Explanation:

The central economic problem, also known as the basic economic problem, is the fundamental economic issue of scarcity. It is the condition where unlimited wants and needs are greater than the limited resources available to satisfy them.

Output is restricted to the limited availability of resources:

The central economic problem arises because of limited resources. Resources are scarce and cannot be produced in unlimited amounts. There are only so many resources to go around, and they are not equally distributed. As a result, society has to make choices about how to allocate these resources to meet different needs and wants.

Implications of the central economic problem:

The central economic problem has several implications for society, including:

- Opportunity cost: Due to the limited availability of resources, every choice has an opportunity cost. The opportunity cost is the value of the next best alternative that has to be forgone in order to pursue the chosen option. Society must choose between different alternatives, and every choice has a cost.

- Production possibilities frontier: Because resources are scarce, the economy can only produce a limited amount of goods and services. The production possibilities frontier (PPF) represents the maximum amount of goods and services that can be produced given the available resources and technology.

- Efficiency: The PPF also illustrates the concept of efficiency. An economy is efficient if it is producing at a point on the PPF. Any point inside the PPF represents an inefficient use of resources, while any point outside the PPF is currently unattainable given the available resources and technology.

- Distribution: The central economic problem also raises questions about the distribution of resources and goods and services. How should resources be allocated? Who should get what? These questions are addressed through the economic system, which can be a market economy, planned economy or mixed economy.

Conclusion:

In conclusion, the central economic problem is the fundamental economic issue of scarcity. Due to the limited availability of resources, society must make choices about how to allocate these resources to meet different needs and wants. The central economic problem has several implications for society, including opportunity cost, the production possibilities frontier, efficiency, and distribution.