Final answer:
Markets and governments answer the question of 'how should we produce' (option A) when deciding the most efficient way to convert resources into goods and services. The method of production is chosen based on the economic system in place, with businesses making decisions in market economies and governments in command economies.
Step-by-step explanation:
When markets or governments make economic decisions about how to most efficiently convert their resources into goods and services, they are answering the basic economic question of how should we produce it. This involves determining the most efficient production methods given the resources available. In a market economy, businesses decide how to produce goods and services by hiring labor and deciding on wages. In contrast, in a command economy, the government typically makes these production decisions and sets wages.
Economic decision-making also involves answering additional questions such as what should be produced, which is about choosing which goods and services to produce given the scarce resources available. Finally, the question of for whom to produce is about deciding who will receive the produced goods and services, usually based on who can afford them in a market economy.