Thanks 1. Define and explain: a. Productivity b. Marginal Cost and Marginal Bene

Question

Thanks 1. Define and explain: a. Productivity b. Marginal Cost and Marginal Benefit c. Scarcity d. Opportunity Cost e. Efficiency 2. What are the characteristics of a "free market economy" as opposed to a "Centralized economy"? 3. What is meant by "externality"? Give an example. 4. What are the critical steps in a "scientific approach" to economic analysis? 5. Distinguish "Positive Analysis" from "Normative Analysis 6. Distinguish "Microeconomics" from "Macroeconomics 7. Describe the elements and significance of the "Production Possibilities Frontier. Why might the frontier be "bowed outwards"? 8. Use the "Theory of Comparative Advantage" to illustrate the benefits of "specialization" and "trade". What is the role of "opportunity cost" in motivating trade? Define and distinguish "Comparative Advantage" from "Absolute Advantage". 9. Explain the meaning of "equilibrium", "shortage" and "surplus" in terms of supply and demand analysis. 10. What is the difference between a "normal good and an "inferior good"? 11. Distinguish a "change in quantity demanded" from a "change in demand" 12. What are the variables that can cause a "change in demand"? What are the variables that can cause a "change in supply"? 13. What is the meaning of " elastic" and "inelastic" in a supply/demand analysis? 14. What is the formula for computing "Price Elasticity of Demand"? What does it mean (in non- technical terms)? 15. Define "perfectly elastic demand", "income elasticity of demand" and cross price elasticity of demand". Give an example of "perfectly elastic demand" 16. What is the importance of "time" with respect to price elasticity of supply?

Explanation / Answer

1a) productiveness is the output per head

B)marginal cost is the addition in total cost due to an additional unit produced. Marginal benefit is the addition to total benefit for to an additional unit consumed. Profit or gain is maximised when MC=MB

C)scarcity is the relative measure which means demand is greater than supply

D)opportunity cost is the next best alternate forgone

E)Efficiency is achieved when you get maximum output for given inputs or minimum inputs for given output.

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