week 1

Question 1

What is circular flow of diagram?

Answer 1

it is a diagram shows how money flow through the market from household to firm, firm to household

Question 2

What is the production possibilities frontier(PPF)?

Answer 2

it is the curve that shows the combination of two goods that can be produced in an economy

Question 3

What does it say point on PPF?
What does it say point under PPF?
what does it say point above PPF?

Answer 3

Point on PPF is possible and efficient
point under ppf is not possible, resources are not fully utilized.
point above is not possible, the resources are overused.

Question 4

if a ppf line straight what does it mean

if a ppf line is bow-shaped what does it mean

Answer 4

if the ppf line is straigth the opportunity cost is to be say constant,
if the ppf curve is bow shape, then the opportunity cost increases.

Question 5

what is the positive statement?

what is the normative statement?

Answer 5

positive statement is a statement that can be confirmed or refuted.
normative statement is a statement that connot be confirm or refuted.

Question 6

What is an absolute advantage?

Answer 6

it is a good that produces using fewer inputs than the other produce.

Question 7

what is comparative advantage?

Answer 7

the ability to produce a good that has lower opportunity cost than the other good.