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5 marksCentral Problem of Economics

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

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

Using the PPF from (a)(ii), explain how the concept of opportunity cost relates to the problem of scarcity.

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Other parts of this question

  1. 1(a)(i)Define the term 'scarcity'.[2 marks]
  2. 1(a)(ii)Draw and label a diagram of the production possibilities frontier (PPF) for Utopia.[3 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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