Chapters 1 and 2 - Basic Economic Problem and PPF/PPC

Chapters 1 and 2 BEP/PPF

Revision

CHAPTER 1 BEP Learning objectives

CHAPTER 1 - BASIC ECONOMIC PROBLEM

1. Understand the problem of scarcity

2. Understand opportunity cost and its effect on economic agents (consumers, producers, & government)

Multiple Choice

____ are things we purchase.

• budget

• goods

• services

• supply

Multiple Choice

____ are actions people do for someone else.

• budget

• goods

• services

• supply

Multiple Choice

Does this person provide a good or a service?

• good

• service

Multiple Choice

Does this person provide a good or a service?

• good

• service

Multiple Choice

Does this person provide a good or a service?

• good

• service

Multiple Choice

VOCABULARY: FINIITE

• No end or limit

• Having an end or limit

Multiple Choice

VOCABULARY: INFINIITE

• Limits

• Without limits

Multiple Choice

The four factors of production (Capital, Enterprise, Land, Labour) represent ALL categories of _______________.

• infinite resources

• scarce (finite) resources

Multiple Choice

What is a want?

• A person

• Something you would like to have but don't need to live

• Purple

• Something you need to live

Multiple Choice

What is a need?

• Nothing

• Something you have to have to live

• Something you would like to have

• Ice cream

Multiple Choice

What's the problem of scarcity?

• Finite resources and Infinite wants require us to make choices

• Infinite resources and Finite wants require us to make choices

• Finite resources and Finite wants require us to make choices

Multiple Choice

VOCABULARY: SCARCE RESOURCE

• amount of resources available when supply is limited

• amount of resources available when supply is unlimited

Multiple Choice

Which THREE QUESTIONS help us answer the BASIC ECONOMIC PROBLEM of SCARCITY? This is THE CHOICE.

• What to produce? When to produce? For whom to produce?

• What to produce? When to produce? Where to produce?

• What to produce? How to produce? For whom to produce?

After we make the choice, we are left with...

• Opportunity costs

• Opportunity costs are the next best alternative given up AFTER making the choice

• The cost of what you can't do because you chose something else

Multiple Choice

The government has $1 million to spend on either a new school or a new hospital. The government picks the new hospital.

What is the opportunity cost?

• The new school

• The new hospital

• Neither

Multiple Choice

What is the abbreviation for PPC?

• Possibility Production Curve

• Production Possibility Curve

• Production Possible Choice

• Possibility Production Frontier

Multiple Select

What does PPC show? Multiple answer.

• 2 products → we can ONLY produce two product per period

• Efficiency → operate with full employment and full production capacity

• normative economics

• various possible combinations of goods and services

Multiple Choice

Which one considered a choice?

• G

• F

• A,B,C,D

• E

Multiple Choice

Which coordinate is impossible to be produced?

• F

• G

• E

• A

Multiple Select

Which coordinate is inefficient to produce both products?Multiple answer

• B

• F

• G

• E

Multiple Choice

Which scenario contributes towards the shifting of the curve in the picture above?

• When a country is struck by a natural disaster, natural resources are either exhausted or reduced due to the incident.

• A population increase leads to increasing numbers of buyers and school admission.

• Economic decline due to Covid 19

• Inflation occurs and the price of goods had increased to support Malaysia's economy

Multiple Choice

The following diagram shows the production possibility frontier for an economy that produces bread and honey.

If the economy is initially at point W, then the opportunity cost of moving to point X is

• 6 units of honey.

• 8 units of honey.

• 12 units of bread.

• 23 units of bread.

Multiple Choice

What can cause a production possibilities curve to move to the right?

• thousands of people move out of the country

• an epidemic kills thousands of young men and women

• a new invention lowers the cost of production

• the population is growing increasingly old

Multiple Choice

If a natural disaster strikes, the production possibilities curve can shift

• No shift

• To the left

• To the right

• Outward on one axis only