Chapter 1 and 2

Question 1

Define Scarcity

Answer 1

Lack of resources to satisfy everyone’s needs and wants

Question 2

Define Economics

Answer 2

The study of how society manages its scarce resources

Question 3

What are Resources (Inputs, Factors of Production)?

Answer 3

Land, Labour and Capital (tools, machinery etc etc)

Question 4

Define Opportunity Cost

Answer 4

Cost of something in terms of what is given up

Question 5

What 3 groups of people are decision makers and what are their characteristics?

Answer 5

Households: make consistent decisions, maximize well being and principle owners of resources.

Firms: make consistent decisions, maximize profit and are principal users of resources.

Government: (all officials or agencies under direct control of federal, provincial or municipal governments) make inconsistent decisions, maximize ?

Question 6

Define Market

Answer 6

Area in which buyers and sellers negotiate the exchange of a commodity

Question 7

What are the characteristics of the circular flow diagram?

Answer 7

Clockwise flow/physical/real flow

Counterclockwise flow is monetary

Question 8

Define Microeconomics

Answer 8

Study of the behaviour of individual agents and markets

Question 9

Define Macroeconomics

Answer 9

Study of economy wide phenomena such as inflation, unemployment etc etc

Question 10

What are some key issues in macroeconomics?

Answer 10

unemployment
inflation
growth
productivity
interest
deficits and debts
fiscal and monetary policy
trade and trade policy

Question 11

What are the elements of the Economics Model?

Answer 11

theory
assumptions
hypothesis
variables
endogenous (induced, dependent)
variables explained with a theory
exogenous (independent)
outside factors
dangers 
unrealistic assumptions
embedded value judgements