Identify the central problem of an economy which is concerned with distribution of output in the economy.

For whom to produce ?

The correct answer is option (3) : For whom to produce ?

This question addresses the distribution of goods and services among individuals or groups in the economy.

• What to produce?

  • This central problem addresses the question of which goods and services should be produced in an economy. It involves deciding on the allocation of limited resources to different types of goods and services to satisfy the needs and wants of the population. The choice involves determining the mix of consumer goods, capital goods, public goods, and services that will best meet the demands of society.

• How to produce?

  • This problem focuses on the methods and processes used to produce goods and services. It involves deciding on the combination of factors of production (land, labor, capital, and entrepreneurship) and the techniques (labor-intensive vs. capital-intensive methods) to be used. The goal is to determine the most efficient way to utilize resources to produce the desired output, considering the cost, technology, and environmental impact.

• For whom to produce?

  • This problem deals with the distribution of the produced goods and services among the members of society. It addresses questions of equity and fairness: who gets what share of the total output? This involves decisions about income distribution, access to resources, and the provision of goods and services to different groups, including considerations of wealth, income, and social welfare policies.

• In what quantities to produce?

  • This problem is about determining the optimal quantity of each good or service to be produced. It involves understanding the demand for various goods and services and adjusting production levels accordingly to avoid shortages and surpluses. This decision helps in achieving allocative efficiency where resources are used to produce the right amounts of goods and services as per the preferences and needs of consumers.