Central Problems of Economy

No matter in which part of world one lives, whether he or she lives in America, Europe or Asia all economies of various countries face difficulty when it comes to how to run an economy. There are basically 4 central problems of economy, let’s look all of them –

  1. What to Produce – This aspect relates to which goods and services should the country produce and in what quantities should goods or services should be produced.
  2. How to Produce – After deciding about the types and quantum of goods and services the next question is how to achieve the desired result, because a good or service can be produced in many ways and a country should choose the method which results in maximum gain for the society as a whole.
  3. For Whom to Produce – Since the needs and wants of people are unlimited but the resources are limited therefore a country will always try to distribute the produced goods and services in such a way that all are satisfied, however this never happens due to gap between rich and poor as rich people always get what they want which is not the case with poor.
  4. Future Planning – A country or society never consumes all resources at one go rather it makes provisions for future generations also and any country would have to maintain that balance about the current consumption and also how the society should save for the future generations.
0 comments… add one

Leave a Comment


Related pages


implicit and explicit cost in economicsregional rural banks functionscashless economydupont analysis chartthe accounting for cash discounts and trade discounts arewhat is the income effect and substitution effectbartering systemdiminishing marginal utility examplesreturn outwardsdirect and indirect quotationswhat is mixed economy in economicsfeatures of absorption costingmerits of urbanisationjournal entry for salary paidhow to record prepaid rent journal entryadvantages of conglomerateadvantages and disadvantages of a joint ventureusefulness of break even analysisaccounting treatment for contingent liabilitiesadvantages of price skimming strategydisadvantages of monopolistic competition market structurefull form of fmcg productsfull form of tdsmerger horizontalwhat is the difference between job costing and process costingcurrency cross rate formulacapitalism positivesdisadvantages to democracyppt on fund flow statementwhat are the disadvantages of commodity moneymarket oriented pricing advantages and disadvantagesdisadvantages of bank loansadvantages of trading internationallydifference between accounts payable and receivableskimming pricing strategy examplesdifference between bank overdraft and bank loandifference between capital and drawingscharacteristics of urbanisationdefine direct expensecompetitive pricing advantages and disadvantageswhat are substitutes and complements in economicsdrawbacks of venture capitalupsell exampleswhat is the meaning of bearer chequenet worth calculation of a companyexamples of process costingadvantages and disadvantages of bank loansurbanization advantagesstatutory liquidity ratio and cash reserve ratiowhat is sundry assetsdisadvantages of process costingmarket skimming and market penetration pricing strategiesmeaning of pros and cons in hindiaccrued interest meaningdeflation advantages and disadvantagesauthoritarian leadership characteristicsbearer cheque and order chequewhat are the differences between horizontal analysis and vertical analysistransfer pricing advantages disadvantageswhat is the meaning of escrow accountcalculating net worth of a companywhat is full form of slrintraday transactioncibil in bankingwhat is trial balance & why it is preparedwhat is convention of materialityadvantages and disadvantages of horizontal communicationunclaimed dividendsunearned revenue journal entry examplesprofit ratioscharacteristic of capitalist economyfmcg full formwhat are characteristics of a traditional economy