Explain the problem of ‘what to produce’?


1.       ‘What to Produce’ is a problem related to the selection of goods and services to be produced.
2.       An economy has to decide whether to produce consumer goods such as rice, wheat, clothes, etc. or to produce capital goods such as machinery and equipment.
3.       T has also to make a choice between necessary goods and luxury goods.

4.       The scarcity of resources limits the production of goods and services in an economy.