Micro Economics (Week 2)

Question 1

When is value judgement needed

Answer 1

The PPF shoes all possible combinations of output in an economy, but the decision about which combination is most appropriate requires an opinion, or a subjective value judgement

Question 2

How can we find out the opportunity cost

Answer 2

It can be illustrated on a production possibility frontier or PPF

Question 3

What happens as economies develop

Answer 3

The level of specialisation increases

Question 4

What does specialisation allow

Answer 4

Workers to improve their efficiency and productivity as they preform a relatively small number of tasks over and over again

Question 5

3 advantages of specialisation

Answer 5

Most productive use, prosperity, can invest in only relevant capital

Question 6

3 disadvantages of specialisation

Answer 6

Changes in demand=waste; structural unemployment & workers don’t know how to do other work; countries which specialise mean other export industries unprofitable