Chapter 1

Question 1

Define Economics

Answer 1

The study of the choices that people make in overcoming the problems that arise because resources are scarce but wants are unlimited.

Question 2

Opportunity Cost

Answer 2

The next best alternative forgone while making an economic decision.

Question 3

Free Good

Answer 3

Goods which do not have an opportunity cost as they are not scarce. Eg. Air

Question 4

What are the three economic questions?

Answer 4

1) What should be produced in what quantities?
2) How should things be produced?
3) For whom should things be produced?

Question 5

Microeconomics

Answer 5

Deals with smaller, discrete economic agents such as firms, consumers and producers.

Question 6

Macroeconomics

Answer 6

Looks at factors pertaining to the economy as a whole, such as economic growth and wellbeing impacted by it.

Question 7

Scarcity

Answer 7

Limited availability of economic resources as compared to unlimited demand