Micro Economics Edexcel A level Questions & Answers 100% Correct!

What are the four assumptions of micro economics? - ANSWERSRational Consumers, perfectly competitive market, average consumer, ceteris paribus What is a positive statement? - ANSWERSa statement that can be tested and validated What is a normative statement? - ANSWERSan opinion, a value judgement What is the economic problem? - ANSWERSResources are scarce, however wants are unlimited. There are finite resources so goods/services need to be allocated efficiently. What is opportunity cost? - ANSWERSCost of the next best alternative foregone What is the PPF? - ANSWERSproduction possibilities frontier is a graph showing the combinations of output that the economy can possibly produce given the current production and technology What do points x, b and y show? - ANSWERSX - underutilisation - at this point the opportunity cost is zero as you can increase one good without decreasing the other. B - Efficient C - unattainable Difference between capital and consumer goods? - ANSWERSCapital goods are used to make consumer goods, consumer goods are goods to meet needs and wants when consumed What are the economic agents? - ANSWERSProducers - decide what to make and how much they are willing to sell for Consumers - decide what they want to buy and how much they are willing to sell for Governments - decide how much to intervene in the way producers and consumers act What is specialisation? - ANSWERSwhen a country decides to focus on making a particular good/service What is division of labour? - ANSWERSproduction process of a good which is broken down in various small tasks What are the advantages and disadvantages of specialisation and division of labour? - ANSWERSAdvantages -