Chapter 1 : term test micro economics

Question 1

PPF

Answer 1

A curve that depicts the various combinations of two products that can be produced when all the available resources are being fully and efficiently used.

Question 2

Central purpose of economic activity

Answer 2

Is the production of goods and services to satisfy peoples needs and wants.

Question 3

Capital goods

Answer 3

A good which is used in the production of other goods or services.

Question 4

Allocative efficiency

Answer 4

Occurs when the available resources are used to produce the combination of goods and services that best suit peoples tastes and preferences.

Question 5

Opportunity cost

Answer 5

The cost of giving up the next best alternative.

Question 6

Normative statements

Answer 6

A statement that includes a value judgement and cannot be proven wrong by just looking at the evidence.

Question 7

Positive statement

Answer 7

A statement that can be scientifically tested to see If its true or not.

Question 8

Hypothesis

Answer 8

A proposed explanation of something.

Question 9

Theory

Answer 9

When a hypothesis is tested and passes the test proving the hypothesis.

Question 10

Micro economics

Answer 10

Studies the behaviour of economic agents these are; firms, consumers and government.

Question 11

Macro economics

Answer 11

Studies large economic phenomena, such as inflation, unemployment, EU trade.

Question 12

Social science

Answer 12

The branch of science that studies society and relationships of individuals within a society.