alleryA government deciding how many schools, hospitals and metres of cloth the nation should turn out is essentially answering which basic economic question?
AWhen to consume
BHow to produce
CFor whom to produce
DWhat to produce
Answer & Solution
Correct answer: D. What to produce
1. 'What to produce' covers which goods and in what quantities they are made.
2. Choosing the number of schools, hospitals and cloth is a question of selecting goods and their amounts.
3. This squarely matches the 'what to produce' problem.
4. 'How' concerns technique and 'for whom' concerns distribution, neither of which is being decided here.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 1 Unit II "Basic Problems of an Economy and Role of Price Mechanism", p.1_
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