CH1- Intro To Econ

Question 1

What is economics?

Answer 1

A study of choices

Question 2

What is scarcity?

Answer 2

Limited ressources, we have less than we want.

Question 3

What are the two most scarce resources for us?

Answer 3

Time and money

Question 4

What is the most important resource for a country?

Answer 4

Population (labour+skill)

Question 5

What does scarcity bring?

Answer 5

Because we have scarce ressources we must face choices (tradeoffs)

Question 6

How do we measure choices?

Answer 6

With opportunity cost

Question 7

What is opportunity cost?

Answer 7

How much you give up to get something.

It’s the next best option, your second choice

Question 8

How do we make choices?

Answer 8

By responding to incentives (rewards/penalities)

Question 9

What does the PPF show?

Answer 9

Potential (how much we are capable to produce)
Scarcity (we can only produce a point inside or on the ppf)
Choices (you choose between X and Y, if you produce more of one, you produce less of the other)
Opportunity of cost (production one more unity of X, is how many unit of Y you give up)

Question 10

What does it mean if a point inside is produce in the PPF?

Answer 10

It means it’s inefficient (maybe the economy is in recession)

Question 11

What does it mean if a point on the PPF is produced?

Answer 11

It’s efficient, all the resources are used