1. Economic Problem

Question 1

Positive statement

Answer 1

Statement of fact that can be scientifically tested to see if it is correct

Question 2

normative statement

Answer 2

Statement that includes a value judgement and can’t be refuted by looking at the evidence

Question 3

Need

Answer 3

Something necessary for human survival

Question 4

Want

Answer 4

Something desirable not necessary for human survival

Question 5

Economic welfare

Answer 5

Economic well-being of an individual , group or economy

Question 6

Economic system

Answer 6

Set of institutions within which a community decides what, how and for whom to produce

Question 7

Market economy

Answer 7

Economy in which the goods and services are purchased through the price mechanism

Question 8

Command economy

Answer 8

An economy in which government officials of planners allocate economic resources to firms

Question 9

Mixed economy

Answer 9

Economy that contains both large market and non market sector in which the planning mechanism operates

Question 10

Production

Answer 10

Converts inputs into outputs of goods or servcies

Question 11

Capital good

Answer 11

Good used in production of goods and services

Question 12

Consumer good

Answer 12

Good consumed by individuals to satisfy needs and wnats

Question 13

Factors of production

Answer 13

Inputs in production: land , labour, capital and enterprise

Question 14

Renewable resource

Answer 14

A resource in which with careful management can be renewed as it is used

Question 15

Non-renewable resource

Answer 15

A resource which is scarce and runs out as it is used

Question 16

Fundamental economic problem

Answer 16

How best to make decisions about the allocation of scarce resources among competing users to maximise human welfar

Question 17

Scarcity

Answer 17

Humans have unlimited wants but resource to meet the wants are limited

Question 18

Choice

Answer 18

Choosing between alternatives when making a decision on how to use scarce resources

Question 19

Opportunity cost

Answer 19

The cost of giving up the next best alternative

Question 20

Production possibility frontier

Answer 20

Curve depicting various combinations of two products that can be produced when resources are fully and efficiently employed

Question 21

Technical progress

Answer 21

New and better ways of making goods for producing more output from scarce resources

Question 22

Economic growth

Answer 22

Increase in the potential level of real output the economy can produce over a period of time

Question 23

Full employment

Answer 23

When all who are able and willing to work are employed

Question 24

Unemployment

Answer 24

When not all of those who are able and willing to work are employed

Question 25

Resource allocation

Answer 25

Process through which available factors of production are assigned to produce different goods and services

Question 26

Productive efficiency

Answer 26

Economy - When it is impossible to produce more of one without producing less of another
Firm -minimising average total costs