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Scarcity and Choice 1. Define the following terms : Trade-off : One good is sacrificed for another Opportunity cost : The value of the next best alternative given up to obtain that item Production possibilities curve : show all of the possible combinations of two Goods or services that can be produced within a stated time period given two Important assumptions. 2. What assumptions determine the production possibilities curve? : The above assumptions are important because they determine which production combinations will fall on the curve and which will not. 3. What condition is represented by a point lying inside, or below, the production possibilities curve? : An inefficient use of resources. If the existing factors of production were used more efficiently the industry should be able to produce at a level represented by one of the points on the production possibilities curve, instead of at the level of point 4. How can an increase in available resources affect the production possibilities curve? : When improvements is technology occur or new resources become available the entire production possibilities curve change. A new curve is formed to right of the old curve. Economists say that the curve has ¡°shifted to right¡± Scarcity and Choice 1. Define the following terms : Scarcity : Is the most basic problem of economic because it forces people to make decision about how to use resource effectively.
Approximate Word count = 883
Approximate Pages = 3.5
(250 words per page double spaced)
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