Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): Every economy has to choose one of the many production possibilities that it has.
Reason (R): The resources of an economy are scarce and have competing uses.
In the light of the above statements, choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): Every economy has to choose one of the many production possibilities that it has. — True. An economy can produce many different combinations of goods, but only one at a time.
Reason (R): The resources of an economy are scarce and have competing uses. — True. The same land, labour and machines can be used to make different goods, and there is not enough of them for everything.
Why R explains A?
Since resources are scarce, using more of them for one good leaves less for another. The economy cannot have the most of every good together, so it must pick one combination. It is scarcity that gives rise to the problem of choice.
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.” “Production Possibility Frontier … If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. … Every economy has to choose one of the many possibilities that it has. In other words, one of the central problems of the economy is to choose from one of the many production possibilities.” |