Economic

Strand 1: Introduction to Economics

Scarcity

a situation where resources are not enough to produce all the goods and services required to satisfy all the needs and unlimited wants

Choice

the option selected from various alternatives

Opportunity cost

is the next best alternative foregone while making a choice

Law of increasing cost

as production of a good increases, the opportunity cost of producing additional units rises, leading to higher costs.

Law of Constant cost

as production of one good increases, the opportunity cost of additional units produced remains constant

Production Efficiency

Producing maximum with the given level of resources. Scarce resources are rationed to their highest use and there is no wastage

Allocative Efficiency

the economy is producing the unique combination of goods that best meets the needs of society at a given point in time.

Points on the PPC

shows the maximum possible combination of the two goods that can be produced with the given level of resources and technology

Points inside PPC

inefficient allocation of resources or unemployment of resources, Underutilization of resources or some resources are lying idle

Points outside PPC

Unattainable with the given level of resources and technology. Can be achieved through external trade or economic growth