Question:
The fundamental economic questions of ‘what to produce’ and ‘for whom to produce’ are essentially interdependent because:
(1) different patterns of income distribution generate different patterns of demand and therefore different patterns of resource allocation.
(2) different patterns of production methods generate different patterns of income distribution.
(3) income and wealth are concentrated in the hands of the economically powerful segments of society.
(4) markets cannot be relied upon to allocate resources efficiently.
(5) a particular level of output may be produced by many different combinations of inputs.
Correct Answer:
(1)
Answer Explanation:
“For whom to produce” determines how income is distributed among the population. “What to produce” is driven by consumer demand. Because people with different incomes demand different types of goods, the distribution of income directly dictates what goods the market will choose to produce.
Topic: Basic Concepts Year: 2017
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