Question

A garment factory replaces 50 workers with some machines to reduce the costs of production. Which central problem of an economy is being added in the statement?

• A. What to produce
• B. How to produce
• C. What quantities to produce
• D. For whom to produce

Hint:

The "How to produce" problem in economics deals with the methods or processes used in production, such as the choice between labor or capital-intensive techniques.

Answer 1

The Correct Option is B

Step 1: Understanding the central economic problems.
The central problems of an economy revolve around how to allocate scarce resources effectively to meet unlimited wants. This includes determining what to produce, how to produce, and for whom to produce.
Step 2: Explanation of options.

• (A) What to produce: Incorrect. This refers to deciding which goods and services should be produced in the economy. The statement does not focus on the choice of goods.
• (B) How to produce: Correct. The replacement of workers with machines is an example of determining how to produce goods more efficiently and cost-effectively.
• (C) What quantities to produce: Incorrect. This focuses on the amount of goods to be produced, which is not the main issue discussed in the statement.
• (D) For whom to produce: Incorrect. This relates to deciding who will receive the goods and services, which is not addressed in the scenario.

Step 3: Conclusion.
Thus, the correct answer is (B) How to produce, as the focus is on the method of production, specifically through the use of machines. Final Answer: How to produce.