Which of the following central problems deals with the choice of technique of production?

How to produce?

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:

• Labour-intensive techniques (using more human labour), or

• 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.