Chap 1.1

Question 1

what 2 fundamental facts is econ derived from

Answer 1

1. material want is unlimited
2. resources are limited

Question 2

what is the goal of the consumer

Answer 2

maximum satisfaction

Question 3

what is the goal of buisness firms

Answer 3

profit

Question 4

what is the goal of the government

Answer 4

satisfy the wants of citizens

Question 5

describe the wants of humans

Answer 5

numerous, expand and diversify through time

Question 6

whats resource

Answer 6

its anything natural or man made that can be used in production of goods and services

Question 7

whats economic resource

Answer 7

theyre the means to produce goods and services

Question 8

def scarcity

Answer 8

refers to a physical condition where the
quantity desired of a particular resource exceeds the quantity available

Question 9

whats the central aim of economics

Answer 9

efficient use of the
scarce resources by minimizing loss so as to get the maximum
possible satisfaction

Question 10

whats econ

Answer 10

a science which studies the allocation of
scarce resources in production, consumption and distribution
of goods and services to attain the maximum fulfillment of
society’s material wants

Question 11

what does the implication of cost lead to

Answer 11

cost of the forgone opportunity aka opportunity cost

Question 12

whats an opportunity cost

Answer 12

Opportunity cost is basically what you give up when you choose one option over another. it’s about the value of the next best alternative you didn’t choose.

Question 13

def macroeconomics

Answer 13

is a branch of economics which studies the
economy as a whole

Question 14

def microeconomics

Answer 14

It is a branch of economics which deals with the decision making behavior of individual economic agents such
as households, business firms. it studies flow of goods to consumers and their prices as well as the economic resources

Question 15

what are major economic problems

Answer 15

what to produce
how to produce
for whom to produce

Question 16

what does the ppf show

Answer 16

due to the capacity of producing combinations of goods being constrained by its limited resources. this curve shows the various combinations of 2 types of goods that an economy can produce when its resources are fully employed.

Question 17

what are the assumptions to draw ppf

Answer 17

• economic resources fixed over the time period are considered
• all factors are fully employed
• some resources inputs are better suit for the production of one good than another
• tech doesnt change overtime

Question 18

what does limit on resources imply

Answer 18

limits to total output that can be produced

Question 19

what does limit on total output mean

Answer 19

This means that if production of good X is
increased then production of good Y must be decreased because resources would be transferred
from Y to X.

Question 20

whats the law of opportunity cost

Answer 20

The law of increasing opportunity cost says that as you produce more of one thing, the opportunity cost of producing additional units of that thing goes up

Question 21

what does an economic growth cause

Answer 21

• PPC shifts to the right
• capital accumulation
• technical progress

Question 22

what does contraction to the PPF cause

Answer 22

-shift to the left
- droughts
- floods
-earthquakes

Question 23

whats an asymmetrical change in technology

Answer 23

if theres change in one sector

Question 24

whats a symmetrical change in technology

Answer 24

if theres change in both sectors

Question 25

what are the economic ways of thinking

Answer 25

• rational choice
• cost
• benefit
• choosing at margin

Question 26

whats marginal benefit

Answer 26

what you gain when you get one more unit of something.

Question 27

whats marginal cost

Answer 27

what you must give up to get one additional unit of it