Answer the questions below

The problem of scarcity in economics: A exists only in economies which rely on the market mechanism. CO could be eliminated if we force prices to fall. C means that there are shortages of some goods. D exists because there are insufficient resources to satisfy human wants. [174] An economy can produce either Good X or Good Y. The opportunity cost of producing an extra unit of Good X is: A the value of the capital and labour used to produce Good X. B the number of units of Good Y that must be given up in order to produce an extra unit of Good X. C the cost of producing Good X less the cost of producing Good Y. D the amount of Good X that would have been produced in the following year. [174] Define the two branches of economics: macroeconomics and microeconomics. [2] Describe and discuss the scope of economics in terms of the problems of the allocation of scarce resources. [5] Explain the differences between a command economy and a free market economy. [10]