1.1.3/1.1.4 the economic problem questions

Question 1

what is the economic problem

Answer 1

the problem of scarcity - where there are unlimited wants and finite resources
so CHOICES MUST BE MADE

Question 2

what must each society decide

Answer 2

• what goods and services to produce
• how best to produce the goods and services
• who is to receive the goods and services

Question 3

what are the main factors of production

Answer 3

CELL
- capital
-enterprise
- labour
-land

Question 4

what is land

Answer 4

the stock of natural resources available for production- known as nature capital

Question 5

what is labour

Answer 5

the quantity and quality of human input available for the production processes

Question 6

what is capital

Answer 6

man made goods used to supply other products such as drones ,factories hardware and software

Question 7

what is enterprise

Answer 7

entrepreneurs organise inputs and take risks when seeking to exploit market opportunities

Question 8

what is automation

Answer 8

a production technique that uses capital machinery and harnesses new technologies to replace or enhance human labour. replacing labour is known as capital labour substitution

Question 9

what are non renewable resources

Answer 9

the finite in supply

Question 10

3 examples of non renewable resources

Answer 10

crude oil , coal and natural gas

Question 11

what are renewable resources

Answer 11

they are replaceable if he rate of extraction is less than the natural rate at which resources renews

Question 12

give 3 examples of non renewable resources

Answer 12

solar energy , tidal power and biomass

Question 13

define opportunity cost

Answer 13

the cost of a choice measured by the next best alternative forgone

Question 14

what does PPF stand for

Answer 14

production possibility frontiers

Question 15

what does a PPF show

Answer 15

maximum potential output combinations of two good or services that an economy can achieved when all its resources are fully efficient and employed

Question 16

why do we draw PPFs as a concave to the origion

Answer 16

when we move down along the PPF as more resources are allocated to good Y , then the extra output created gets smaller this is because of the law of diminishing marginal returns

Question 17

what is the law of diminishing marginal returns

Answer 17

it occurs because not all factor inputs such as (CELL) are equally suited to producing different goods leading to lower productivity

Question 18

what is the pareto efficiency

where will it lie on the PPFs curve

Answer 18

a pareto efficiency outcome is an action that harms no one and helps at least one person

it will occur on points that lie on the PPFs

Question 19

what does a pareto improvement mean

Answer 19

the output of both products can increase

Question 20

why does the PPF curve shift outwards

Answer 20

an improvement in the technology available to produce capital goods and if workers have been skilled through training will cause the curve to shift outwards

Question 21

what are the causes of an outward shift in the PPFs

Answer 21

1. higher productivity
2. better management of factor inputs
3. increase in the stock of capital and labour supply
   4.innovation and invention of new products and resources
4. discovery of new natural resources(land)

Question 22

reasons why a PPF may shift inwards

Answer 22

1. affects of natural disasters such as tsunamis , earthquakes and floods
2. the destruction caused by war
3. large scale migration of people out of a country perhaps where there is high unemployment or depression.
   4.a long term fall in the productivity of labour perhaps due to a decline in the quality of machinery

Question 23

what is resource depletion

Answer 23

decline in total stock of resources available

Question 24

what is resource depreciation

Answer 24

this is when the efficiency of resources diminishes with age and with repeated use during production

Question 25

what are the key causes / drivers of deforestation

Answer 25

-expansion of large scale industry catlle/soy/palm oil farming
- urban development / urban sprawl as forestry is cleared for housing and other services
- illegal logging

Question 26

what are the economic and social costs of deforestation

Answer 26

• threats to livelihoods of millions in indigenous populations
• threat to eco systems
• huge threat to potential for a country to achieve sustainable development and reduce extreme poverty

Question 27

what polices/ government interventions might successfully reduce the rate of deforestation

Answer 27

• increase in overseas aid programmes such as husbandry payments to local farmers
• investment to make farming more sustainable
• using satellite technology to monitor and track deforestation rates
• investment in reforestation via government spending
• linking trade agreements to improved environmental and farming policies

Question 28

define trade off

Answer 28

choices must be mate between different objectives of policy for example a trade off between economic growth and inflation

Question 29

what is a productive potential

Answer 29

the amount of output an economy could produce if all its resources were fully and efficently employed