chapter 2 Economics

Question 1

Economics

Answer 1

The study of how society uses resources to produce and distribute goods and services

Question 2

Macroeconomics

Answer 2

The sub-area of economics that focuses on the economy as a whole by looking at aggregate data for large group of people, companies, or products

Question 3

Microeconomics

Answer 3

The sub-area of economics that focuses on individual parts of the economy, such as households or businesses

Question 4

Natural resources:

Answer 4

commodities that are useful inputs in their natural state

Question 5

Labour:

Answer 5

economic contributions of people

Question 6

Entrepreneurs:

Answer 6

combination of natural resources, labour, and capital to produce goods and services

Question 7

Knowledge:

Answer 7

the combined talents and skills of the workforce

Question 8

capital

Answer 8

Capital: inputs used to produce goods and services and get them to the customers

Question 9

Three macroeconomic goals of a mix

Answer 9

full employment,
price stability
economic growth

Question 10

Economic system:

Answer 10

The combination of policies, laws, and to establish the systems that determine what goods and services are produced and how they are allocated

Question 11

Market Economy

Answer 11

Based on competition in the marketplace and private ownership of the factors of production (resources

Question 12

command economy

Answer 12

(planned or central planning): The government owns virtually all resources and controls all markets

Question 13

socialism

Answer 13

owned by the government (social ownership) or by the private sector under strong government control

Question 14

mixed economics

Answer 14

use several economic systems

Question 15

perfect competition

Answer 15

lots of firms, similar or same products, low barriers to entry

Question 16

monopolistic competition

Answer 16

many firms, practice product differentiation, easy entry

Question 17

oligopoly

Answer 17

few firms, large capital requirements ( high barriers to entry)

Question 18

Monopoly

Answer 18

1 firm controls all the sales in the the industry, no entry available

Question 19

how a free market works

Answer 19

many buyers and sellers trading freely determine prices at which they will exchange goods and services.

Question 20

How prices are determined

Answer 20

the constant interplay between supply and demand determines an equilibrium price at which a transaction will occur.

Question 21

GDP

Answer 21

Gross domestic product (GDP) the total market value of all final goods and services produced within a nation’s border in a year

• Employees get their share of GDP via wages
• Employers get their share of GDP via profits
• Governments get their share of GDP via taxes

Question 22

Economic Growth

Answer 22

An increase in a nations outputs of goods and services

Question 23

GNP

Answer 23

Gross National Product:the total market value of all final goods and services produced by a country regardless of where the factors of production are located