discuss the economic problem and how it can be solved
That being so, an economy has to decide how to use its scarce resources to give the maximum possible satisfaction to the members of the society. In doing so, an economy has to solve some basic problems called Central Problems of an economy, which are: (i) WHAT to Produce. (ii) HOW to Produce. (iii) FOR WHOM to Produce. Whatever the type of the economy or economic system, these problems have to be solved somehow. Whether it is a capitalist economy of the U.S.A. or a socialist economy of the U.S.S.R. or a mixed economy of India, every economy has to make decisions in regard to what, how and for whom to produce.
The economic problem. All societies face the economic problem, which is the problem of how to make the best use of limited, or scarce, resources. The economic problem exists because, although the needs and wants of people are endless, the resources available to satisfy needs and wants are limited. Resources are limited in two essential ways: