CBSE Class 11-commerce Answered

Central problems faced by any economy is summarised under three heads:

What to produce?

This involves the selection of goods [consumer or capital goods] to be produced and in what quantities.

How to produce?

This involves the method or technique of production. Whether to use labour intensive techniques or Capital intensive techniques

For whom to produce?

This refers to selection of the category of people [rich or poor] who will be the ultimate consumers of the good.

 In short these problems arise due to the fact that resources are scarce and wants are unlimited. Therefore, what is important is the efficient allocation and utilisation of resources.