Foundations of Economics

Question 1

Social science

Answer 1

a study of society and the way individuals interact within it.

Question 2

Economics

Answer 2

a social science, and is the study of how society employs finite resources in order to satisfy infinite wants.

Question 3

Microeconomics

Answer 3

the study of individual economic units such as households and firms.

Question 4

Macroeconomics

Answer 4

the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

Question 5

Positive statements

Answer 5

based on facts or evidence so can be proven or disproved using a scientific approach.

Question 6

Normative statements

Answer 6

based on opinions and value judgements.

Question 7

Ceteris paribus

Answer 7

all other things being equal.

Question 8

Scarcity

Answer 8

the result of resources being limited, whereas wants are unlimited.

Question 9

Factors of production

Answer 9

the resources necessary to create goods and services in an economy.

Question 10

Land

Answer 10

the gift of nature, everything on, under, above or in the land/sea.

Question 11

Labor

Answer 11

the human component of the production of a good.

Question 12

Utility

Answer 12

the satisfaction gained from the consumption of a product.

Question 13

Opportunity cost

Answer 13

the cost of the next best alternative forgone.

Question 14

Free good

Answer 14

something which is not scarce, has no opportunity cost and therefore no price.

Question 15

Economic good

Answer 15

something which is scarce and therefore has an opportunity cost and price.

Question 16

Production Possibility Curve

Answer 16

shows all the possible combinations of two goods/services that can be produced within an economy.

Question 17

Capital

Answer 17

any man made goods that are used to produce other goods or services.

Question 18

Enterprise

Answer 18

the risk, creativity and business idea that combines the other factors of production