economic problem

Question 1

What is the problem of scarcity?

Answer 1

infinite want finite resources

Scarcity is a fundamental concept in economics that forces individuals and societies to prioritize their needs and wants.

Question 2

What is opportunity cost?

Answer 2

Opportunity cost is the cost of the next best alternative that is foregone when a choice is made.

It affects economic agents like consumers, producers, and government by influencing their decision-making.

Question 3

What does a production possibility curve (PPC) illustrate?

Answer 3

A production possibility curve illustrates the maximum productive potential of an economy, the employment status of resources, opportunity cost, and economic growth.

It visually represents trade-offs and efficiencies in production.

Question 4

What are the key features shown by a production possibility curve diagram?

Answer 4

A production possibility curve diagram shows:
* Maximum productive potential of an economy
* Fully employed or unemployed resources
* Opportunity cost
* Positive or negative economic growth that shifts the PPF outwards and inwards
* Possible and unobtainable production.

The PPC can indicate the efficiency and trade-offs in an economy’s production capabilities.

Question 5

What can cause positive economic growth?

Answer 5

Possible causes of positive economic growth include factors like increased efficiency, technological advancements, and an increase in resources.

These factors can lead to an outward shift in the production possibility frontier.

Question 6

What can cause negative economic growth?

Answer 6

Possible causes of negative economic growth include resource depletion, economic downturns, and reduced productivity.

These factors can lead to an inward shift in the production possibility frontier.

Question 7

Fill in the blank: The production possibility frontier (PPF) can shift _______ due to positive economic growth.

Answer 7

outwards

This shift indicates that an economy can produce more goods and services than before.

Question 8

Fill in the blank: The production possibility frontier (PPF) can shift _______ due to negative economic growth.

Answer 8

inwards

This shift indicates a decrease in the economy’s productive capacity.