Explain the central problem of "choice of technique".

1.	Explain the central problem of "choice of technique".
Answer» The problems of how to produce is a problem relating to choice of technology. There are two techniques of production: (i) Labour Intensive Technique in which labour is used more than capital. (ii) Capital Intensive Technique in which capital is used more than labour. An economy must decide as to which technique is to be used so that efficient production is obtained. It is the central problem in every economy because it impacts production (or efiiciency) on the one hand and the degee of employment on the other hand. Higher productivity often implies a lower degree of employment.

Answer»

The problems of how to produce is a problem relating to choice of technology.

There are two techniques of production:

(i) Labour Intensive Technique in which labour is used more than capital.

(ii) Capital Intensive Technique in which capital is used more than labour.

An economy must decide as to which technique is to be used so that efficient production is obtained. It is the central problem in every economy because it impacts production (or efiiciency) on the one hand and the degee of employment on the other hand. Higher productivity often implies a lower degree of employment.

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