The Economic Problem

Question 1

What are some reasons that could shift the production possibility curve to the right?

Answer 1

Over time, resources are allocated more efficiently or new resources are discovered. Some reasons that could shift the production possibility curve to the right could be advances in technology, more investments in education/training, and changes in the labor force.

Question 2

What are some reasons that could shift the production possibility curve to the left?

Answer 2

Some reasons that could shift the production possibility curve to the left could be degradation of technology and decrease of supply of both of the goods.

Question 3

What are some reasons consumers may not maximise their benefits? Consider difficulties in measuring benefits

Answer 3

consumers may have difficulty in calculating the benefits of a product because it’s hard to quantify the satisfaction gained from consumption.

Question 4

What are some reasons consumers may not maximise their benefits? Consider Influence of Habits and Brand Loyalty

Answer 4

consumers may develop buying habits and remain loyal to a particular brand, even when other options may offer better value. This behaviour can be observed, and businesses try to establish brand loyalty through marketing activities.

Question 5

What is meant by the term finance

Answer 5

Funding for a firm