Fundamentals Flashcards
What is Economics?
Economics refers to the study of how people allocate their scarce resources to satisfy their unlimited wants.
What are the two key economic problems?
The problem of relative scarcity, and the problem of choice.
What is the meaning of scarcity?
Scarcity means that there is limited resources to satisfy societies unlimited wants.
What is the meaning of the problem of choice?
The problem where consumers must decide which wants they will satisfy.
What are the three basic economic questions?
- What to produce?
- Whom to produce it for?
- How to produce?
What are the general types of resources?
- Natural Resources.
- Human resources
- Capital resources
What are natural resources?
Natural resources are resources provided by the environment, including air, water, plants, and minerals.
What are human resources?
Human resources refers to the quantity and quality of the labour force.
What are capital resources?
Capital refers to the man-made resources which assists human resources in the
production of goods and services.
What is microeconomics vs macroeconomics?
Microeconomics: Deals with the economic problem from a individual point of view.
Macroeconomics: Deals with the economic problem from societies point of view.
What is opportunity cost?
Opportunity cost is the value of the foregone alternative, or the value of the best alternative which you give up.
What are the assumptions of the PPF
- Technology is fixed.
- Resources are fixed.
- The economy produces two goods.
What is a Market Economy?
Where resources are owned privately, and all decisions are made by the owner of the resources acting on their own self-interest.
What is command economy?
An economy in which resources are owned collectively,
and decisions are made by a planning authority
