Introduction to Business EconomicsPYQ Dec 23Question 605 of 209
All Questions

In which type of central economic problem, an economy must decide whether more Indian electric toys should be produced and how many units of each toy should be produced.

Options

AHow to produce
BWhat to produce
CFor whom to produce
DWhat provision should be made for economic growth
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Correct Answer

✅ Option b — What to produce

All Options:

  • AHow to produce
  • BWhat to produce
  • CFor whom to produce
  • DWhat provision should be made for economic growth

Detailed Solution & Explanation

• This question addresses one of the fundamental central problems of an economy: resource allocation. Every society faces scarcity, meaning resources are limited while wants are unlimited. This forces choices about what to produce. • The core of the problem described is deciding *which goods and services* to produce and *in what quantities*. The example specifically asks whether "more Indian electric toys should be produced" and "how many units of each toy should be produced." This directly relates to the composition and volume of output. • Therefore, the correct answer is (B) What to produce. This problem deals with the choice between different goods (e.g., toys vs. food, electric toys vs. traditional toys) and the specific quantities of each to be manufactured, given limited resources. • Option (A) How to produce is incorrect because it focuses on the methods or techniques of production (e.g., using more labor or more capital, manual vs. automated processes), not on *what* is being produced. • Option (C) For whom to produce is incorrect because it deals with the distribution of the produced goods and services among different sections of society (e.g., who gets the toys – children, adults, high-income groups, low-income groups), not the initial decision of what to make.

About This Chapter: Introduction to Business Economics

Paper

Paper 4: Business Economics

Weightage

5%

Key Topics

Meaning, Scope, Price Mechanism

This chapter lays the groundwork for understanding Business Economics as a discipline. It covers the meaning, scope, and nature of economics — including key distinctions like Microeconomics vs Macroeconomics, Positive vs Normative economics, and the fundamental economic problem of scarcity. Students learn how businesses use economic principles for decision-making in a competitive marketplace.

View Official ICAI Syllabus

Exam Strategy Tip

Focus on definitions and distinctions between concepts. Questions often test whether you understand the difference between Micro and Macro, or Positive and Normative statements.

Related Comparison Tables

Microeconomics vs Macroeconomics: The Complete CA Foundation GuidePositive vs Normative Economics: Fact vs Opinion

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