . Production of both capital and consumer good is essential for the economy.Capital goods like plant and machinery are needed for further production and future growth . Consumer goods are needed for present consumption .If the limited resources are largely used for the production of consumer good ,the present generation will enjoy good quality of life .But lack of capital good would mean lack of future growth .The generation would suffer .
⏺️In What Quantity Goods Are To Be Supplied.
That the loss of quantity of consumer good is the cost of producing more of capital good . likewise loss of quantity of capital good is the cost of producing more of consumer good . While shifting resources from one used for the other ,we must find out the opportunity cost of doing it .
⏺️How To Produce ❓
➡️ Labour Intensive Technique:Labour Intensive Technique implies
greater use of labour than capital.labour intensive technique promote employment and this technique also reduce unemployment.
➡️ Capital Intensive Technique : Capital Intensive Technique implies greater use of capital (machinery) than labour . Capital Intensive Technique Promotes efficiency .
It accelerate the pace of growth.
✨ Hope this helps you ✨
Central Problem Of An Economy ⤵️⤵️
⏺️ What To Produce❓
What Goods are to be produced ?
Broadly,Goods are classified as capital good and consumer good . Production of both capital and consumer good is essential for the economy.Capital goods like plant and machinery are needed for further production and future growth . Consumer goods are needed for present consumption .If the limited resources are largely used for the production of consumer good ,the present generation will enjoy good quality of life .But lack of capital good would mean lack of future growth .The generation would suffer .
⏺️In What Quantity Goods Are To Be Supplied.
That the loss of quantity of consumer good is the cost of producing more of capital good . likewise loss of quantity of capital good is the cost of producing more of consumer good . While shifting resources from one used for the other ,we must find out the opportunity cost of doing it .
⏺️How To Produce ❓
➡️ Labour Intensive Technique:Labour Intensive Technique implies
greater use of labour than capital.labour intensive technique promote employment and this technique also reduce unemployment.
➡️ Capital Intensive Technique : Capital Intensive Technique implies greater use of capital (machinery) than labour . Capital Intensive Technique Promotes efficiency .
It accelerate the pace of growth.
✨ Hope this helps you ✨
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