1.1 the economic problem

Question 1

what is the economic problem?

Answer 1

is the scarcity of resources in relation to unlimited wants and needs .

Question 2

what PPC graph shows ?

Answer 2

(PPC) production possibility curve shows the maximum combinations of two goods that an economy can produce in a given period of time with all its resources fully and efficiently employed.

Question 3

define the word “need”

Answer 3

A need is any good or service that we require or that is necessary for our survival. E.g. food and water, shelter.

Question 4

define the word “want”

Answer 4

A want is any good or service that is desired but is not necessary. For example, we need clothing to survive (warmth) but we may want branded clothes to be fashionable.

Question 5

For what is used the PPC graph ?

Answer 5

The PPC model is used in economics to illustrate the concepts of scarcity, choice, and opportunity cost​

Question 6

Economic growth​

Answer 6

Economic growth is an increase in the capacity of an economy to produce goods and services, compared from one period to another​
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Question 7

economic assumption

Answer 7

the underlying assumptions that : consumers aim to maximise their benefit , businesses aim to maximise their profit

Question 8

reasons why consumers may not maximise their benefit

Answer 8

-they have habits that are hard to give up
-they are not always good at calculating their benefits

Question 9

reasons why producers may to maximise their profit

Answer 9

-they may have manager that revenue maximise or sales maximise
-producers may prioritise caring for consumers.

Question 10

what is demand?

Answer 10

Demand is the amount of a good that consumers are willing and able to buy at a given price.​
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Question 10

what is supply?

Answer 10

Supply is the amount of a product which suppliers will offer to the market at a given price.​

Question 11

increases in supply

Answer 11

-Increase in price causes an expansion in supply shown by a movement along the supply curve​
-If supply increases for any reason other than price (e.g. costs of production fall) we shift the supply curve to the right ​

Question 12

decreases in supply

Answer 12

-Decrease in price causes a decrease in supply shown by a movement along the supply curve​
-If supply decreases for any reason other than price (e.g. costs of production rise) we shift the supply curve to the left ​

Question 13

Factors that may cause a shift in the supply curve​

Answer 13

Changes in the cost of production​
Changes in technology​
Indirect taxes​
Subsidies​
Natural factors (external shocks, weather etc)​