what are the three central problems of an economy? what do they arise? short answer class 11
Answers
Answer:
Production, distribution, and disposition of goods and services are the basic economic activities of life. In the course of these activities, every society has to face scarcity of resources. Because of this scarcity, every society has to decide how to allocate the scarce resources.
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Answer:
Explanation:
Following are the three Central Problems faced by an economy:
1. What to produce
2. How to produce
3. For whom to produce
CAUSES OF ECONOMIC PROBLEMS ARE:
(a) UNLIMITED HUMAN WANTS- Human wants are unlimited and these can never be fully satisfied. As soon as one want is satisfied, another crops up.
(b) SCARCITY OF RESOURCES- Scarcity means shortage of resources in relation to their demand. (It is a relative term).
•For example, resources like, land, water, minerals and nuclear material etc. are scarce i.e. their availability is less than their demand.
(Scarcity is a universal and unavoidable problem for all individuals, organizations and countries. This problem can never be solved, it can only be managed).
(c) ALTERNATIVE USES- Resources are not only scarce but can be put to various uses also.
•For example, a piece of land can be used for agriculture purpose; for setting up a factory or to construct a Godown (warehouse).
•So, we have to make a choice among alternative uses.