what to produce in the central problems of an economy
Answers
Answer:
What to Produce: This problem involves selection of goods and services to be produced and the …
How to Produce: This problem refers to selection of technique to be used for production of goods …
For Whom to Produce: This problem refers to selection of the category of people who will …
Explanation:
The first central problem of an economy is to decide what goods and services are to be produced and in what quantities. This involves allocation of scarce resources in relation to the composition of total output in the economy. Since resources are scarce, the society has to decide about the goods to be produced: wheat, cloth, roads, television, power, buildings, and so on. Once the nature of goods to be produced is decided, then their quantities are to be decided. How many tonnes of wheat, ho...The next basic problem of an economy is to decide about the techniques or methods to be used in order to produce the required goods. This problem is primarily dependent upon the availability of resources within the economy. If land is available in abundance, it may have extensive cultivation. If land is scarce, intensive methods of cultivation may be used. If labour is in abundance, it may use labour-intensive techniques; while in the case of labour shortage, capital-intensive techniques may...The third basic problem to be decided is the allocation of goods among the members of the society. The allocation of basic consumer goods or necessities and luxuries comforts and among the household takes place on the basis of among the distribution of national income. Whosoever possesses the means to buy the goods may have then. A rich person may have a large share of the luxuries goods, and a poor person may have more quantities of the basic consumer goods he needs. This problem is illustra...This is one of the important basic problems of an economy because having made the three earlier decisions, the society has to see whether the resources it owns are being utilised fully or not. In case the resources of the economy are lying idle, it has to find out ways and means to utilise them fully. If the idleness of resources, say manpower, land or capital, is due to their male allocation, the society will have to adopt such monetary, fiscal, or physical measures whereby this is corrected...The last and the most important problem is to find out whether the economy is growing through time or is it stagnant. If the economy is stagnant at any point inside the production possibility curve, says in Figure 5, it has to be moved on to the production possibility curve PP whereby the economy now produces larger quantities of consumer goods and capital goods. Economic growth takes place through a higher rate of capital formation which consists of replacing existing capital goods with new..
Answer:
Once the decision regarding the goods to be produced is taken, the next problem as to what techniques should be adopted to produce the commodity arises. This function is related to the allocation of resources to production techniques which have to be employed during the production of goods and services.
Explanation: