Question

The problem of “What to produce?” includes which of the following considerations?
• [(A)] Whether to produce more of food, clothing, and housing or luxury goods.
• [(B)] Whether to allocate more resources to education or military services.
• [(C)] Whether to use labour-intensive or capital-intensive production methods.
• [(D)] Whether to focus on consumption goods or investment goods. Choose the correct answer from the options below:

• A. (A), (B), and (D) only
• B. (A), (C), and (D) only
• C. (B), (C), and (D) only
• D. (A), (B), (C), and (D)

Hint:

Central problems of an economy: \[ \mathrm{What\ to\ Produce} \] \[ \mathrm{How\ to\ Produce} \] \[ \mathrm{For\ Whom\ to\ Produce} \]

Answer 1

The Correct Option is A

Step 1: Understand the problem of “What to produce?”
This central problem of an economy deals with:
• Choice among different goods and services
• Allocation of scarce resources
• Priority of production

Step 2: Analyze statement (A).
Choosing between: \[ \mathrm{Necessities\ and\ Luxury\ Goods} \] is part of deciding what goods should be produced. \[ \Rightarrow \mathrm{Correct} \]

Step 3: Analyze statement (B).
Allocation of resources between: \[ \mathrm{Education\ and\ Military\ Services} \] is also related to what society wants to produce. \[ \Rightarrow \mathrm{Correct} \]

Step 4: Analyze statement (C).
Choice between: \[ \mathrm{Labour\text{-}Intensive\ and\ Capital\text{-}Intensive} \] methods belongs to: \[ \mathrm{How\ to\ Produce} \] not what to produce. \[ \Rightarrow \mathrm{Incorrect} \]

Step 5: Analyze statement (D).
Choosing between: \[ \mathrm{Consumption\ Goods\ and\ Investment\ Goods} \] is also a part of deciding what to produce. \[ \Rightarrow \mathrm{Correct} \]

Step 6: Identify the correct combination.
Correct statements are: \[ (A),\ (B),\ \text{and}\ (D) \] Hence, the correct answer is: \[ \boxed{\mathrm{(A)}} \]