Introduction of Microeconomics Test 28

Resource allocation is one of the central problems of an economy, as it involves deciding how to allocate limited resources to fulfill unlimited wants.

Economics is the study of how societies allocate scarce resources to satisfy unlimited wants. Therefore, it encompasses economic activities related to both unlimited wants and limited resources.

A mixed economy is defined by the co-existence of a public and private sector.

A production possibilities frontier (PPF) is used in microeconomics to show the maximum combinations of two goods that an economy can produce given its resources and technology.

Microeconomics focuses on the behavior of individual economic units, while macroeconomics studies aggregate economic phenomena.

An economic problem generally means the problem of making choices that occurs because of the scarcity of resources. It arises because people have unlimited desires but the means to satisfy that desire is limited.

In a capitalist economic system, economic decision-making happens through price mechanisms as determined by markets. Price mechanism refers to the system where the forces of demand and supply determine the prices of commodities and the changes therein.

Production possibility curve (PPC) is concave to the origin because marginal opportunity cost (Loss of output of YGain of output of X) of shifting resources from commodity Y to commodity X tends to rise. This happens because resources are use-specific.

Monopolistic competition is characterized by a large number of firms, allowing for diverse product offerings and consumer choice. These firms engage in non-price competition, such as advertising and branding, to differentiate their products and attract customers. This leads to selling costs associated with promoting and marketing their goods, contributing to the overall dynamic nature of monopolistic competition.

In Economic terms, Globalization is the process of rapid Integration between countries. Globalization is the process by which ideas, goods, and services spread throughout the world. Globalization is often used in an economic context to describe an integrated economy marked by free trade, the free flow of capital, and corporate use of foreign labor markets to maximize returns and benefit the common good.