Question

Illustrate the Five central problems of an economy in your own words in the context of COVID 19 in economy ?

Answer 1

Answer--The five central problems of an economy in the context of Covid 19 in economy are--

1.What to produce and in what quantities- In this Covid 19 pandemic the main issue of every producers is what goods to produce and how much goods to produce, because due to this pandemic,almost every countries in the world is going through lockdowns in which all shopping malls ,stores ,trade activities are restricted by the respective governments in fear of spread of corona virus.Producers must produce goods and services in those areas where the impact of pandemic is less .

2.How to produce goods--In this Covid 19 pandemic,there is huge shortage of labor (both skilled and unskilled),in developing countries the labor cost is very less then the capital intensive production process,but due to the unavailability of labors firms have no option to use labor intensive in place of capital intensive process of production ,as we know that for developing countries capital intensive process is reducing the profits of the firms.

3.For whom is the good produced--In covid 19 pandemic ,citizens of countries is avoiding the outside commodity due to this highly communicable disease ,when there is shortage of customers in the maarket then firm should decide for whom they need to produce in this pandemic time.

4.How efficiently are the resources being utilised--In this pandemic and due to the lockdowns and closure of the production process,this is very clear that none of the firm is able to use there resources efficiently ,even firms are not able to utilise there existing raw materials.

5.Is the economy growing?--In this covid 19 pandemic ,every countries in the world are struggling with the economy growth , after above discussed problems ,in the end producers and government both are excited to know the economy is growing or not.But in this pandemic every economy is suffering the condition of recession thats why there is no growing of economy in this pandemic.