Identify the Central Problem which is associated with the choice of goods in order to achieve optimum use of resources.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → What to produce
Resources are scarce, so every economy must decide which goods to produce with them: more food or more clothing, more consumption goods or more machines. This choice of goods is the central problem of what to produce.
Option (1) What to produce — Correct. It decides which goods and services the economy makes. How much of each to make is decided along with it.
Option (2) In what quantity to produce — Incorrect. The quantity of each good is part of the same first problem: what goods are produced and in what quantities. It is not a separate central problem, and it does not choose the goods.
Option (3) How to produce — Incorrect. This is the choice of method: more labour or more machines, and which technology to use.
Option (4) For whom to produce — Incorrect. This is about who gets how much of the goods once they are produced.
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 agricultural goods or to have industrial products and services. Whether to use more resources in education and health or to use more resources in building military services. Whether to have more of basic education or more of higher education. Whether to have more of consumption goods or to have investment goods (like machine) which will boost production and consumption tomorrow. How are these goods produced? Every society has to decide on how much of which of the resources to use in the production of each of the different goods and services. Whether to use more labour or more machines. Which of the available technologies to adopt in the production of each of the goods? For whom are these goods produced? Who gets how much of the goods that are produced in the economy?… Thus, every economy faces the problem of allocating the scarce resources to the production of different possible goods and services and of distributing the produced goods and services among the individuals within the economy.…” |