Which of the following is not the central problem of the economy?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Why are the goods produced?
The central problems of an economy arise due to the problem of scarcity of resources and include:
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What to produce? – Deciding which goods and services should be produced and in what quantities.
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How to produce? – Choosing the method of production (labour-intensive or capital-intensive).
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For whom to produce? – Determining the distribution of goods among different sections of society.
"Why are the goods produced?" is not a central economic problem.