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2 marksCentral Problem of Economics

CAPE Economics Unit 1 · 2014 · Paper 2 · Question 1(a)(i)

The ideological nation of Utopia allocates all its productive resources (land, labour, capital, entrepreneurship) to producing food and clothing.

Define the term 'scarcity'.

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Other parts of this question

  1. 1(a)(ii)Draw and label a diagram of the production possibilities frontier (PPF) for Utopia.[3 marks]
  2. 1(a)(iii) a)Using the PPF from (a)(ii), explain how the concept of opportunity cost relates to the problem of scarcity.[5 marks]
  3. 1(a)(iii) b)Using the PPF from (a)(ii), explain how economic growth can be achieved in Utopia.[3 marks]
  4. 1(b)(i)State TWO differences between a 'command economy' and a 'free market economy'.[4 marks]
  5. 1(b)(ii)Given the disadvantages of a centrally planned economy, discuss TWO possible economic reasons for the collapse/downfall of this type of economic system over…[8 marks]

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