Question

The decision of whether to produce more consumption goods or more investment goods (to boost future production and consumption) relates to which central problem of an economy?

• A. Why are these goods produced?
• B. For whom are these goods produced?
• C. How are these goods produced?
• D. What to produce and in what quantities?

Hint:

Remember:

• Central problems of an economy:
  • What to produce?
  • How to produce?
  • For whom to produce?
• Choice between consumption and capital goods: \[ \text{What to produce problem} \]

Answer 1

The Correct Option is D

Concept: Every economy faces the problem of scarcity of resources. Therefore, it must decide:

• Which goods should be produced
• How much of each good should be produced

This is known as the central problem of: \[ \text{What to produce and in what quantities} \]

Step 1: Understand the issue mentioned in the question. The question asks whether an economy should produce:

• More consumption goods, or
• More investment goods

This is a choice regarding: \[ \text{Allocation of resources among different goods} \]

Step 2: Identify the related central problem. Choosing between consumption goods and capital goods directly concerns: \[ \text{What goods should be produced and in what quantities} \] Thus: \[ (D) \text{ is correct} \]

Step 3: Eliminate the incorrect options.

• For whom to produce deals with distribution of goods among people.
• How to produce concerns production techniques.
• Why are these goods produced is not considered a central economic problem.

Therefore, the correct answer is: \[ \boxed{\text{What to produce and in what quantities}} \]