Which of the following does not constitute the central problems of an economy ?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Whether to consume more of leisure or more of work related activity
Resources are scarce, so every society must decide what to produce, how to produce and for whom to produce. These are the central problems of an economy. They are about how the society as a whole uses its resources and shares the output. The choice between leisure and work is made by each household for itself.
Option (1) Whether to have more agricultural goods or to have more industrial products — A central problem (Incorrect). It is the problem of what to produce: more of one good means less of another.
Option (2) Whether to use more labour or more machines — A central problem (Incorrect). It is the problem of how to produce, that is, which technique to use.
Option (3) Whether to consume more of leisure or more of work related activity — Not a central problem (Correct). This is a household’s own choice between income and leisure. It decides how many hours a person offers to work, not how the society allocates its resources.
Option (4) Who gets how much of the goods that are produced in the economy ? — A central problem (Incorrect). It is the problem of for whom to produce, the distribution of output among people.
NCERT (2026-27): “1.2 Central Problems of an Economy … 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. Whether to produce more of food, clothing, housing or to have more of luxury goods. Whether to have more agricultural goods or to have industrial products and services.… 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. Whether to use more labour or more machines. Which of the available technologies to adopt in the production of each of the goods? For whom are these goods produced? Who gets how much of the goods that are produced in the economy? How should the produce of the economy be distributed among the individuals 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.” |