BASIC ECONOMIC CONCEPTS

Question 1

One who manages the households

Answer 1

Oikonomos

Question 2

The study how society manages its scarce resources

Answer 2

Economics

Question 3

Two central economic problems / individual economizing problems :

Answer 3

Scarcity of Resources and Multiplicity of wants and needs

Question 4

Focuses on facts, Cause and effect, It avoids valued judgement, Concerns what is

Answer 4

Positive

Question 5

Opinionated, incorporates valued judgement, ought or should

Answer 5

Normative

Question 6

Father of Economics

Answer 6

Adam Smith

Question 7

Book of Adam smith

Answer 7

Wealth of Nation 1776

Question 8

Restrict options demand sources, The basic of all economic activities, Reason why opportunity costs arises

Answer 8

Scarcity

Question 9

Which you forego or what are you willing to give up when you make a decision or choice

Foregone alternative

What a person loses by choosing one opportunity instead of another

Answer 9

Opportunity Costs

Question 10

Refers to the value of what is given up in order to produce that additional unit

Answer 10

Marginal Costs

Question 11

Refers to what people are willing to give up in order to obtain one more unit of good

Answer 11

Marginal Benefit

Question 12

Is concern with the behavior of individual units, households, factors of production and firms

Answer 12

Microeconomics

Question 13

Is concern with the economy as a whole

Answer 13

Macroeconomics

Question 14

3 basic economic problems

Answer 14

1. What are the goods produce & how much?
2. How are the goods produce?
3. For whom are the goods produce?

Question 15

4 factors of production:

Answer 15

1. Land
2. Labor
3. Capital
4. Entrepreneurial ability or Entrepreneur

Question 16

Includes all natural resources

Answer 16

Land

Question 17

Consist of physical actions and mental activities that contribute to the production of services

Answer 17

Labor

Question 18

Man made-aid production

Answer 18

Capital

Question 19

Combine land, labor and capital to make them more productive

Captain of industry

Answer 19

Entrepreneurial ability

Question 20

PPF, PPB

Answer 20

Production Possibility Frontier
Production Possibility Boundary

Question 21

In which large number of independently acting buyers and sellers come together to buy and sell standardized products

Bring together buyer and seller

Answer 21

Market

Question 22

Is a schedule or a curve the shows the various amount of a product the consumers are WILLING and ABLE to purchase at each of a series of possible prices during a specified period of time

Answer 22

Demand

Question 23

2 requisites of demand:

Answer 23

1. Willingness to buy
2. Ability to buy

Question 24

5 non price determinants of demand:

Answer 24

1. Income
2. Population
3. Taste and preferences
4. Price expectation
5. Prices of related goods

Question 25

2 types of prices of related goods:

Answer 25

1. Compliment goods 2. Substitute goods

Question 26

Is one that is used together with another good

Answer 26

Compliment goods

Question 27

Is one that can be used in place of another good

Answer 27

Substitute goods