question_answer

Briefly discuss the causes of economic problem.

Or

Diagrammatically illustrate the impact of import substitution policy on the Production Possibility Curve (PPC) of India.

 

Answer:

Economic problem arises due to the following reasons: (i) Human Wants are Unlimited Human wants are unlimited as it is a repetitive process in which wants get increased by consuming goods and services. Fulfillment of one want leads to the surfacement of another want. (ii) Resources are Limited Resources are limited in supply in relation to their demand. Scarcity is the basic feature of every economy. No economy can be self-sufficient in everything. Scarcity is a universal phenomenon, which continues indefinitely. The scarcity of resources creates economic problem for every country in the world. (iii) Resources have Alternative Uses The resources are not only scarce in supply but, they also have alternative uses. e.g. land can be used to produce wheat or to rice or to build a hospital or a school. A choice between the alternative uses of land has to be made, This problem of choice leads to an economic problem.                               Or Import substitution policy means producing goods in the country rather than importing from rest of the world. To produce more output, now "puts are being imported which increases the resources of the country. Consequently, reduction possibility curve would shift right from ab to\[{{a}_{1}}{{b}_{1}}\]