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What does movement along the PPC illustrate?

The concept of opportunity cost as more of one good is produced and less of another.

What does it mean to say economics is a social science?

It studies human behaviour in relation to the allocation of scarce resources to satisfy unlimited wants.

What assumption is made about resources in the PPC model?

Resources are fully employed and used efficiently.

What can cause the PPC to shift outwards?

An increase in resources, better technology, or improved productivity.

What does the PPC model show?

The maximum possible output combinations of two goods given available resources and technology.

What does a bowed-out PPC indicate?

Increasing opportunity cost as more of a good is produced.

What is a mixed economy?

An economic system combining elements of market and planned economies.

What does a point outside the PPC represent?

An unattainable combination of goods with current resources and technology.

Name the two main branches of economics.

Microeconomics and macroeconomics.

What is opportunity cost?

The value of the next best alternative foregone when making a choice.

Define scarcity in economics.

The situation where unlimited wants exceed limited resources.

How does a market economy answer the basic economic questions?

Through the forces of supply and demand with minimal government intervention.

How is scarcity linked to sustainability?

Sustainability requires managing scarce resources so future generations can meet their needs.

Give an example of a free good.

Air in an unpolluted environment.

What three basic economic questions must all economies answer?

What to produce, how to produce, and for whom to produce.

List the nine central concepts in IB Economics.

Scarcity, choice, efficiency, equity, economic well-being, sustainability, change, interdependence, intervention.

How does a planned economy answer the basic economic questions?

Through centralised government decision-making.

What are the four factors of production?

Land, labour, capital, and entrepreneurship.

What is actual growth versus potential growth in the PPC model?

Actual growth is movement towards the PPC; potential growth is an outward shift of the PPC.

What does a point inside the PPC represent?

Underutilisation of resources or unemployment.

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