PPC + Decision Making

Question 1

Axes?

Answer 1

Capital goods, consumer goods (depends on qn)

Question 2

Points within PPC?

Answer 2

Inefficient

a) Unemployment: Recession
b) Underemployment: Ppl with jobs below skill

Question 3

Movement onto PPC?

Answer 3

Increased efficiency

Question 4

Factors that shift PPC?

Answer 4

Quality of FOP
Quantity of FOP
Technological Advancement

Question 5

What are the 4 factors of production (FOP)?

Answer 5

CELL

Capital
Entrepreneurship
Land (All natural resources)
Labour

Question 6

What does shift of PPC show?

Outward vs pivoted shift?

Answer 6

Increase in country’s productive capacity.

Improve ability to produce both/one good

Question 7

State three economic agents and their goals.

Answer 7

1. Consumer, maximize satisfaction [MPB = MPC]
2. Producer, maximize profit [MR = MC]
3. Govt. , maximize social welfare [MSB = MSC]

Question 8

What is the deicision making framework?

Answer 8

1. Economic Agent + Objective
2. Benefits
3. Costs (Explicit vs Implicit/Opp.]
4. Information (Either)
5. Constraints (Or)
6. MB vs MC
7. Evaluation

Question 9

What to consider when doing evaluation

Answer 9

(CCC)

Characteristic (Of country) –> Size,land avilable,…
Cause –> Address root cause?
Current Economic Condition