Question

why the problem of what, how and for whom to produce are known as central problem?​

Answer 1

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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It leads to following Central Problems that are faced by every economy:

1. What to produce?

2. How to produce?

3. For whom to produce?

These problems are called central problems because these are the most basic problems of an economy and all other problems revolve around them.

These 3 problems are studied under the problem of ‘Allocation of Resources’.

Answer 2

Explanation:

The central problem of "How to produce?" which is faced by the economy where the economy consider either labour intensive techniques or capital intensive techniques for the production of goods and services in the economy depending upon the available resources in the economy.

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