Central Problem of an Economy
Central problem of an economy: It is the problem which has to be faced to every economy whether the country is vibrant or stagnant, rich or poor, developed or backward because resources are limited and demand for resources is unlimited,resources have their alternative uses due to which problem of choice arises. It has three dimensions: 1-What to produce? 2-How to produce? 3-For whom to produce? 1-What to produce: This is the problem of choice of goods. It has also two dimensions. a-What goods to be produced? b-In what quantity goods to be produced? In every economy there are two types of goods, consumer goods (consumption goods like Icecream etc) and capital goods (producer goods like machines etc). If we put all resources to produce capital goods then our future will be good but currently we will suffer lack of consumer goods,and if we put all resources to produce consumer good then our present generation enjoy but our future generation will trouble. 2...