Here are the slides used in the contact sessions and voice-over PPT lecture video's. Watch the video on YouTube and then use your textbook to supplement the slides to make your own set of notes. The first part of Chapter 2 deals with the question of WHAT to produce.

1. ECONOMICS FOR SOUTH AFRICAN
STUDENTS
CHAPTER 2:
THE ECONOMIC PROBLEM
PART 1: WHAT TO PRODUCE?
ECON-1

2. ECONOMIC
PROBLEM?
When you consider the economic problem:
•Scarcity
•Choice
•Opportunity cost
It leads to 3 important questions:
•WHAT to produce?
•HOW to produce?
•For WHOM to produce?
Economic systems determine how society will answer these
questions.

3. WHAT SHOULD BE
PRODUCED…
CONSUMER GOODS
Used to satisfy needs
Categories:
Non-durable goods
• Example
Semi-durable goods
• Example
Durable goods
• Example
CAPITAL GOODS
Used in the
production of other
goods
Examples…
Depreciation

4. WHAT SHOULD BE
PRODUCED…
FINAL GOODS
Consumed by
households and
firms
Examples…
INTERMEDIARY
GOODS
Used as inputs in
production
Examples…

5. WHAT SHOULD BE
PRODUCED…
PRIVATE GOODS
Consumed by
households and firms
Examples…
PUBLIC GOODS
Consumed by society as
a whole
Examples…

6. WHAT SHOULD BE
PRODUCED…
EKONOMIC GOODS
Produced at a cost,
using scarce resources
Examples…
FREE / COMMON
GOODS
Not scarce and has no
price
Examples…

7. WHAT SHOULD BE
PRODUCED…
HOMOGENOUS GOODS
Are exactly the same
Examples…
HETEROGENOUS
GOODS
Differentiated in terms of
quality, variety, brand
Examples…

8. WHAT SHOULD BE
PRODUCED…
Possible?
Impossible?
Efficient?
Inefficient?

9. WHAT SHOULD BE
PRODUCED…
Suppose this economy can produce two types
of goods:
1.Consumer goods
2.Capital goods
How would the PPC change if better
techniques are developed to produce both
these goods with the same resources?
(i.e. PRODUCTIVITY INCREASES)

10. WHAT SHOULD BE
PRODUCED
IMPROVED TECHNIQUES FOR THE
PRODUCTION OF CAPITAL GOODS
On AB there
is opportunity
cost: If you
want to
produce more
capital goods,
you have to
sacrifice some
consumer
goods.
But if the production
techniques for producing
capital goods improve, you
would be able to produce
more capital goods while
keeping the production of
consumer goods unchanged

11. WHAT SHOULD BE
PRODUCED…
IMPROVED TECHNIQUES FOR THE
PRODUCTION OF CONSUMER GOODS

12. WHAT SHOULD BE PRODUCED…
IMPROVEMENT IN THE PRODUCTIVITY OF
AVAILABLE RESOURCES

13. DID WE ACHIEVE THE
OUTCOMES?
Can you describe the different categories of goods and
services and give examples?
Can you draw a production possibilities curve that shows
improvements in productivity and economic growth?
Chapter 2 in Mohr & Fourie
eFundi
Answer the questions on Quiz
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