Define Economics

Question 1

define the term ‘economics’

Answer 1

economics is a social science which studies the behavior of individuals as they try to satisfy their unlimited needs and wants using limited resources.

Question 2

Economics as a Social Science: include this in defintion

Answer 2

DEALS WITH the allocation of scarce resources and the
creation of wealth and the production, distribution and consumption of goods and services;

Question 3

There are two (2) branches of Economics

Answer 3

Micro and Macroeconomics

Question 4

microeconomics

Answer 4

Microeconomics is the study of economics at an individual, group, or company level. Microeconomics focuses on issues that affect individuals and companies.

Question 5

macroeconomics

Answer 5

Macroeconomics is the study of a national economy as a whole.
Macroeconomics focuses on issues that affect nations and the world economy.

Question 6

an economy

Answer 6

a distinct region where economic activity, production, consumption and distribution, takes place.

Facilitates the organization of scarce resource for the production of goods and services.

Question 7

economic Agents

Answer 7

there are three main economic agents:

*households/consumers
*firms/producers
*government

Question 8

Households/Consumers

Answer 8

consume goods and services (Utility maximization)

Question 9

Firms/Producers -

Answer 9

produce good and services (Profit maximization)

Question 10

Government

Answer 10

provides the framework for rules and regulations for the households and firms to operate within (Welfare maximization)

Question 11

The Central Problem of Economics

Answer 11

Scarcity

Question 12

Scarcity

Answer 12

Scarcity refers to a situation where there are limited resources to supply unlimited wants.
Scarcity exists for all groups in the economy.
This means that we are forced to choose among the things that we desire.
Our wants are unlimited however economic resources are limited.

Question 13

Opportunity Cost

Answer 13

the ‘ next best alternative forgone’.
It is the highest valued alternative forgone or given up.

Question 14

Money Cost

Answer 14

what was actually paid for the inputs used to produce and item i.e the price of that item.

Question 15

choice

Answer 15

the range of options available to the individual, household, firm or government (economic agents) when making a decision.

when making a choice something has to be given up.

Question 16

needs

Answer 16

Needs are any goods and services that are essential to life (necessary for survival).

Question 17

wants

Answer 17

goods and services that are desired to improve the quality of life but are not essential.

Question 18

Equilibrium

Answer 18

the state of balance or rest within an economy from which there is no tendency to change