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Questions and Answers
What does point D on the production possibilities curve represent?
What does point D on the production possibilities curve represent?
- Production of 9,000 units of sewing machine and 3,000 kg butter
- Production of 3,000 units of sewing machine and 9,000 kg butter
- Production of 3,000 kg butter and 9,000 units of sewing machine (correct)
- Production of 9,000 kg butter and 3,000 units of sewing machine
What is the name of the curve shown in the diagram?
What is the name of the curve shown in the diagram?
- Production Possibilities Frontier
- Economic Growth Curve
- Scarcity Curve
- Production Possibilities Curve (correct)
What does point Z on the diagram represent?
What does point Z on the diagram represent?
- A point of scarcity
- A point of choice
- A point outside the PPC (correct)
- A point of inefficiency
What does point Y on the diagram represent?
What does point Y on the diagram represent?
What is the main concept illustrated by the PPC?
What is the main concept illustrated by the PPC?
What is the difference between points inside and outside the PPC?
What is the difference between points inside and outside the PPC?
What is the main focus of microeconomics?
What is the main focus of microeconomics?
What is the definition of economics that involves alternatives or choices?
What is the definition of economics that involves alternatives or choices?
What does the PPC curve show?
What does the PPC curve show?
What is the name of the concept represented by point Y on the diagram?
What is the name of the concept represented by point Y on the diagram?
What type of analysis deals with the question of 'what ought to be'?
What type of analysis deals with the question of 'what ought to be'?
What is the main difference between microeconomics and macroeconomics?
What is the main difference between microeconomics and macroeconomics?
What is the focus of a positive analysis?
What is the focus of a positive analysis?
What is not a part of microeconomics?
What is not a part of microeconomics?
What is the main goal of economics?
What is the main goal of economics?
What is not a definition of economics?
What is not a definition of economics?
What does the Production Possibilities Curve (PPC) show?
What does the Production Possibilities Curve (PPC) show?
What is one of the assumptions of the Production Possibilities Curve (PPC)?
What is one of the assumptions of the Production Possibilities Curve (PPC)?
What would happen if a country allocates all its resources to producing one product?
What would happen if a country allocates all its resources to producing one product?
What is the combination of goods and services that Country Jaya can produce at Point C on the PPC?
What is the combination of goods and services that Country Jaya can produce at Point C on the PPC?
What happens to the production of butter if Country Jaya allocates all its resources to producing sewing machines?
What happens to the production of butter if Country Jaya allocates all its resources to producing sewing machines?
What is implied by the assumption of full employment in the PPC?
What is implied by the assumption of full employment in the PPC?
What is the implication of the assumption that the state of technology does not change throughout the production?
What is the implication of the assumption that the state of technology does not change throughout the production?
What is the point on the PPC where Country Jaya produces only sewing machines?
What is the point on the PPC where Country Jaya produces only sewing machines?
What is the effect of an increase in population on the PPC curve?
What is the effect of an increase in population on the PPC curve?
What type of economic system does an Islamic economy represent?
What type of economic system does an Islamic economy represent?
What is a key characteristic of a capitalist economic system?
What is a key characteristic of a capitalist economic system?
What would be the effect of a decrease in population on the PPC curve?
What would be the effect of a decrease in population on the PPC curve?
What is NOT a type of economic system mentioned in the content?
What is NOT a type of economic system mentioned in the content?
What is true about the PPC curve?
What is true about the PPC curve?
What is a characteristic of an Islamic economy?
What is a characteristic of an Islamic economy?
What is NOT a characteristic of a capitalist economy?
What is NOT a characteristic of a capitalist economy?
Which of the following is a characteristic of a private enterprise economy?
Which of the following is a characteristic of a private enterprise economy?
What is the outcome of consumers' sovereignty in an economy?
What is the outcome of consumers' sovereignty in an economy?
Which economic system has the government or central authority making all economic decisions?
Which economic system has the government or central authority making all economic decisions?
What is a demerit of a private enterprise economy?
What is a demerit of a private enterprise economy?
Which of the following is a merit of a private enterprise economy?
Which of the following is a merit of a private enterprise economy?
What is a characteristic of a private enterprise economy?
What is a characteristic of a private enterprise economy?
What is the outcome of economic freedom in an economy?
What is the outcome of economic freedom in an economy?
Which of the following is a demerit of socialism?
Which of the following is a demerit of socialism?
Study Notes
Definition of Economics
- Economics is the science that studies human behavior as a relationship between ends and scarce means which have alternative uses.
- Economics is the study of how people use their limited resources to try to fulfill unlimited wants and involves alternatives or choices.
Microeconomics vs. Macroeconomics
- Microeconomics is the study of individual parts of the economy, such as public choices, business choices, and personal choices.
- Macroeconomics is the study of the economic system as a whole, including national income, trade cycle, unemployment rate, and general price level.
Positive vs. Normative Analysis
- A positive analysis deals with the question of "what is" and focuses on facts and cause-and-effect relationships.
- A normative analysis deals with the question of "what ought to be".
Production Possibilities Curve (PPC)
- The PPC shows the various possible combinations of goods and services produced within a specified time period with all resources fully and efficiently employed.
- Assumptions of PPC:
- The economy is operating in full employment and full production capacity.
- The amount of resources available is fixed.
- The state of technology does not change throughout the production.
Shift of PPC
- Factors that influence the shift of PPC:
- Increase in population
- Decrease in population
- Improvement in technology
- Change in the quantity of resources
Economic Systems
- Types of economic systems:
- Mixed economy
- Socialism
- Capitalism
- Islamic economy
Capitalism
- Characteristics of capitalism:
- Private ownership of resources
- Freedom of enterprise and choice
- Consumers' sovereignty
- Competition
- Government intervention
- Price system
- Merits of capitalism:
- Production according to consumers' needs
- Economic freedom
- Efficient utilization of resources
- Variety of consumer goods
- Enhanced trade, business, and R&D
- Automatic incentives
- Flexibility
- Demerits of capitalism:
- Inequality of distribution of wealth and income
- Inflation and high unemployment rate
- Lack of social welfare
- Wasteful competition
- Misallocation of resources
- Social cost
Socialism
- Characteristics of socialism:
- All economic decisions are made by the government or a central authority
- Merits of socialism:
- Equality of distribution of wealth and income
- Social welfare
- Government intervention to correct market failures
- Demerits of socialism:
- Lack of economic freedom
- Inefficient utilization of resources
- Limited consumer goods
- Lack of incentives
- Bureaucratic inefficiency
- Corruption
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Description
Understand the fundamental principles of economics, including the definition, and the differences between microeconomics and macroeconomics.
