The economic problem

Question 1

What is the economic problem?

Answer 1

Allocation of a nations scarce resources between competing uses that represents infinite wants

Question 2

How does knowing what to produce help countries overcome the economic problem?

Answer 2

Because its impossible to produce all the wants, the country needs to decide which goods should be produced.

Question 3

How does knowing who to produce for help countries overcome the economic problem?

Answer 3

Goods can be produced through a variety of meothods, the 4 factors of production can be organised in different way to produce the same goods.

Question 4

How does knowing for whom to produce for help countries overcome the economic problem?

Answer 4

Once goods are produced, there has to be distribution, this means goods have to be shared in some way in the population.

Question 5

What is opportunity cost?

Answer 5

Cost of the next best alternative given up

Question 6

What are capital goods?

Answer 6

Those purchased by firms and used to produce other goods and services

Question 7

What are consumer goods?

Answer 7

Those purchased by households for consumption

Question 8

What is a production possibility curve?

Answer 8

Line that shows the combination of 2 goods an economy can produce if all resources are used up

Question 9

What are causes of a shift to the right in a PPC?

Answer 9

New technology
Improved efficiency
Education and training
New resources