Micro 1

Question 1

Definition of PPC

Answer 1

Outlines all possible combinations of two economic goods that can be produced assuming that there is a fixed quantity of resources, full and efficient usage of these resources and a given state of technology.

Question 2

Law of increasing opportunity cost

Answer 2

As more resources are allocated away from one good to another good, the opportunity cost of every additional unit of production of one good increases as economic resources are not equally adaptable to alternative uses.

Question 3

Opportunity cost

Answer 3

The value of the next best alternative forgone when a choice is made

Question 4

Allocative efficiency

Answer 4

Occurs only at one point of curve where quantity of the two goods produced are at socially optimal level to maximise societal welfare.

Question 5

Productive efficiency

Answer 5

2 combinations of goods on the PPC when all resources are fully utilised on PPC curve

Question 6

Scarcity

Answer 6

Unlimited human wants and limited resources to satisfy these wants.

Question 7

Choice

Answer 7

To determine the distribution of good

Question 8

Unemployment

Answer 8

Lies insude the curve when all 4 resources are not utilised fully.
The 4 resources are: land, labour, enterprises and capital.

Question 9

Land

Answer 9

Natural resources availiable

Question 10

Labour

Answer 10

Human efforts willing to work

Question 11

Capital

Answer 11

Man made resources for further production of goods and services

Question 12

Enterprises

Answer 12

People who tske risks and innovate