MAKE A PRESENTATION ON THE CENTRAL PROBLEMS OF AN ECONOMY FACES. EXPLAIN THESE WITH REFERENCE TO THE INDIAN ECONOMY.

                                                                                                          ( First Page) 

PROJECT NO: 1
 
 
MAKE A PRESENTATION ON
 
THE CENTRAL PROBLEMS OF AN
 
ECONOMY FACES. EXPLAIN
 
THESE WITH REFERENCE TO
 
THE INDIAN ECONOMY
 

 

 

INTRODUCTION                       ( 2nd Page)

 

       An economy is a System by which people get their living. It is People the total system which provides with goods and Services which directly indirectly Satisfy their Wants. This Consists of various factories farms, Schools, Offices etc. Production, Consumption, Distribution and Exchange of goods and Services are the basic economic activities, they have to face Scarcity of resources and these resources have alternative uses also. It five rise to the problem of Economics deals with the way Society Choose to use its limited Resources, which have alternative uses  to Produce goods. and Services and distribute them among different groups

 

PRESENTATION                         ( 3rd Page) 

 

The Compulsion of making choices before Societies is referred to as Central Problems. The choice problem is  common to all Economies. It leads to central problems. While allocating  the Scarce resources has to answer the following. Three Central Problems

 

1) What to Produce and in what quantities

 

(2) How to Produce

 

(3) For whom to Produce

 

What to Produce and in what quantities

 

The Problem of what' has two aspects, what Possible Commodities to  Produce?  How much of the  chosen Commodities to produce?

                                Since its resources are limited, every economy has to decide what commodities are to be produced and in what quantities. In views of limited resources when we produce more of a commodity, it means we will be able to produce less of another. Economy has to decide that what of consumer and capital goods to be produced. Less production of capital goods would reduce the productive capacity of the economy.

2 How to Produce

 

The Second basic problem that every economy has to face is how to Produce the chosen  goods and services.

This Problem relates to the choice of technique of Production they are :

 

1.     1) Labour intensive technique  

2.     Capital intensive technique.

 

                            In labour intensive technique more labour and less of capital is used. For example, cloth can be Produced either by using handlooms and a little amount of Capital or by using modern machines. The choice between both Techniques becomes problem  because producers need to minimize Cost need of production and at the Same time maximise their efficiency

 

For  Whom to Produce

 

The third basic Problem of allocation of resources is the Problem of distribution Of the Producer among the Various individuals or factors of Production. In other words, who should get more or who should get less. This problem has two aspects, functional distribution and personal distribution. Functional distribution  implies how the various Social groups- owners, Capitalist, workers and entrepreneurs receive their relative Shares of income and Personal distribution is Concerned with the problem of inequality in the distribution of income.

 

Conclusion

       In India economic decisions on what, how and for whom are taken on the basis of price mechanism as well as on the basis Social Consideration. In certain areas of Production, Producers are free to take their decisions to  maximise their  profits, but in other areas of Production decisions are  taken an Social grounds. Those goods and  Services will lee Produced for needy Persons. The choice of technique of Production will be made  in manner So that do not remain underutilized.