Economics Term 1 - For exam

Question 1

Opportunity cost

Answer 1

:“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up,” . The best alternative

Example: Would you rather watch funny cat videos or learn about the ecosystem, the best alternative and best use of your time

Choosing one alternative means losing money because you turned down another alternative. Your opportunity costs result from income not earned because you decided to do something else

Question 2

Define Scarcity and how it affects decision making

Answer 2

When People have unlimited wants but limited Resources

Example: Natural resources like gold, oil, silver and other fossil fuels are naturally rare. People want all of these deluxe items but they are limited

Affect Decision Making: Ability to make decision comes with a limited capacity. The scarcity of money affects the decision to spend that money on the urgent needs while ignoring the other important things which comes with a burden of future cost.

Question 3

Define Recession

Answer 3

Recession: A Recession is a business cycle Contraction when there is a general decline in economic activity. Usually happens in a widespread drop in spending

Contraction= Becoming smaller

Question 4

Be able to explain the nature of economics

Answer 4

• Is a social science to build theories that explain behave in induvial, group and organisations
• Economics attempts to explain economic behaviour
• Also, the study of the ownership, use and exchange of scare resources
• Often shortened to the science of scarcity

Question 5

List and provide examples of the factors of production

Answer 5

The factors of product are resources that are building blocks of the economy. This is what people use to produce goods and services. Divided into four Categories

Land- This includes any natural resources use to produce goods and services such as Water, oil. Copper, natural Gas, coal, and Forest

Labour- refers to the effort that individuals exert when they produce a good or service. Example: An artist producing a painting, or an author write a book

Capital- Think of capital as the machinery, tools, and buildings humans to produce goods and services. Examples: Hammers, forklifts, computers, and delivery vans

Entrepreneurship- Entrepreneurship are the people who combine the others factors of production – Land, labour and capital – to generate profit

Question 6

three basic economic questions

Answer 6

What will be produced?
How will it be produced?
How will the output society produces be distributed?