Which of the following central problems deals with the choice of technique of production?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → How to produce?
The central problem of “How to produce?” relates to the choice of technique of production — that is, deciding how resources should be used to produce goods and services.
Economies must choose between:
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Labour-intensive techniques (using more human labour), or
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Capital-intensive techniques (using more machines and technology).
The goal is to minimize cost and maximize efficiency while making the best use of available resources.