The problem of "what to produce" relate to
Options
AThe choice of goods and service
BDistribution of income
CThe choice of technique
DNone of these
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Introduction to Business EconomicsMTP Dec 22Question 657 of 209
All Questions Correct Answer
✅ Option a — The choice of goods and service
All Options:
- AThe choice of goods and service
- BDistribution of income
- CThe choice of technique
- DNone of these
Detailed Solution & Explanation
• The problem of "what to produce" is one of the fundamental central problems of an economy. It arises because resources are scarce, and an economy cannot produce everything its citizens might want.
• This problem directly addresses the decision of which goods and services, and in what quantities, should be produced from the available limited resources. For example, should an economy produce more consumer goods like food and clothing, or more capital goods like machinery and factories? Should it produce more defense goods or more education and healthcare?
• Therefore, the choice of goods and services to be produced is the core of the "what to produce" problem.
• Option (A) "The choice of goods and service" is correct because it directly defines the essence of the "what to produce" problem. An economy must decide which specific items to prioritize for production.
• Option (C) "The choice of technique" refers to the "how to produce" problem. This involves deciding the method of production – whether to use labor-intensive or capital-intensive techniques. It's a separate fundamental problem from deciding *what* to produce.
• Option (B) "Distribution of income" relates to the "for whom to produce" problem, which deals with how the output and income generated are distributed among the members of society. This is also a distinct central problem of an economy.
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 SyllabusExam 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.
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