· How to produce?: It is defined as the problem of choice between different techniques of production that can be used in the production of different commodities, so that the given resourcesare utilised to their maximum efficiency. For example, an economy has to make a choice between labour intensive and capital intensive techniques of production.Labour intensive technique refers to use of more labour in comparison to capital and capital intensive technique refers to the use of more capital in comparison to labour. The choice between different techniques depends on relative availability of resources in the economy. An economy where labour is abundant as compared to capital will prefer to use labour intensive technique.
