Key Economic Principles and the Basic Economic Problem Flashcards
1
Q
What are the main types of economic systems?
A
Free market, mixed economy, and planned economy.
2
Q
How does a Production Possibility Frontier (PPF) illustrate opportunity cost?
A
The slope of the PPF shows the trade-offs between two goods; moving along the curve reflects opportunity cost.
3
Q
What does a point inside the PPF represent?
A
Underutilization of resources or inefficiency.
4
Q
What is the basic economic problem?
A
Scarcity: resources are limited, but human wants are infinite.
5
Q
Name the three fundamental economic questions every society must answer.
A
What to produce, how to produce, and for whom to produce.
6
Q
What is opportunity cost?
A
The value of the next best alternative foregone.
