Hi Aspirant!
The central problems related to an economy includes problems related to production, consumption and distribution. Problems regarding the resources include what to produce, how to produce, and for whom to produce. This problem arises in almost every economy due to limted resources, unlimited wants, and alternative use of resources. Thus, every economy has to decide how much resources are to be used in production of different goods and services. Hence, allocation of resources is the fundamental problem. Once the problem of resources is sorted, then it comes to distribution and consumption. Authorties failing to execute a solid plan for distribution leads to wastage or over consumption of the resources.
Thankyou!
Question : Assertion (A): Central problems of an economy are called central problems. Reason (R): It is because these are the most basic problems of an economy and all other problems revolve around them.
Option 1: A and R are correct and R is the correct explanation of A.
Option 2: A and R are correct and R is not the correct explanation of A.
Option 3: A is true but R is false.
Option 4: A is false but R is true.
Question : Following are the central problems of an economy:
Option 1: What to produce
Option 2: How to produce
Option 3: For whom to produce
Option 4: All of the above
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