The correct option is 2 and 3 only.
Explanation
Every economy faces the central problem of allocating scarce resources to alternative uses. These problems are broadly classified into three categories: "What to produce," "How to produce," and "For whom to produce." The problem of "How to produce" specifically concerns the choice of technique or method of production.
Statement-wise Analysis:
- Statement 1 is Incorrect. Deciding the distribution of final goods among consumers constitutes the problem of "For whom to produce." This deals with how the national product is shared among the factors of production (functional distribution) or individuals (personal distribution).
- Statement 2 is Correct. The problem of "How to produce" involves deciding the combination of resources (factors of production) to be used. It requires choosing between different techniques, such as labour-intensive techniques (using more labour than capital) or capital-intensive techniques (using more capital than labour), to achieve efficiency.
- Statement 3 is Correct. The problem of "How to produce" is directly driven by the scarcity of resources. Since resources are limited, an economy must choose the most efficient method of production to minimize cost and wastage while maximizing output. If resources were unlimited, the choice of technique would be irrelevant.
Key Takeaway:
The central problem of "How to produce" is essentially a problem of choice of technique (Labor vs. Capital) aimed at efficient utilization of scarce resources.