BSNS 113 Latest Version with Verified Solutions

BSNS 113 Latest Version with Verified Solutions Scarcity Sometime is scarce if there is not enough for everyone if it were free Implies the need for trade offs Unlimited wants People have unlimited wants, but the resources to satisfy those wants is limited. Positive economics Studying how the economy works Normative economics figuring out how the economy should be GDP Gross domestic product Measures the market value of all final goods and services in a country What GDP misses Illegal activity Home made goods Second hand sales Production possibilities What a country is capable of producing given their resources The amount of good or services a country can produce Main types of resources Land - Natural resources Labour - human time and effort Capital - Preexisting manufactured inputs, human knowledge Production possibilities frontier The best we can do if we appropriately allocate resources to those best suited to using them Technical efficiency of the PPF All points of the PPF are technically efficient All resources are allocated to their best use Points on the PPF Combinations of goods and services with all resources efficiently employed Points under the PPF Technically inefficient, we could produce more goods and services with the same resources Major issue with motivating employees Points above the PPF Combinations of goods and services unobtainable with current resources and technology Opportunity cost - PPF Making trade offs between goods and services Opportunity cost The loss of other alternatives when