Question

Which of the following are identified as basic economic problems ?

• A. What, how, and for whom to produce
• B. Why to produce, when to produce, and where to produce
• C. Who produces, how much to produce, and for whom to sell
• D. What to sell, when to sell, and how to market

Answer 1

Answer:

A. What, how, and for whom to produce

• Economics is the branch of science that studies economic activities relating to production, distribution, and consumption.

• It is not merely a study of wealth, but is also a study of man and society.

• Man satisfies his wants through the consumption of goods and services. The reward received by participating in the production process is spent on consumption. Therefore, there is a correlation between production, distribution and consumption of goods and services

• Economic decisions are taken by analysing the basic problems in an economy. The basic economic problems are what, how, and for whom to produce.

• There should exist of balance between the wants of the society and the quantity of a product. How to produce is decided on the basis of the availability of resources and technology.

• For example, the services of laborers or machines can be utilized for agricultural activities like preparing land for cultivation, sowing, weeding, harvesting, and threshing. The selection of a particular method is decided on the basis of available resources in an area. The method of production varies with the availability of resources.