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Applied Economics Assignment - Ian C. Dagatan BSHM 4

APPLIED ECONOMICS

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Vanessa Franca Dagatan
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9 views4 pages

Applied Economics Assignment - Ian C. Dagatan BSHM 4

APPLIED ECONOMICS

Uploaded by

Vanessa Franca Dagatan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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POLYTECHNIC COLLEGE OF DAVAO DEL SUR, INC.

Barangay Kiagot, Digos City


Province of Davao del Sur

Name: Ian C. Dagatan Course: BSHM – 4


Teacher: Miss Mary Joy Vasquez

APPLIED ECONOMICS
Quiz

1. The following is a production possibilities table for good X and Y.

Production Alternatives
Good A B C D E
X 0 3 6 9 12
Y 33 30 25 15 0

a. Plot the production possibilities frontier of the data with good X on the
horizontal axis and good Y on the vertical axis.

b. What do the points on the curve indicate?


Answer:
According to the study, in economics, the production possibilities curve
is a visualization that determines the most effective creation of a pair of
goods. Every point on the curve shows how much each good will be formed or
produced when resources change to producing more of one good and less of
the other.
The points on the curve indicates not just mainly as a point but it also
has its own purpose and at the same time sign or indication. Those points
were plotted in the curve, in a very elaborate but simple idea called
Production Possibilities Frontier are the circumstances or situations. It
displays all of the different kinds of possibilities that we can have, we can do,
and as well as what we can get. It shows all of the situations created in the
horizontal and vertical axis which correspond to the provided data.
Additionally, all of the points on the Production Possibilities
Frontier are effective for the particular reason that it shows how a person is
doing his or her best with all of his or her might which he or she can do. And
he or she is making the most use of his or her time which makes those points
in the curve efficient.

2. What does it mean for an economy to be on its production possibilities frontier?


Why is it not recommended to be outside (or to the northeast) of the frontier?
Answer:
Production Possibility Curve demonstrates the price of the choice of
society among two different goods. The economy that functions at the
production possibility frontier means that it has the uppermost standard of living it
can achieve, as it is producing as much as it can using its resources.
Though, the curve does not tell the people who make decisions how much every
good the economy should produce or create; somewhat, it expresses them how
ample each good they must forgo in order to produce more of the other things.
If the amount produced is inside the curve, then all of the resources are not
being used. Besides, it is not suggested to be outside either to the northeast of the
frontier. It is something that we cannot do. Any point outside the production
possibilities curve is impossible. Most of both goods cannot be produced with the
limited resources. It is also not suggested due to the fact that it is not feasible. Points
outside the production possibilities frontier are Last of all, other factors that
contribute to unproductive production can be more complicated.

3. What are the three basic economic problems? Explain the significance of these
problems in any economic system.
Answer:
The 3 Basic Economic Problems are:
a. What to produce – this involves defining the kinds and amounts of goods
and services to be produced based on the available resources. When we
talk about the basic and fundamental economic question of what to
produce, the decision-makers must study or consider a different of factors
which includes what does the consumer demands, what resources are
available and what does the society priorities. It’s not simply a matter of
producing what is in demand at present, but well as predicting the future
needs of the consumer and making judgement that calls about what will
benefit and profit society as a whole.
b. How to produce - focuses on choosing the greatest effective procedures
and techniques for production while we consider the costs and benefits of
different approaches. The economy must select the most efficient way to
combine the resources to produce goods and services while considering
the costs and benefits of different production techniques. This often
involves finding a balance between labor-intensive and capital-intensive
production methods.
c. For whom to produce - deals with allocating goods and services among
the members of society. It's about making a decision of who gets what in
an economy where not everyone can have everything, due to scarcity. In
addressing this challenge, economic systems must grapple with issues of
equity and fairness which turns around the distribution of goods and
services among different segments of society. These problems are
important by means of they stem from the presence of inadequate
resources and unlimited human wants, requiring economies to make
trade-offs and continuously adapt to effectively allocate resources,
enhance efficiency, and promote well-being for their citizens. This issue is
particularly important for addressing the problem of scarcity, ensuring
equitable access to essential goods and services, and reducing socio-
economic inequality

4. Explain why money is not a factor of production in economics.


Answer:
Money is not a factor of production in economics because the factors of
production are just the resources used to produce goods and the services, which
includes land, labor, capital, and entrepreneurship. Although money is vital for
facilitating transactions and investment, money does not directly contribute into the
production process. But it serves as a medium of exchange, a unit of account, and a
store of value. In the production process, money is used to acquire the factors of
production like labor and capital) but is not inherently a factor itself.

5. Explain the movement of production and payments in a circular flow of economy.


Answer:
Money flows coming from the producers going to the workers as
salaries and flows back to producers as payment for the products that the workers
buy. Households purchase or buy goods and services, which businesses deliver or
provide through the product market. Businesses, meanwhile, need resources in
order to produce goods and services. Members of households provide labor to
businesses through the resource market. In return, businesses convert those
resources into goods and services.
When the households need a good or service, they buy products or services.
Their money flows to the product market in a process called consumer spending. To
provide goods and services to households, the product market purchases them from
businesses, generating revenue. To make goods and services for the product
market, businesses purchase resources from the resource market, generating cost.
Lastly, to generate resources businesses need to create goods, the resource market
pays for other resources—namely, workers and land. This generates income for
labor and landholders.

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