Basic Economic Problems

2. 2

3. Problem of choice
• What to produce is the problem of choice
between commodities.
• This problem arise due to scarcity of resources.
• The objective of the economy should be
produce maximum output to satisfy the
maximum needs of maximum number of
people.
• Resources are scarce, so that everyone has to
choose between different goods and services. 3

4. Problem of choice of technique
4
• This problem is the problem of choice of
technique.
• It arose due to scarcity of resources.
• Resources are limited so we have to choose a
technology which uses resources most
economically.
• This problem helps to decide
1.With what resources and technology the goods
should be produced
2.On what scale the goods should be produced
3.In what sector the goods should be produced

5. 5
• This is a problem of distribution of goods and
services among the society.
• The solution of this problem depend upon the
nature and type of economic system.
• In capitalist economy : Consumer’s preference
and price mechanism
• In Socialist economy : Central planning
authority.