The economic problem

• What term do economists use to mean 'all other things remaining equal'?

  Ceteris paribus
• What is a positive economic statement?

  Objective and testable
• What is a normative economic statement?

  Subjective and opinion-based
• What is the basic problem of economics?

  Scarcity
• Why are resources considered scarce in economics?

  They are finite and limited
• What is a renewable resource?

  Can be replenished or replaced
• Why is oxygen considered a renewable resource?

  It can be replenished naturally
• What is a non-renewable resource?

  Cannot be readily replaced
• Why are fossil fuels considered non-renewable?

  They cannot be readily replaced
• What is opportunity cost?

  Cost of the next best option
• Why does opportunity cost exist?

  Resources are limited
• What does the PPF show?

  Maximum possible combinations of goods

  
• Why is the PPF drawn as a curve?

  Resources are more productive in one area

  
• What does any point on the PPF curve represent?

  Maximum productive potential

  
• What does economic efficiency mean?

  Resources used for their best use
• Why might an economy decline?

  Natural disasters
• What is the opportunity cost of producing 1 consumer good if 600 capital goods are lost for 200 consumer goods?

  3 capital goods
• Why might an economy grow?

  Increased quantity/quality of resources
• What does the PPF show about the economy's production?

  Maximum possible combinations

  
• Why is the PPF drawn as a curve?

  Resources are more productive in one area

  
• What does any point on the PPF curve represent?

  Maximum productive potential

  
• What does any point on the PPF curve represent?

  Maximum productive potential

  
• What does economic efficiency mean?

  Resources used for their best use
• Why is point B on the PPF inefficient?

  Not maximising output
• What does the purple arrow on the PPF indicate?

  Economic growth

  
• Why might an economy decline?

  Natural disasters
• What is the opportunity cost of producing 1 consumer good if 600 capital goods are lost for 200 consumer goods?

  3 capital goods
• Why is the opportunity cost of producing one capital good ⅓ of a consumer good?

  200/600 = ⅓
• What does the orange arrow on the PPF indicate?

  Economic decline
• Why might an economy grow?

  Increased quantity/quality of resources
• What is the opportunity cost of producing 60 capital goods if 20 consumer goods are lost?

  20 consumer goods
• Why is point A on the PPF efficient?

  Resources are allocated efficiently
• What is the opportunity cost of producing an extra 15 consumer goods if 30 capital goods are lost?

  30 capital goods
• Why is point C on the PPF unobtainable?

  Beyond the PPF
• What does the PPF show about the economy's production?

  Maximum possible combinations

  
• What is economic efficiency?

  Resources used for their best use
• Why is point B on the PPF considered inefficient?

  Not maximising output
• What does point C on the PPF represent?

  Unobtainable production
• What does a movement along the PPF curve indicate?

  Change in combination of goods produced

  
• What are the two types of goods mentioned?

  Consumer and capital goods