Which among the following is not a central problem of an economy?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Scarcity of resources
Every economy has limited resources, so it must decide how to use them. Those decisions are its central problems: what to produce, how to produce and for whom to produce.
Option (1) For whom to Produce ? — A central problem (Incorrect). The economy must decide who gets the goods and how much each person gets.
Option (2) Scarcity of resources — Not a central problem (Correct). Scarcity is the reason these problems arise. It is a condition that every economy faces.
Option (3) How to Produce the good ? — A central problem (Incorrect). The economy must choose the technique, for example more labour or more machines.
Option (4) What to Produce ? — A central problem (Incorrect). The economy must choose which goods to make, and in what quantities.
NCERT (2026-27): “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. The problems of an economy are very often summarised as follows: What is produced and in what quantities? Every society must decide on how much of each of the many possible goods and services it will produce.… How are these goods produced? Every society has to decide on how much of which of the resources to use in the production of each of the different goods and services.… For whom are these goods produced? Who gets how much of the goods that are produced in the economy?… 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.” |