2 Marks Question

Question

Explain the central problem of ‘choice of technique’.

Vidyadip · Accepted Answer

Choice of technique at the micro level, every economy has to face three central problems, i.e.

What to produce: The first problem that an economy faces is to decide which goods and services are to be produced. Besides this, the economy also needs to decide in what quantities these goods and services should be produced
How to produce:It is concerning with, how to organise production. This problem is related to the choice of technique of production. It arises due to the availability of various techniques for the production of a commodity such as labour intensive technique and capital intensive technique. Depending upon the availability of resources, either technique is used.
For whom to produce:This economic problem basically focuses on the distribution mix of the final goods and services produced. The distribution of the final goods and services is equivalent to the distribution of National Income (or National Product) among the factors of production such as land, labour, capital and entrepreneur.

p	d₁	d₂
1 2 3 4 5 6	9 8 7 6 5 4	24 20 18 16 14 12

Answer