ECONOMIC PROBLEM

• What does the economic problem refer to?

  The existence of unlimited wants using limited resources to satisfy them
• Why do individuals have to make choices regarding production?

  Because resources are scarce while wants are many
• What is the term for the commodity given up when making a choice?

  Opportunity cost
• What does a production possibility curve (PPC) represent?

  • A concave curve
  • Shows maximum combinations of two goods
  • Assumes full and efficient use of resources

  
• What does a point under the PPC indicate?

  Not all resources are being used, indicating underutilized resources
• What does it mean if a point is outside the PPC curve?

  That production of that combination is unachievable due to lack of resources
• What is the relationship between capital goods and consumer goods in production?

  • Capital goods are used to produce consumer goods
  • Producing more capital goods today allows for more consumer goods in the future
  • Trade-off exists between current and future production

  
• What are capital goods?

  Goods that can produce other goods, such as machinery and factories
• What are consumer goods?

  Goods bought for use at home, such as food, clothes, and furniture
• What is positive economic growth?

  • Increase in production of all goods
  • Can shift the PPC curve to the right
  • Achieved through factors like new technology and resource discovery

  
• What can cause the PPC to shift inwards, indicating negative economic growth?

  Resource depletion, natural disasters, and wars
• What is one reason for positive economic growth related to technology?

  New technology increases production efficiency
• How does the discovery of new resources contribute to economic growth?

  It increases the productivity of a country
• Why is education and training important for economic growth?

  It makes the population more productive and efficient
• What does improved efficiency in production methods lead to?

  More output can be produced with fewer resources
• What are the factors that can lead to a rightward shift of the PPC?

  • New technology
  • Discovery of new resources
  • Education and training
  • Improved efficiency
• What are the factors that can lead to a leftward shift of the PPC?

  • Resource depletion
  • Natural disasters
  • Change in weather patterns
  • Immigration of skilled workers
  • Wars