Tutorial 1 Introduction
Tutorial 1 Introduction
MICROECONOMICS
TUTORIAL 1
1. Distinguish between:
i) Socialism and capitalism.
Socialism refers to the way in which the government decides to answer key economics questions, in
particular those questions such as what to produce, how to produce and when to produce, that relate to
production and trade.
Capitalism refers to the way in which the market decides to answer key economics questions, in particular
those questions such as what to produce, how to produce and when to produce, that relate to production
and trade.
2. With examples, describe the FOUR (4) resources used to produce goods and services.
(8 marks)
The resources used to produce goods and services, including labor, capital, land and entrepreneurship.
● Labor is who provides the physical and mental talents to the production, such as teachers
teaching, chefs cooking and others.
● Capital refers to producing goods that can be used as inputs for further production such as
computers, factories and others.
● All natural resources from land, such as gold, forests and others.
● Entrepreneurship refers to some people having a particular talent, organizing the resources,
seeking for new business opportunities and developing new ways of doing things such as
successful businessmen.
The term “an advance in technology” refers to the ability to produce more output with a fixed amount of
resources or the ability to produce the same output with fewer resources.
6. Presently, Century Products Manufacturing Sdn. Bhd. has maximised the production of
its range of products with its present technology and resources. Recently, a decision was
made to invest RM20 million in new technology and resources.
Using an appropriate diagram, describe the future effect of the above decision on the
production possibility frontier (PPF) of the company. (5 marks)
The future effect of the above decision on the production possibility frontier (PPF) of the company is
advance in technology. It can increase in productivity to expand goods 1 and goods 2, shifting the ppf
curve outwards. The second effect is an increase in resources. It can increase in capacity to buy more
resources to produce more output, shifting the curve to outwards.