No matter in which part of world one lives, whether he or she lives in America, Europe or Asia all economies of various countries face difficulty when it comes to how to run an economy. There are basically 4 central problems of economy, let’s look all of them –
- What to Produce – This aspect relates to which goods and services should the country produce and in what quantities should goods or services should be produced.
- How to Produce – After deciding about the types and quantum of goods and services the next question is how to achieve the desired result, because a good or service can be produced in many ways and a country should choose the method which results in maximum gain for the society as a whole.
- For Whom to Produce – Since the needs and wants of people are unlimited but the resources are limited therefore a country will always try to distribute the produced goods and services in such a way that all are satisfied, however this never happens due to gap between rich and poor as rich people always get what they want which is not the case with poor.
- Future Planning – A country or society never consumes all resources at one go rather it makes provisions for future generations also and any country would have to maintain that balance about the current consumption and also how the society should save for the future generations.