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| Chapter-1 |
There are three major problems of an economy 1) what to
produce 2) how to produce 3) for whom to produce.
1)
What to produce: - There
are so many commodities to produce, like luxury goods, wage goods, capital
goods, or consumer goods. It has to decide which one to produce, and once it
has decided what to produce, it has to decide how much to produce.
2)
How to produce:- It is to decide the technique of
the production. It's a big challenge for every economy to figure out how to
combine the resources for production. An economy may choose a labor- or
capital-intensive technique depending on the availability of a particular
factor of production.
3)
For whom to produce:- Who will consume the goods
depends upon how the national products are distributed among people or factor
owners. For whom the product is produced, it should be properly distributed or
reached to the particular people to attain the purpose.