Economics [3 marks Question-Answer]

Limited Resources: Resources which are available in limited quantity on the earth are called limited resources.
Examples : Minerals, fossil fuels, etc.
Unlimited Resources: Unlimited resources refer to renewable resources whose supply is not exhausted with use.
Examples : Sunlight, water, etc.

Problem of "for whom to produce means how the national product i.e. national income is to be distributed among the factors of production that helped to produce it. It is the factor prices namely rent, wages, interest and profits which determine the distribution of goods among the various individuals in the society. For example, how should production be distributed among landlords, labourers, capitalists and entrepreneurs who are the suppliers of factor services.

Goods can be produced in more than one way. Production techniques may be either labour intensive or capital intensive. An economy will opt for the technique which uses the least amount of scarce resources for a given quantity of output.
Example : A given amount of foodgrains can be produced either by using more capital and less labour or less capital and more labour. We have to make a choice.

Resources available to an economy are scarce. An economy cannot produce all that the society needs. This compels the economy to utilise its scarce means so that society gets maximum aggregate satisfaction.
Example : From a given quantity of land, either wheat or cotton can be produced or a combination of them. If it is desired to produce more wheat and less cotton, land use will have to get diverted from cultivation of cotton to wheat.

Every economy has to face some fundamental (basic) problems which are known as central problems. These are :
(i) What to produce?
(ii) How to produce? and
(iii) For whom to produce?
The first problem, vi.z., what to produce, has two parts. The first part deals with what is to be produced under given circumstances. The second part is concerned with the quantities of goods to be produced. The second problem relates to the methods of production. And the third problem relates to the distribution of national product.