Universal Economic Problem (UEP)
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Questions and Answers

What is the Universal Economic Problem (UEP)?

The problem of how to use scarce resources to satisfy unlimited wants and needs.

What are the three questions that arise from the Universal Economic Problem (UEP)?

  1. What goods and services are to be produced and in what quantities? 2. How are those goods and services to be produced? 3. Who will receive and consume those goods and services?

What is a Free Market Economy?

An economy based on supply and demand with little or no government control.

What is a Command Economy?

<p>An economy where the government decides what goods to produce, as well as the price and quantity of production.</p> Signup and view all the answers

What is a Subsistence Economy?

<p>An economy focused on essentials like food, clothing, and shelter, often found in developing or underdeveloped countries.</p> Signup and view all the answers

What is a Possibility Production Curve (PPC)?

<p>A graphical representation showing different combinations of two goods that can be produced with full employment of resources.</p> Signup and view all the answers

Define productive efficiency.

<p>Productive efficiency is achieved if the economy is producing ON the PPC.</p> Signup and view all the answers

What is the role of enterprise or entrepreneurial ability in the production process?

<p>Enterprise or entrepreneurial ability is the ability to initiate the production process by organizing and combining all necessary factors of production.</p> Signup and view all the answers

Explain the concept of implicit cost.

<p>Implicit cost is any cost that has already occurred but not necessarily shown or reported as a separate expense.</p> Signup and view all the answers

How can economies push their production possibilities curve out?

<p>Economies can push their curve out through innovation, productivity improvements, and immigration.</p> Signup and view all the answers

What is the cost-benefit principle in economics?

<p>The cost-benefit principle states that one should choose to do something only if the extra benefit of doing it is greater than the extra cost.</p> Signup and view all the answers

Define multi-factor productivity (MFP).

<p>Multi-factor Productivity (MFP) is defined as output per unit of combined inputs.</p> Signup and view all the answers

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