Q5 of 38 Page 1

Explain briefly the central problem of ‘‘What to produce’’.

● The central problem of What to produce means the problem of deciding which goods and services should be produced.


● The resources are limited and have to used judicially.


● It has to be decided carefully as to the optimum utilization of resources in the production of goods and services.


● The resources must be allocated so as to provide maximum satisfaction to the society.


● For example, the decision to make consumer goods or war related goods.


●


More from this chapter

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3

If the percentage change in quantity supplied of commodity X is more

then the percentage change in the price of the commodity X, the coefficient


of price elasticity of supply would be _______________ : (Choose the correct alternative)


 4

If the average fixed cost of producing 4 units of output is < 60, then thevalue of total fixed cost for producing 5 units will be _____________ . (Fill up the blank)

OR


State any two examples of variable cost.


 6

A rational consumer is consuming only two goods, Good X and Good Y with < 4 and < 5 as their respective prices. Her total money income is < 40. Answer the following questions, based on the given information :

(a) State the consumer’s budget line equation.


(b) What would be the slope of the budget line?


 7

Given the following schedule, state at which level of output, will the firm be at equilibrium and why.