You are here
In short:
What to produce asks which goods should be made and in what quantity, like sugarcane or millets on a farm.
This section has two parts:
- What to produce
- For whom to produce
Let us study them one by one.
What is the meaning of 'what to produce'?
- It asks which goods and services should be produced, and in what quantity.
- This is decided for the needs of the economy over a given period.
Example of 'what to produce' in the case of a farmer
- A farmer has two choices - to grow sugarcane and paddy, or to grow millets and pulses.
- He decides what to produce by checking various factors.
| Factor the farmer checks | Sugarcane and paddy | Millets and pulses |
|---|---|---|
| Water needed | High, these are water-intensive crops | Low, these are drought-resistant crops |
| Money earned now | High profits, and it supports industries such as sugar | The gain is saved water instead |
| Effect on the soil | Better soil health is given up | Improves soil health |
| Long-term effect | Short-term gain | Promotes sustainable farming |
- Water-intensive means the crop needs a lot of water. Drought-resistant means the crop can grow with little water.
We say the farmer made a trade-off between short-term economic gains and long-term sustainability. What does this mean?
- Short-term economic gain means the money the farmer earns in this season.
- Long-term sustainability means keeping the water and the soil good for the coming years.
- Sugarcane gives the money now, but the saved water and the better soil are given up.
- Millets keep the water and the soil, but the high profit of sugarcane is given up.
- Picking one means giving up the other, and that is the trade-off.
- So the opportunity cost of growing sugarcane is the saved water and the better soil.
- Companies, governments and consumers have to make similar trade-offs.
What is the meaning of 'for whom to produce'?
- It asks who the goods and services are produced for, and who benefits from them.
- People have different needs, income levels, tastes and lifestyles.
- So producers decide which group of consumers they want to serve.
Example of 'for whom to produce' for a shoe factory
| Type of shoe | Produced for | What it is like |
|---|---|---|
| School shoes | Students | Simple in design, durable and affordable |
| Office-wear shoes | Working professionals | Comfortable, formal and of good quality, often leather |
| Sports shoes | Athletes and fitness enthusiasts | Special rubber soles, lightweight, give grip and support |
| Casual shoes or slippers | People, for daily use | Comfortable yet affordable |
The decision of 'for whom to produce' also affects the materials used. How?
-
The group of buyers decides which material the producer uses.
- Example 1 - leather shoes are made for office-goers and high-income customers.
- Example 2 - rubber or synthetic shoes are made for sports players, factory workers, and people who need affordable and durable footwear.
How do producers decide what to make?
- They study what consumers like, how much money they have, and how much demand there is.
- Only then do they decide what to make.
-
This makes sure that limited resources are used well and not wasted.
- Example - Apple decided to make the iPhone for buyers who can pay a high price, instead of making cheap phones for buyers with less money.
- So Apple keeps adding costly features, because its chosen group of buyers is ready to pay for them.
Example from the news - electric cars
- In May 2026, Tata Motors decided to raise its electric car production by about 50 per cent.
- Its output was to go from about 9,000 to 10,000 units a month to about 15,000 units a month.
- The decision was made because bookings for its electric cars had grown to about 2 to 2.5 times in just two months.
-
Petrol and diesel prices were rising, so buyers were moving towards electric cars.
- Example - a rise of Rs 10 in the fuel price adds about Rs 1,000 to a buyer's cost every month.
- Electric cars were nearly 30 per cent of the company's bookings in that month.
- This is a production decision - a company produces more of the model that people are buying.
Source: Autocar India, 29 May 2026.
💭 THINK ABOUT IT
Should the government allocate more funds to healthcare and education or to defence and space exploration?
Healthcare and education
Defence and space exploration
Improves people's daily lives
Protects the country from outside threats
Gives better health and better jobs
Builds new technology for the country
Meets the needs people feel today
Builds the strength the country will need later
- The government has limited funds, so spending more on one means spending less on the other.
- That is the opportunity cost of the choice.
- It is also a trade-off - between the needs of today and the long-term strength of the country.
- So most governments do not pick only one. They divide the funds between both.
📖 Questions from the Book
Q9. Analyse how a country's present economic choices can shape its long-term future. Why is it important to consider future consequences while making economic decisions today?
-
Today's choices decide what resources are left for tomorrow.
- Example - growing only sugarcane earns money now, but it uses up the water.
- Growing millets and pulses saves water and improves soil health, which keeps the land useful for the future.
- So future consequences must be counted, or the short-term gain becomes a long-term loss.
Q10. Identify a news article from any newspaper of your choice about a product or commodity (such as vegetables, fruits, fuel, or electronics) where producers or companies are deciding how much to produce or supply. Write 2-3 sentences explaining the example you found and why the production decision was made.
- In May 2026, Tata Motors decided to raise its electric car production by about 50 per cent.
- Its output was to go from about 9,000 to 10,000 units a month to about 15,000 units a month.
- The decision was made because bookings for its electric cars had grown to about 2 to 2.5 times in just two months, and because rising petrol and diesel prices were pushing buyers towards electric cars.
Worth remembering:
Shoes are shoes, but school shoes and sports shoes are made for different people. The same product is made in different versions for different buyers.
1. What does the question 'what to produce' ask?
Show answer
Which goods and services should be produced, and in what quantity.
2. What is the opportunity cost of growing sugarcane instead of millets?
Show answer
The saved water and the better soil that are given up.
3. Why are leather shoes and rubber shoes made for different buyers?
Show answer
Because buyers differ in their needs and in how much money they can spend.
📝 What Have We Learned
- What to produce asks which goods should be made and in what quantity, like sugarcane or millets on a farm.
- That choice is a trade-off between short-term economic gains and long-term sustainability.
- For whom to produce decides the group of buyers, which also decides the design and the material used.
