CA Foundation · Business Economics · Nature and Scope of Business Economics
Which of the following correctly lists the central problems that every economy must solve because resources are scarce and have alternative uses?
The central problems of every economy are what to produce, how to produce, and for whom to produce. These arise because resources are scarce and have alternative uses, so choices must be made about output, technique and distribution of goods among people.
- AWhat to produce, how to produce, and for whom to produceCorrect
- BWhom to tax, how much to borrow, and when to export
- CWhat to import, how to advertise, and where to invest
- DHow to price, how to distribute profits, and when to merge
Explanation
Scarcity of resources with alternative uses forces every economy to decide what goods to produce, which technique to use to produce them, and how output is distributed among people. The other options list business or fiscal decisions that are not the basic economic problems of an economy.
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