Economics Study Material

Running head: ECONOMICS
Economics
Name of the student
Name of the university
Author note

ECONOMICS
Answer 1
Answer a
An economic problem states that the finite resources of an economy are insufficient to satisfy
the wants and needs of all human beings. An economic problem basically takes place since
the scarce resources have alternative uses.
Answer b
The three economic questions which will allocate the scarce resource in the production of
wool jacket are
What to produce?
How to produce?
For whom to produce?
Answer c
The positive economics is that stream of economics which is known to focus on the
description, expectations, quantifications ad explanation of economic developments. Positive
economics is also known to be objective as well as fact based where statements are
descriptive in nature. On the other hand, the normative economics focuses on the opinion
oriented, value judgements and those statements which aim towards economic development.
normative economics are basically
Answer 2
Answer a)

ECONOMICS
The improvement in the general level of education level will make the production possibility
curve shift outwards. Since the improvement in the education level for the working
population will help in better production and t5his makes the PPF shifts right.
Answer b
When the birth rate is lower, it will lead to a smaller labor force which will make the
production possibility curve to shift frontier. As labor force decrease, the production also gets
negatively affected for which the PPF moves inward.
Answer c
When there is an increase in the total investments in research and development, the
production possibility frontier while shift right and move outwards. Since, increase in
investment in research will help in increasing the productivity of a country which moves the
PPF outwards.
Answer d
The natural disaster will shift the production possibility curve will shift inwards since
occurrence of natural disaster reduce the productivity of the country for which the PPF moves
left or in ward.
Answer e
Brain drain along with brain drain is harmful for the economy since it leads to loss in
productive potential. For this reason, the brain drain will shift the PPF inward or to the left as
it reduces the productive capacity of the country.
Answer 3
Answer a

ECONOMICS
The demand of Peckham pears will increase when the price of its substitutes will be
increasing. When the price of apples will increase, people will tend to buy more Peckham
pear. The demand for Peckham pears can also increase when the consumers will expect its
price to rise in future. When the consumers will be expecting high prices in the future, they
will be buying more Peckham pears for avoiding higher price which will be leading to
increase in demand. Therefore, the two reasons for which the price pears will increase is that
when the price of substitute goods will increase and also when consumers will expect higher
prices in future.
Answer b
The supply of green capsicums will decrease when the production will be less in number.
When the production of green capsicums will go down, it will be shifting the supply curve
which will also lead to the rise in price of capsicums. The climatic conditions also affect the
supply of green capsicums. Drought, flood or any kind of natural disaster will hamper the
supply of green capsicums.
Answer 4
Answer a