What to produce
Also called: What is produced and in what quantities · Topic: Scarcity, Choice and Economic Systems · NCERT: Class 12, Ch 1 "Introduction (Microeconomics)"
Meaning
"What to produce" is one of the three central problems of an economy. It asks how much of each possible good and service to produce. It arises because resources are scarce and can be put to other uses, so producing more of one good means producing less of another. Output should match what society wants. If people want less of a good than is being made, resources should move to goods in higher demand.
Example
A society must choose between many pairs of goods:
- food, clothing and housing vs luxury goods;
- health and education vs the military;
- consumption goods today vs machines (investment goods) that raise output tomorrow.
A farmer who chooses sugarcane over millets is also answering "what to produce".
Don't confuse with
- How to produce: That problem is about the method, labour or machines. It is not about which goods to make.