part1 economics class 11th,chapter 2(central problem of economy)एक अर्थव्यवस्था की केंद्रीय समस्याएं

what is central problem  of an economy?

what to product produce ?

how to produce?

for whom to produce?

what is market economy?

what is centrally planned economy?

what is mixed economy?

production possibility curve PPC and central problem


Central Problems Of An Economy

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.

As such scarcity is evident, due to the availability of limited resources, and human needs having no limit. Therefore, this variation between the supply and demand leads to the formation of central problems of an economy.

The central problems of an economy revolve around these factors.

What to produce?

How to produce?

For whom to produce?

Let us discuss these points in detail.

1. 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.

Since resources are in limited quantities, producing more of one good will result in less production of the other.

2. 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 Techniques

The choice of technique for production depends on the availability of the resource in that nation, and hence resource allocation becomes a challenge.

3. For 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.

It leads to the creation of a problem of choice in an economy as a good that may be in demand among a section, may not be in demand for another section of the society.

Such a situation arises due to the difference in income distribution among the population, which causes a change in buying behaviour.

With this, we conclude the concept of central problems of an economy. Stay tuned to BYJU’S for more such exciting updates.

[class 11th Microeconomics all chapter links]

[chapter 1]

part 1  Microeconomics chapter 1 class 11th (...
part 2  Microeconomics chapter 1 class 11th (...

[chapter 2]

part 1  part1 economics class 11th,chapter 2(...
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[chapter 3]

part 1 Chapter 3 | class 11th |consumer's  e...


[chapter 4]

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[chapter 5]

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[chapter 6]

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[chapter 7]

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[chapter 8]

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[chapter 9]

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[chapter 10]

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[chapter 11 ]

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[chapter 12 ]

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part 3  chapter 12 MICROECONOMICS || form of ...
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[chapter 13 ]

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