What are the two basic economic problems faced by the society?

Allocation and Distribution

The Correct Answer is option 1: Allocation and Distribution

The two fundamental economic problems faced by any society are:

1. What to produce and in what quantities? (Allocation)

2. For whom to produce? (Distribution)

Here's why these are considered the most basic problems:

• Scarcity: Resources (land, labor, capital) are limited compared to human wants and needs. This scarcity necessitates making choices about how to allocate these resources for production.
• Efficiency and Equity: Societies need to decide how to produce goods and services efficiently, but also ensure a fair distribution of the produced goods and services among its members.