BSNS 113 Otago Exam Questions and
Answers 100% Solved | Graded A+
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
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,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 another is
chosen
The net value of the next best opportunity forgone
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Traditional allocation - ✔✔Do stuff how its always been done
Planned allocation - ✔✔Boos or committee plans production
Market allocation - ✔✔Consumers and market influence economy
Terms of trade - ✔✔Relative price used to trade items
Economies of scale - ✔✔The larger the economy and time active, the lower
the average cost
Short run time frame - ✔✔Sufficiently short time frame, where at least one
variable remains constant
Long run time frame - ✔✔All inputs can be varied
Very long run time frame - ✔✔So much time that the state of technology
changes
The law of diminishing returns - ✔✔Short run time frame - one variable help
constant
Because of this there is a capacity limit and eventually increasing product
leads to decreasing marginal product
Absolute advantage - ✔✔The ability to produce a good using fewer inputs
than another producer
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
Answers 100% Solved | Graded A+
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
1
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
,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 another is
chosen
The net value of the next best opportunity forgone
2
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
, Traditional allocation - ✔✔Do stuff how its always been done
Planned allocation - ✔✔Boos or committee plans production
Market allocation - ✔✔Consumers and market influence economy
Terms of trade - ✔✔Relative price used to trade items
Economies of scale - ✔✔The larger the economy and time active, the lower
the average cost
Short run time frame - ✔✔Sufficiently short time frame, where at least one
variable remains constant
Long run time frame - ✔✔All inputs can be varied
Very long run time frame - ✔✔So much time that the state of technology
changes
The law of diminishing returns - ✔✔Short run time frame - one variable help
constant
Because of this there is a capacity limit and eventually increasing product
leads to decreasing marginal product
Absolute advantage - ✔✔The ability to produce a good using fewer inputs
than another producer
3
©JOSHCLAY 2024/2025. YEAR PUBLISHED 2024.
