Economics Questions and Answers

2571 Words11 Pages
QUESTION 1 a In the world, all of the resources are limited; there is the issue in a fundamental economic problem also for society at large. Also resources are finite and want and need to be infinite, unless everybody’s wants and has to be restricted in some way. But this is not possible in this world, so they should make the choices for conditions in scarcity resources. Choices comprise making a selection between two or more alternatives. The choices are always expressed in requirements of three questions. There are including what to produce, how to produce, and for whom to produce. The three questions are of great importance for choosing in resource. About to produce goods and services in society, we should consider various elements in land, labor, capital and enterprise. So, the society needs to do choices about how to allocate these resources effectively. The following, we will be making a production possibility curve to show the resource allocating between goods and services. It be composed in an economy in a fixing period assume that all the resources in the economy are being used fully and efficiently. PPC curve showing the combination of the production of cars and televisions Table / curve (1) From the above curve, we can see different points in this curve; let us analyze this means of points. In curve (A) there are unemployed resources. The point at Curve (E), there is unattainable with the resources the society at present. Also, if we want to achieve the point (E), we should just have to increase the quantity or quality of its factors of production, such as improve technology demands. In additions, the point at point B on the curve, there are fully employed resources to show the maximum combination of goods. There are comprised 300 cars and 800 televisions that can be made by distributing a portion of the total resources to car production and the rest of television production. Then, due to the society wants to make more cars , such as 600, it will be made more resource in cars production, the cars is from 300 that raise to 600, conversely, the television production will be drop from 800 to 600, see the point (C) .So that, the fixed resources will need to be utilized for their alternative use. Deciding to spend scarce resources on producing cars comes at the expense of producing fewer televisions. There is a trade-off.
Open Document