Question

a) How do you compute the cost of choosing one combination over another? What is this called?

b) How does a country promote economic growth?

c) What is private ownership of goods?

d) What does voluntary exchange mean?

e) What does it mean if something is of mutual benefit?

Answer 1

Answer a)To compute the cost of choosing one alternative over the other with the help of production possiblity frontier.As production possiblity frontier shows different combination at one level of point. It shows the cost of next best alternative that has been foregone.This is called as opportunity cost.A straight line PPC shows constant opportunity cost at this point of time.

b ) To increase Economy growth in a country it takes various steps such as :

• Increase in aggregate demand with the help of lower interest rate and higher consumer spending.
• Growth in productivity through development of new technology as well as introduction of new management techinques.

c ) Private ownership of goods means that good has a owner and it has legal right to useage of the good. Private ownership of goods help us in exchange goods as well as for flourishing the human beings. Standard of living as well as exchange rate has been flourish at this level.

d ) Voluntary exchange means that act of buyers and sellers freely and willingly engaged in the market transaction. Transaction has been done in such a manner that both buyers and sellers are better off.

e)If something is in mutual benefit than it means that the agreement in such a manner that both the parties such as buyer as well as seller gain from an agreement.