Economics Intro

Question 1

Interest rates

Answer 1

The reward for saving and cost of borrowing. It has an inverse relationship with spending

Question 2

Basic Economic Problem

Answer 2

Individuals wants are unlimited but recourses to fulfil these wants are limited this necessitates choice

Question 3

Opportunity Cost

Answer 3

The cost of the next best alternative that could have been chosen

Question 4

What are the four factors of production

Answer 4

Capital
Enterprises
Land
Labour

Question 5

What is Capital

Answer 5

All man made resources

Question 6

What is Enterprise

Answer 6

The individual who brings the other 3 factors of production together in pursuit of profit whilst taking a risk

Question 7

What is Land?

Answer 7

All Natural resources

Question 8

What is Labour

Answer 8

All human input

Question 9

What are the 3 stages of production and what do they involve

Answer 9

Primary: Extracting Raw materials
Secondary: Manufacturing the Raw materials
Tertiary: Selling the G/S

Question 10

What is the purpose of the 4 FOPs

Answer 10

Capital: Interest
Enterprise: Profit
Land: Rent
Labour: Wages

Question 11

Positive Statements

Answer 11

Are objective statements that can be tested

Question 12

Normative Statements

Answer 12

Are subjective statements that carry value judgments

Question 13

What are the wants of Consumers, Firms and the Government

Answer 13

Consumers: maximise utility or satisfaction
Firms: maximise profit
Government: Improvements and n social and economic it’s citizens

Question 14

Capital goods

Answer 14

Good that are used to make consumer G/S

Question 15

What do consumer G/S do?

Answer 15

Multiply our needs and wants directly

Question 16

Free good

Answer 16

Doesn’t have an opportunity cost

Question 17

Economic Good

Answer 17

Has an opportunity cost

Question 18

Production Possibility Frontiers

Answer 18

Shows a combination of if 2+ G/S an economy can produce using all available recourses efficiently