chapter 1

Question 1

what is the definition of economics (more for understanding what it is)

Answer 1

study humans and society to make choices about resources to produce goods and services

• social science because human behaviour is studied.
• production results in consumption which results in a transfer of wealth

Question 2

micro vs. macro economics

Answer 2

micro- small segments of economy while macro is large segments of economy

ex: micro: market structure
ex: macro: exchange rate, unemployment

Question 3

what is the economic problem

Answer 3

scarcity forces a choice which involves opportunity cost

Question 4

what is opportunity cost

Answer 4

the opportunity cost of buying this one product for example is forgone to buying a different product
you are giving up one opportunity for another

Question 5

example of economic problem

Answer 5

scarcity is time, you can either go to class, sleep, watch tv, or exercise. 
this forces you to make a choice, you decide to go to class. this decision involves opportunity cost. the opportunity cost of going to class means that you forgo sleep, tv, and exercise

Question 6

what are 3 fundamental questions in economics?

Answer 6

1. What to produce?
2. how to produce it?
3. for whom it is produced( who is it produced for)
   - - for whom it is produced: how would total output (income) of an economy be distributed?– equally? shared by contribution? no one starves?
   * the goals of the society influence how they answer these questions

Question 7

what are the 4 Cs of economics

Answer 7

all economies can be described by the 4cs 
cooperation
custom
command
competition

Question 8

describe canada in terms of the 4 C’s of economics

Answer 8

Command and competition

Question 9

• the type of economy or blend of 4 C’s helps to answer what?

Answer 9

the 3 fundamental questions in economy

Question 10

what does factors of production mean

Answer 10

factors of production are resources that can produce a good or service so labour, capital, land and enterprise

Question 11

what are the 4 factors of production

Answer 11

labour(people)
capital( machines/equipment)
land(natural resources-oil-hill-coal-fish)
enterprise(new ideas)

Question 12

what are the incomes of each factor of production?

Answer 12

-labours income is wage,
-capital income is interest(rate of return
-lands income is rent
enterprises income is profit

Question 13

can market based economies own factors of production

Answer 13

yes and they would receive an associated factor income

Question 14

what are the 3 types of statements in economics

Answer 14

positive: facts that can be proven it costs 10$ to buy a coffee at starbucks
negative: opinions, statements that SHOULD be backed with postive statements, ex: coffees at starbucks are too expensive

economic statements: these are economic theories or laws that are created by finding casual links between positive statements ex: law of demand, as prices rise the quantity of demand falls

Question 15

Productions possibilities curve (PPC)

Answer 15

shows maximum possible output an economy can produce using its current level of inputs or potential

• • assumes 3 things:
    1. there’s full employement
    2. best technology
    3. efficiency

Question 16

Capital

Answer 16

human made goods used to produce other goods

Question 17

what is represented outside of productions possibilities curve?

Answer 17

scarcity, there are not enough resources to obtain, therefore outside the curve is unattainable

Question 18

what is occurring when there is a point inside the products possibility curve

Answer 18

the three assumptions are not being met, it is inefficient

Question 19

opportunity cost on the productions possibility curve

Answer 19

YOU ARE MOVING from one point to another you are showing that to increase the amount of one item you must decrease the amount in another, when you look for the opportunity cost you are finding out much you decrease in the other, thats what the original costs

Question 20

economic growth on the production possibilities curve

Answer 20

means that there are more resources/productivity, and therefore more goods and services can be produced
the ppc shifts out

Question 21

technological breakthrough and the ppc

Answer 21

one industry has a technological break through and can create more of the max amount what it produces– you
if you dont reallocate your resources, the other item doesn’t change and you just make more of what has the technological advancement, if you reallocate your resources you can make more of both

Question 22

technology

Answer 22

method of production

-how you use the factors of production/resources to produce goods and services

Question 23

efficiency

Answer 23

getting the most for the least

Question 24

productive efficiency

Answer 24

production of the output at the lowest cost

Question 25

allocative effeicency

Answer 25

production of the combination of products that best satisfies the needs and wants of a society