Explain the central problem for whom to produce. from Class 1

Subject

Economics

Class

CBSE Class 12

Pre Boards

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Sample Papers

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 Multiple Choice QuestionsShort Answer Type

1.

Unemployment is reduced due to the measures taken by the government. State its economic value in the context of production possibilities frontier.

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2.

Define budget set.

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3.

What is meant by revenue in micro-economics?

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4.

Give meaning of 'returns to a factor.'

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5.

What is perfect oligopoly?

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6.

Explain the central problem 'for whom to produce.'


The problem for whom to produce refers to selection of the category of people who will ultimately consume the goods. Since resources are scarce in every economy, no society can satisfy all the wants of its people. Thus, a problem of choice arises. The economic problem of 'For whom to Produce' basically focuses on the distribution mix of the final goods and services produced. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur.

The problem can be categorised under two main heads:
(i) Personal Distribution: It means how national income of an economy is distributed among different groups of people.
(ii) Functional Distribution: It involves deciding the share of different factors of production in the total national product of the country. Guiding Principle of ‘For whom to Produce’: Ensure that urgent wants of each productive factor are fulfilled to the maximum possible extent.

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7.

A consumer buys 18 units of a good at a price of Rs. 9 per unit. The price elasticity of demand for the good is (−) 1. How many units the consumer will buy at a price of Rs. 10 per unit? Calculate.

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8.

State the relation between marginal revenue and average revenue.


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9.

State the relation between total cost and marginal cost.

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10.

What is the behaviour of average fixed cost as output is increased? Why is it so?

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