Question

"How to produce" refers to:

• A. Which goods and services and how much of each are to be produced
• B. How many of the wants of various people are to be satisfied
• C. How to maintain the economic system by replacing capital goods used up in the production process
• D. The combination of resources and techniques of production to be used

Hint:

Remember this simple association: "What = Choices of Goods," "How = Choice of Technology/Resource Mix," and "For whom = Distribution of Wealth."

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
Every economy faces basic, central economic problems due to scarce resources and unlimited human wants. These are broadly categorized as:
1. What to produce?
2. How to produce?
3. For whom to produce?

Step 2: Detailed Explanation:
Let us define these basic economic questions:
- "What to produce" deals with selecting which goods and services to produce and in what quantities.
- "How to produce" is a purely technological and allocation problem. It deals with selecting the most efficient combination of inputs (labor, land, capital) and production techniques (e.g., labor-intensive versus capital-intensive techniques) to minimize costs.
- "For whom to produce" deals with the distribution of the final national product among different members of society.

Step 3: Final Answer:
Therefore, "How to produce" refers directly to the choice of resource combination and production techniques, matching Option (D).