What are the three central problems of an economy? Why do they arise?

1.	What are the three central problems of an economy? Why do they arise?
Answer» SOLUTION :The central problems of an economy are:(i) What to produce?this problem has two dimensions:(1) what good and services are to be produced2) in what quantity goods and services are to be produced(ii) How to produce?it refers to the technique of production:labour INTENSIVE technique and CAPITAL intensive technique.(iii) For whom to producethis problem relates to the distribution of output in the economy.It has two aspects:Factoral distribution of income and inter-personal distribution of income.The central problems of an economy arises due to three REASONS:a) The wants of the people are unlimited.b) The resources to satisfy these wants are limited.c) These limited resources have alternative uses.

Discussion