Economics

Question 1

Economics is ….

Answer 1

The study of how society manages its scarce resources

Question 2

A resource is scarce when ….

Answer 2

the demand for that resource at 0 price would exceed the available supply

Question 3

Opportunity cost

Answer 3

The value of the best alternative you must sacrifice

Question 4

Income distribution

Answer 4

tells us how total income is divided between groups or individuals

Question 5

Law of diminishing marginal returns

Answer 5

says that each extra worker adds less to output than the previous extra worker

Question 6

The production possibilities frontier

Answer 6

shows the maximum combinations of output that economy can produce using all the available resources

Question 7

micro-economics

Answer 7

individuals and firms make economic decisions

Question 8

macro-economics

Answer 8

interactions in the economy as a whole

Question 9

GDP

Answer 9

value of total output produced in an economy in a given period

Question 10

inflation

Answer 10

the annual rate of change of the consumer price index

Question 11

invisible hand

Answer 11

the assertion that the individual pursuit of self-interests within a free market may allocate scarce resources efficiently