1.1.1 The Economic Problem

Question 1

What is Scarcity?

Answer 1

It is the lack of resources to meet infinite wants

Question 2

What is opportunity cost?

Answer 2

It is the best alternative forgone

Question 3

How does Opportunity Cost affect Consumers?

Answer 3

1. Consumers will have to detect which product to buy, to choose one over the other.

Question 4

How does Opportunity Cost affect Workers?

Answer 4

Working in one job is semi-permanent, and not easily changed. Choosing one job over the other.

Question 5

How does Opportunity Cost affect Producers?

Answer 5

Producers have to choose what to produce, and which is most beneficial for them/

Question 6

How does Opportunity Cost affect the Government?

Answer 6

The government has to choose where to spend tax revenue, though this can also fall on citizens.

Question 7

What is a PPC Curve?

Answer 7

This shows the maximum output of two products, and the combinations in which they can be produced.

Question 8

What does a PPC Curve Show?

Answer 8

1. Fully employed; On the curve
2. Unemployed; Beneath the Curve
3. Unattainable; Above the Curve
4. Opportunity Cost; Movement along the curve
5. Positive Economic Growth; Outwards
6. Negative Economic Growth; Inwards

Question 9

What causes Positive Economic Growth?

Answer 9

1. Decreased Interest Rates
2. Increased Consumer Confidence
3. Increase in net Investment
4. Increase in Labout Size
5. Improvement in education
6. advancements in technology

Question 10

What causes negative economic growth?

Answer 10

1. Inflation that is too high