• thinkigcse.com

Introduction to Economics - Revision Questions

{slider Question 1}"Economics is primarily concerned with the allocation of scarce resources which have alternative uses." Use a production possibility curve to help you explain this statement.

An explanation of the economic problem of unlimited wants, limited resources, scarcity, choice and opportunity cost

Relate to a two good model of the economy, using a PPC.

Draw a PPC diagram to expalin the concept

{slider Question 2}Explain how the three basic economic questions would be answered in a free market economy and in a centrally-planned economy.

Explain free market economy and a centrally-planned economy

Differentiate between these two systems keeping in view the three questions.

While explaining -what to produce?

Free market economy, decided by consumer sovereignty/demand – in a centrally-planned economy, decided by the central planners, based upon their view of what is appropriate

How to produce?

Free market economy, decided by cost of production and attempts to minimize unit costs of production/maximizing profit – in a centrally-planned economy, decided by the central planners based upon desired production targets

Whom to produce?

Free market economy, decided by income/ability to pay – in a centrally-planned economy, determined by perceived needs in the view of the central planners.

{slider Question 3}Explain what is meant by a production possibility curve and use a production possibility curve diagram to explain the concepts of scarcity, choice and opportunity cost

You would be expected to

Explain a production possibility curve: the boundary between attainable and unattainable levels of production given current resources and technology

Draw a Production possibility curve diagram

Related scarcity and the production possibility curve: scarcity of resources determines the position of the production possibility curve and identifies the maximum that can be produced with available resources of land, labour and capital (quantity and quality)

Relate choice and the production possibility curve: better to choose a point on the production possibility curve than a point inside the curve, but points outside the curve cannot be chosen

Relate opportunity cost and the production possibility curve: making a choice of where to produce on the production possibility curve involves an opportunity cost; definition of opportunity cost and explanation. Making a choice to move from a point inside the production possibility curve to the production possibility curve involves no opportunity cost.

{slider Question 4}With reference to the concept of economic growth, explain the difference between a movement along an existing production possibility curve (PPC) and an outward shift in a production possibility curve (PPC).

You will be expected to

Draw a diagram of a production possibility curve (PPC) indicating two alternative types of output (most likely "capital goods/consumer goods")

Define PPC – distinction between potential and actual output

Explain economic growth in terms of a shift outwards in the PPC and that a movement along the PPC  represents reallocation of resources and opportunity cost

Also explain that substitution of capital goods for consumption goods (opportunity cost) along the PPC in the short-term leads to a shift outwards in the PPC i.e. economic growth.

{/sliders}

Exciting News!

IMPORTANT MESSAGE

Quizzes and worksheets on this website have been developed in Flash format. Flash is no more supported by browsers. Therefore, you might see blank pages on some instances. Install Flash player plugin for Chrome from Chrome Web Store. Click here 

Similarly, for other web browsers you will have to activate the relevant flash player plugins.

JOIN OUR ONLINE COURSES

New Youtube Channel - ThinkIGCSE

Hi Everyone, I have launched a new YouTube channel with more than a 100 videos on  Economics and Business Studies, tailored specifically for IGCSE and A Level and IBDP students.

Subscribe now and join us on this learning journey: @thinkIGCSE

WHO'S ONLINE

We have 133 guests and no members online

Crosswords

PDF FILE

Download

MindMaps

PDF FILE

Download

Save
Cookies user preferences
We use cookies to ensure you to get the best experience on our website. If you decline the use of cookies, this website may not function as expected.
Accept all
Decline all
Read more
Analytics
Tools used to analyze the data to measure the effectiveness of a website and to understand how it works.
Google Analytics
Our website uses Google Analytics to understand how you interact with our site and improve your browsing experience. These cookies collect information in an anonymous form, including the number of visitors to the site, where visitors have come from, and the pages they visited. The data helps us analyze trends and user behavior to enhance our website's functionality and content.
Accept
Decline
Marketing
Set of techniques which have for object the commercial strategy and in particular the market study.
Marketing
Our website uses Google marketing cookies to deliver personalized ads and measure the effectiveness of our advertising campaigns. These cookies track your online activity to help us show you relevant ads on Google services and partner websites.
Accept
Decline