Read the case study given below and answer the question :

In reality working of an economy is much more complex than a society. During the course of basic economic problems, every society has to face scarcity of resources. This scarcity gives rise to economic problems. Every society must decide on how much of each of the many possible goods and services, it will produce. Problems of technology to be adopted also arises in due course of time. Who gets how much of produced goods and how should this produce will be distributed among the individuals in the economy are problems, which are being faced by an economy.

Among the following option which is not a Central Problem of an economy ?

Allocation of Resources ?

The correct answer is option (4) : Allocation of Resources

Note: The given answer is as per NTA answer sheet. However, there seems to be a discrepancy in the answer and the correct answer should be Option 3 (How much to be produced?) for this question as explained below.

The Three Central Problems

1. What to Produce? (Option 1): This involves deciding which goods and services to produce and in what quantities (e.g., consumer goods vs. capital goods, or wheat vs. tanks).

2. How to Produce? (Option 2): This refers to the choice of technique—whether to use Labor-Intensive technology (more labor, less capital) or Capital-Intensive technology (more machines, less labor).

3. For Whom to Produce?: This involves the distribution of the produced goods and services among the members of society (based on purchasing power or need).

Why Option 3 is the Correct Choice

While it sounds like a real problem, "How much to produce" is actually a sub-part of the first problem (What to produce). Economists do not list it as a separate "Central Problem." The three core pillars are always What, How, and For Whom.

What about Option 4? :Allocation of Resources is the umbrella term for all three central problems. The problems of What, How, and For Whom are essentially the three different ways an economy decides how to allocate its limited resources. Therefore, it is considered a fundamental part of the central problem framework. Further, as per NCERT "The allocation of scarce resources and the distribution of the final goods and services are the central problems of any economy". Thus, this option cannot be incorrect in context of NCERT wordings.