Chapter 1, Economic Problems

Page: 27- 29
A. Multiple Choice

1. A
2. C
3. E
4. E
5. D
6. C
7. D
8. A
9. D
10. A


B. Essay

1. State and explain the reason behind the scarcity of resources and goods/services!
2. In your own words, explain what scarcity is?
3. Explain recource allocation using the PPF curve!
4. Explain how to make choices rationally!
5. What are the different kinds of human needs? Please explain!
6. Explain about the fundamental economic problems are!
7. Compare between mixed economic system and centralized economic system!
8. What are the advantageous and disadvantageous of sentralized economic system? Please explain!
9. In your opinion, does traditional economic system still exist in this world? Elaborate!
10. In your opinion, what economic system is adopted in Indonesia? Elaborate!

Answer:
1. a. Natural disaster, like tsunami, earthquake, and flood destroy the recources, so that they cannot be utilized.
    b. Wars also one of the main reasons behind scarcity. Civil war in Sudan, for instance, has caused famine and starvation.
    c. Human behaviour toward natural recources also has impact on resource scarceness, which in turn can cause scarcity of goods and services. Illegal logging is one of the examples.
    d. The various array of needs. Human needs are continously developed. It isn a human nature, that humans always feel insufficient.
2. Scarcity is a condition that explains the limitation of resources in producing the human needs. Accordingly, why those human needs become scarce.
3. In economics, resource allocation can be expalined with the Production Possibility Curve. This curve depicts every possible output combinations that can be produced by an economy with its own productions factors (resources).
4. a. Distinguish between needs and wants.
    b. Identify the reason of the need fullfillment.
    c. Do the cost and benefit analysis in fullfilling the needs.
    d. Realising the opportunity cost. If one need is fullfilled, then its opportunity cost is the other need that cannot be fullfilled because of it.
5. a. Needs according to the intensity of its usefullness :
        * Primary needs are that must be fullfilled to maintain the continuity of human life.
        * Secondary needs is the need to be fullfilled if primary needs have been fullfilled.
        * Tertiary needs are the needs will be fullfilled if primary and secondary needs are fullfilled.
    b. Needs according to the shape and nature :
        * Physical needs are the physical needs required by humans for their survival.
        * Spiritual needs are human needs required to satisfy  the mind soul, and the feelings.
   c. Needs according to the season :
       * The needs now is a requirement that must be met right away or cannot be delayed fullfillment.
       * The future needs is a recognized need in the future and the provision made at this time.
       * Need not necessarily that because the time is something sudden.
   d. Needs according to the subject taht requires :
       * Individual needs are the needs associated with people's personal.
       * Needs of group/collective is a group needs required
6.- What to be produced?
       Remembering to the limited production resources and its alternative usage, thus the society must determine the kinds and numbers of goods and services that will be produced.
   - How to produce?
      This is about production technique employed and the ability to combine various factors or resources in a production process.
   - For whom the goods/services are produced?
     This is about who/which social class in the society will consume the goods/services produced.
7. Mixed economic system is an economic system that is controlled and supervised by the government but the people still have ample freedom to determine the economic activities that wish to run whereas centralized economic system is a system of centrally planned economy where the state controls the economy.
8. a. The advantages of sentralized economic system are :
        - This economic system depends on centralized planning of the government.
        - All economic activities have been planned and controlled by the government.
    b. The disadvantages of centralized economic are:
        - In this system, there is no individual ownership.
        - the people are usually passive and do not have the freedom to express themselves.
9. Yes, it does. This economic system is the first ever applied by humankind before other more modern economic system are discovered.
10. For a long time, Indonesia has been applying the mixed economic system in its economic development practices. This system presents a limited freedom to its society to posses means of production. It also shows in the 1945 constitution (UUD 1945) article 33.