Which of the following does production entail?

• A. The transformation of inputs into outputs
• B. The distribution of income among factors of production
• C. The regulation of market prices by the government
• D. The consumption of final goods by households

Answer: (A)

Verified step by step guidance

1. Understand the concept of production in microeconomics: Production refers to the process by which inputs (such as labor, capital, and raw materials) are transformed into outputs (goods and services).
2. Identify the key elements involved in production: inputs (factors of production) and outputs (final goods or services).
3. Recognize that production is about the transformation process, not about how income is distributed or how prices are regulated.
4. Eliminate options that describe other economic activities: distribution of income relates to factor payments, regulation of prices relates to government intervention, and consumption relates to the use of goods rather than their creation.
5. Conclude that the correct description of production is the transformation of inputs into outputs.