Question

i. The problem of choice is called the economic problem. ii. Study of an automobile industry is a subject matter of microeconomics. iii. Allocation of scarce resources and the distribution of the final goods and services are the central problems of an economy. iv. The PP curve is a geographical medium of highlighting the central problem of ‘How to Produce’. v. PPC is the locus of points that represent all the combinations of two goods which are obtainable and which are not obtainable. vi. A point above the PPC represents the growth of resources. vii. The concavity of PPC implies diminishing marginal rate of transformation. viii. PPC is concave to the origin because in order to produce more units of one good, some units of the other goods must be sacrificed. ix. In an economy , production takes place always on the PPC. x. Massive unemployment shifts the PPC to the left. xi. The Problem of ‘ How to Produce’ involves choice between consumer goods and capital goods. xii. Production possibilities frontier shifts towards right when an economy moves from a situation of underutilisation to fuller utilisation of resources. xiii. Economy can never operate outside the production possibilities frontier with the given resources and technology. xiv. Growth of resources shifts the production possibility frontier towards right. xv. Production possibility curve shows the point at which the economy actually operates.​

Answer 1

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Answer 2

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