Explain the problem of‘what to produce’.
or
Explain the central problem of ‘choice of products’ to be produced.
An economy has millions of commodities to produce. It has to decide which goods and services to be produced and that should be in sufficient quantity, as all the goods cannot be produced due to scarcity of resources, e.g. an economy has to decide whether to produce luxury goods or inferior goods, capital goods or consumer goods.
This problem has two dimensions:
(i)Types of goods to be produced.
(ii)Quantity of goods to be produced.