Which one of the following statements is correct?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Allocation of limited resources and distribution of goods and services are the basic problems of an economy.
Every society has limited resources but many wants, and each resource has competing uses. So every economy, rich or poor, must choose how to allocate its scarce resources among the goods and services it can produce, and how to distribute what is produced among its people. These are the basic (central) problems of an economy.
Why the other options are incorrect
Option (1) Scarcity and choice are unrelated concepts. — Incorrect. Choice arises only because resources are scarce; with unlimited resources nothing would have to be given up.
Option (2) Rich economies do not face the problem of allocation of resources. — Incorrect. Resources are limited in every society, rich or poor, so every economy has to allocate them.
Option (3) The scarce resources do not have alternative uses. — Incorrect. Scarce resources have competing uses: land can grow corn or cotton, and that is why a choice has to be made.
NCERT (2025-26): “1.2 Central Problems of an Economy … Production, exchange and consumption of goods and services are among the basic economic activities of life. In the course of these basic economic activities, every society has to face scarcity of resources and it is the scarcity of resources that gives rise to the problem of choice. The scarce resources of an economy have competing usages. In other words, every society has to decide on how to use its scarce resources.… …Thus, every economy faces the problem of allocating the scarce resources to the production of different possible goods and services and of distributing the produced goods and services among the individuals within the economy. The allocation of scarce resources and the distribution of the final goods and services are the central problems of any economy.” |