GENERAL KNOWLEDGE

Detailed explanation-1: -The central problem of an economy does not deal with the time of production as it is assumed that human wants are unlimited and goods are required throughout the year. Therefore, the the problem of ‘When to produce?’ is not regarded as a central problem of the economy.

Detailed explanation-2: -’Scarcity of economics’ is the central problem of economics. It means that the resources in the world are limited whereas the wants of a man are unlimited and never ending. Due to this, the resources are always insufficient to satisfy all human wants and needs.

Detailed explanation-3: -The central problems of an economy revolve around the following factors: What to produce? How to produce? For whom to produce?

Detailed explanation-4: -What to produce? It is one of the central problems in an economy. It is related to the type and quantity of goods and services that need to be produced. Since resources are in limited quantities, producing more of one good will result in less production of the other.

Detailed explanation-5: -The central problems of production deals with production of necessary commodities using scarce means of resources. Therefore, “when to produce” is not a central problem as it is assumed that goods are demanded throughout the year because of unlimited human wants.