ECONOMICS

PROBLEMS OF
ECONOMICS?
LECTURE #2
A GUIDANCE BY SIR SALMAN
 BASIC PROBLEMS OF AN
ECONOMY
Why problems arise?

 Problems of Economy arise because

of two basic facts. Firstly human wants
for goods and services are unlimited and
Secondly Productive resources with
which to produce goods and services are
scare. If our wants are virtually unlimited
and our resources are scare we cannot
Then satisfy all our wants and desire
by producing everything we want.
Therefor economy has to decide how
to use its scare resources to attain the
Maximum possible satisfaction of
the members of the society. Central
problems of economy are following:
What to Produce?

How to Produce?

For Whom to produce?

How to make the Economy grow?

 WHAT TO PRODUCE?

It can be divide into two related

questions. First which goods are to be
produced and which not and second in
what quantities those goods which the
economy has decided to produce.
An economy has to decide how
much resources should be allocated
for the production of consumer goods
and how much of capital goods.
 HOW TO PRODUCE?

The problem of how to produce means

which combination of resources is to be
used for the production of thing and which
technology is to be made use of in
production.
FOR WHOM TO PRODUCE?

It is to be decided that for whom to

produce goods and services. It means
how the national produce is to be
distributed among the members of
society.
 HOW TO MAKE THE
ECONOMY GROW?
Every economy is capable of improving
its economic conditions still further by
producing progressively more and more
goods and services.
The process whereby an economy
increases the amount of goods and services
over time is called economic growth.
THE END