Chapter 1 (Week 1)

Question 1

Three key trade offs

Answer 1

Which goods and services to produce
How to produce them
Who gets the goods and services

Question 2

Microeconomics

Answer 2

The study of how limited resources are allocated to satisfy needs and desires

Question 3

Market

Answer 3

An exchange mechanism that allows buyers to trade with sellers

Question 4

Model

Answer 4

A description of the relationship between two or more economic variables
- Simplified representations of reality to help predict economic behaviour

Question 5

Positive statement

Answer 5

A testable hypothesis about cause and effect

Question 6

Normative statement

Answer 6

Value judgment which includes an opinion

Question 7

Individuals use microeconomic model

Answer 7

Make purchasing and other decisions to maximise their utility

Question 8

Firms use microeconomic models

Answer 8

Which production methods to use to minimise cost and maximise profit

Question 9

Governments use of microeconomic models

Answer 9

Might use them to predict the impact of a policy before it is adopted