0Three central problems that an economy faces:(With examples)
1. What to produce and How much to Produce?
- For example: Every country decides whether to produce rice or wheat and how much wheat should be produced.
2. How to Produce:
For example: Agriculture in India is mainly Labour intensive while Agriculture in US is mainly capital intensive
3. For whom to produce?
For example: Suppose an economy produces 100 tonnes of wheat.
Should wheat be sold to people who can afford them? Or
Should wheat be sold to people at subsidised rates to people who cannot afford them?
Hope this is helpful.
