The Central Economic Problem is:
Options
AWhat to Produce?
BWhat Provision (if any) are to be made for economic growth?
CHow to Produce?
DAll the above
For any discrepancies in this question, email contact@cadada.in
Introduction to Business EconomicsMTP Apr 23Question 726 of 209
All Questions Correct Answer
✅ Option d — All the above
All Options:
- AWhat to Produce?
- BWhat Provision (if any) are to be made for economic growth?
- CHow to Produce?
- DAll the above
Detailed Solution & Explanation
• The central economic problem arises because human wants are unlimited, but the resources available to satisfy those wants are scarce. This fundamental scarcity forces societies to make choices.
• These choices revolve around three core questions that every economy must answer. These are often referred to as the basic or central problems of an economy.
• "What to Produce?" refers to the decision about which goods and services should be produced and in what quantities. For example, should a country produce more food or more weapons? More consumer goods or more capital goods?
• "How to Produce?" addresses the methods and techniques that will be used to produce the chosen goods and services. This involves decisions about the combination of resources (labor, capital, land) and technology. Should production be labor-intensive or capital-intensive?
• "What Provision (if any) are to be made for economic growth?" (or "For Whom to Produce?") deals with the distribution of the produced goods and services among the members of society, and also how to ensure the economy can grow and produce more in the future. This includes decisions about saving, investment, and technological advancement to increase productive capacity over time.
• Since all three options (What to Produce?, How to Produce?, and Provision for economic growth/For Whom to Produce?) are integral parts of the central economic problem, the correct answer is that all of them collectively represent the central economic problem.
• Options (A), (B), and (C) are incorrect individually because each only represents one aspect of the multifaceted central economic problem, not the entire problem itself. The central problem encompasses all these fundamental choices.
About This Chapter: Introduction to Business Economics
Paper
Paper 4: Business Economics
Weightage
5%
Key Topics
Meaning, Scope, Price Mechanism
This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.
View Official ICAI SyllabusExam Strategy Tip
Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.
Related Comparison Tables
More Questions from Introduction to Business Economics
A study of how increases in the corporate income tax rate will affect the nation unemployment rate is an example of
In a ______ the producer is free to set up any type of firms produce goods and services of his choice.
In the beginning the word economics was
In Economics, we use the term scarcity to mean;
In a free market economy, allocation of resources is determined by
If there is no central planning authority to make the fundamental economic decisions and thus to allocate productive resources, how can then free enterprise or capitalist economy solve its central problems?
Ready to Master Introduction to Business Economics?
Practice all 209 questions with instant feedback, earn XP, track your streaks, and ace your CA Foundation exam.
Start Practicing — It's Free