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The central economic problem that every economy must confront, irrespective of whether it is capitalist, socialist or mixed, arises fundamentally from:
AScarcity of resources relative to human wants
BGovernment interference in private markets
CUnequal distribution of national income
DFrequent fluctuations in commodity prices
Answer & Solution
Correct answer: A. Scarcity of resources relative to human wants
1. Resources are limited while human wants are unlimited.
2. This gap between limited means and unlimited ends is termed scarcity.
3. Scarcity is faced by all economies regardless of their type.
4. Hence it is the root of the central economic problem.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit II "Basic Problems of an Economy and Role of Price Mechanism", p.0_
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