Universal Economic Problem (UEP) and Types of Economies

The UEP is how to use scarce resources to satisfy unlimited wants and needs.

The three questions are: What goods and services are to be produced and in what quantities? How are those goods and services to be produced? Who will receive and consume those goods and services?

A Free market economy is based on supply and demand with little or no government control.

<p>The three types of economies are Free market economy, Command economy, and Subsistence economy.</p> Signup and view all the answers

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

<p>A Subsistence economy is directed towards food, clothing, and shelter, often found in developing and underdeveloped countries.</p> Signup and view all the answers

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

<p>Allocative efficiency is achieved at the point on the PPC where the economy produces.</p> Signup and view all the answers

<p>Opportunity cost is the cost-benefit principle where something is chosen only if the extra benefit is greater than the extra cost.</p> Signup and view all the answers

<p>Explicit costs are normal business costs with clearly defined dollar amounts, while implicit costs represent opportunity costs that have already occurred.</p> Signup and view all the answers

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

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