Factors of Production and PPF

Question 1

What is the definition of inputs?

Answer 1

Items that are used to produce goods and services in an economy​

Question 2

What are factors of production?

Answer 2

the inputs available to supply goods and services in an economy.​

Question 3

What are the four factors of production?

Answer 3

Land, Labour, Enterprise and Capital

Question 4

As a factor of production, what does land entail of?

Answer 4

Natural resources available for production

Question 5

As a factor of production, what does enterprise entail of?

Answer 5

Entrepreneurs organising factors of production and taking risks

Question 6

As a factor of production, what does labour entail of?

Answer 6

The human input into the production process

Question 7

As a factor of production, what does capital entail of?

Answer 7

Goods used in the supply of other products e,g tech

Question 8

What are factor rewards?

Answer 8

The incomes that flow to each of the main factors of production when they are brought into productive use

Question 9

What is the definition of a capital good?

Answer 9

Goods that used to make consumer goods and services

Question 10

What is the definition of consumer goods and services

Answer 10

Goods and services which satisfy our needs and wants directly

Question 11

What is the definition of consumer durables?

Answer 11

Products that provide a steady flow of satisfaction / utility over their working life

Question 12

What is the definition of consumer non-durables?

Answer 12

Products that are used up in the act of consumption ​

Question 13

What are consumer services?

Answer 13

a non-tangible good that is consumed (i.e. not physical)​

Question 14

What is the fundamental economic problem?

Answer 14

We have unlimited wants but only finite resources available to fulfil those wants

Question 15

What does the fundamental economic problem force economic agents to do?

Answer 15

To make choices and allocate scarce resources between competing uses

Question 16

What is opportunity cost?

Answer 16

The benefits lost from the next best alternative from a choice

Question 17

What does a PPF show?

Answer 17

alternative combinations of two goods or services attainable when all resources are fully and efficiently employed​

Question 18

What type of substitute are land, labour and capital?

Answer 18

Imperfect substitute

Question 19

Why is the PPF graph drawn concave to the origin?

Answer 19

As more resources are allocated to Good X the extra output gets smaller

Question 20

Which law explains why the PPF is concave to the origin and how does it do this?

Answer 20

The law of diminishing marginal returns because not all factor inputs are equally suited to producing items leading to lower productivity

Question 21

What does marginal mean?

Answer 21

An additional unit

Question 22

How are “marginal units” used in economics?

Answer 22

To measure the impact of each marginal unit and how it influences the overall picture

Question 23

What is the definition of productive capacity?

Answer 23

The maximum amount of output that can be produced by a nation or country

Question 24

What are two causes of an inward shift of a PPF.

Answer 24

Damaging effects of a natural disaster
Destruction caused by civil war or conflicts
Large scale net outward labour migration
A trend decline in productivity inputs

Question 25

Give 2 causes of an outward shift of a PPF.

Answer 25

Increase in the stock of capital and labour supplies, higher productivity, innovation and invention of new products and resources

Question 26

What occurs during an economic recovery?

Answer 26

Aggregate demand will be rising. This leads to an increase in real national output and a fall in the amount of spare capacity