ECONOMIC DEFI - 1

Question 1

Scarcity

Answer 1

When the demand for goods/services is greater than their availability, limiting the choices of consumer

Question 2

Opportunity Cost

Answer 2

Are what an individual/invester/businesses miss out on when choosing 1 alternative over another

Question 3

Production Possibility Frontier

Answer 3

The maximum goods/services with the given factors of production

Question 4

Law of Diminishing Marginal Returns

Answer 4

Happens when all factors are not inputed equally leading to lower productivity.

Question 5

What does outwards shift in PPF mean?

Answer 5

There is economic growth

Question 6

What does an inwards shift in economic mean?

Answer 6

There is a negative economic growth

Question 7

Reasons for outwards shift in PPF

Answer 7

✴𝑖𝑚𝑝𝑟𝑜𝑣𝑒𝑑 𝑡𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑦
✳𝑖𝑛𝑐𝑟𝑒𝑎𝑠𝑒 𝑖𝑛 𝑛𝑎𝑡𝑢𝑟𝑎𝑙 𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠
✳𝐻𝑢𝑚𝑎𝑛 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑑𝑒𝑣𝑒𝑙𝑜𝑝𝑚𝑒𝑛𝑡 𝑖𝑒 𝑒𝑑𝑢𝑐𝑎𝑡𝑖𝑜𝑛
✳𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑖𝑛 𝑐𝑎𝑝𝑖𝑡𝑎𝑙 𝑖𝑒 𝑖𝑛𝑓𝑟𝑎𝑠𝑡𝑟𝑢𝑐𝑡𝑢𝑟𝑒
Allows more output production using same resources

Question 8

Productively efficient

Answer 8

Goods cannot be reduced without reducing the amount of other products available

Question 9

Allocative efficiency

Answer 9

No one can be better off without making someone else worse off

Question 10

Pareto efficiency

Answer 10

(Allocative efficiency) If more of both goods produced, there is a gain in allocative efficiency