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| 1. |
Explain the central problem of an economy |
| Answer» The basic economic activities of life are production, distribution and disposition of goods and services. A society will be facing scarcity of resources during the time of fulfillment of these activities.\xa0The central problems of an economy revolve around these factors.What to produce?It is one of the central problems that arise in an economy. It is related to the type of goods and services that need to be produced and the quantity to be produced.How to produce?This aspect deals with the process or technique by which the goods and services can be produced. Generally, there are two techniques that can be used for producing, which are:*Labour Intensive Techniques*Capital Intensive TechniquesFor whom to produce?This problem deals with determining the people who will be the final consumers of the goods produced. As the resources are scarce in an economy, it becomes difficult to cater to all sections of society.<br>The basic economic activities of life are production, distribution and disposition of goods and services. A society will be facing scarcity of resources during the time of fulfillment of these activities.\xa0The central problems of an economy revolve around these factors.\tWhat to produce?\tIt is one of the central problems that arise in an economy. It is related to the type of goods and services that need to be produced and the quantity to be produced.\tHow to produce?\tThis aspect deals with the process or technique by which the goods and services can be produced. Generally, there are two techniques that can be used for producing, which are:\t*Labour Intensive Techniques\t*Capital Intensive Techniques\tFor whom to produce?\tThis problem deals with determining the people who will be the final consumers of the goods produced. As the resources are scarce in an economy, it becomes difficult to cater to all sections of society. | |