Q5 of 38 Page 1

Explain briefly the central problem of ‘‘For whom to produce’’.

The central problem of for whom to produce is related to distribution of income among the different factor inputs.

● Goods and services are produced for those who have the ability to pay.


● The ability of pay depends on the income of the people


● The income of the people depends on the market conditions of demand and supply of the factor inputs.


More from this chapter

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17

If marginal propensity to save is 10% and is constant at all levels of income and autonomous consumption is Rs. 200 crores, construct consumption function of the given hypothetical economy.

 22

Given the following data, find the values of ‘Operating Surplus’ and ‘Gross Domestic Capital Formation’ :

 7

Given the following schedule, state at which level of output, will the firm

be at equilibrium and why.



 10

What is meant by ‘negative returns to a factor’ ? Discuss any two

reasons behind negative returns to a factor.