Universal Economic Problem (UEP) and Types of Economies
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Questions and Answers

What is the Universal Economic Problem (UEP)?

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

What are the three questions raised by the UEP?

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?

What is a Free market economy based on?

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

What are the three types of economies mentioned in the text?

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

What is a Command economy and what does it decide?

<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

What is a Subsistence economy focused on?

<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

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 allocative efficiency?

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

Explain the concept of opportunity cost.

<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

What is the difference between explicit and implicit costs?

<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

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

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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