Explain the problem of ‘how to produce’.
or
Explain the central problem of ‘choice of techniques’.
The problem of ‘how to produce’ is a problem relating to choice of techniques. Broadly, it is the problem of deciding the techniques of production which are to be used.
There are two types of techniques of production, which are as follows:
(i)Labour intensive technique It is that technique in which labour is used more than capital.
(ii)Capital intensive technique It is that technique in which capital is used more than labour.