Why may a society choose to produce more investment goods, like machines, instead of more consumption goods?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Machines add to the capacity to produce, so output and consumption can be higher in future.
Choosing between consumption goods and investment goods is part of the problem of what to produce. Consumption goods meet needs today. Machines help produce more goods later, so production and consumption can be higher tomorrow.
Option (1) Investment goods give consumers more satisfaction today than food and clothing do. — Incorrect. Machines are not bought for satisfaction today; they are used to produce other goods.
Option (2) Producing investment goods needs no choice about how to use resources. — Incorrect. Making machines uses scarce resources, so a choice is still needed.
Option (3) Machines add to the capacity to produce, so output and consumption can be higher in future. — Correct. Machines boost production and consumption tomorrow.
Option (4) Investment goods use fewer resources than consumption goods. — Incorrect. Machines also use scarce resources. The reason to make them is the future output they give.
NCERT (2026-27): “What is produced and in what quantities? Every society must decide on how much of each of the many possible goods and services it will produce. Whether to produce more of food, clothing, housing or to have more of luxury goods. … Whether to have more of consumption goods or to have investment goods (like machine) which will boost production and consumption tomorrow.” |