Introduction to Economics

Question 1

oikonomos

Answer 1

“the one who manages the household”

Question 2

Economy

Answer 2

comes from the Greek word oikonomos

Question 3

True or False:

A household faces only one decision

Answer 3

False. A household faces many decisions

Question 4

Scarcity

Answer 4

society has limited resources and therefore cannot produce goods services people have

Question 5

True or False:

An individual can attain the highest standard of living

Answer 5

False because resources are limited.

Question 6

Study of how society manages its scarce resources

Answer 6

Economics

Question 7

They study how people make decisions

Answer 7

Economists

Question 8

Decisions are made by ____ and ______

Answer 8

Household and firms

Question 9

It is the level wherein decisions are made by firms and household

Answer 9

Microeconomics

Question 10

It is the level that examines the economy as a whole.

Answer 10

Macroeconomics

Question 11

Determine whether microeconomics or macroeconomics.

Change of income can change the demand of the product

Answer 11

Microeconomics

Question 12

Determine whether microeconomics or macroeconomics.

Question of unemployment

Answer 12

Macroeconomics

Question 13

Determine whether microeconomics or macroeconomics.

State activity that increases the economics growth

Answer 13

Macroeconomics

Question 14

The concept that we have limited resources and cannot meet unlimited demand

Answer 14

Scarcity

Question 15

Why do we use the term scarcity instead of limited when we talk about resources?

Answer 15

The concept of scarcity is not limited only to the quantity (or availability of a product or service) but also the quality. Example: Before the Industrial Revolution, there was no scarcity of clean air.

Question 16

True or False

Society can produce everything people wish to have

Answer 16

False.

Question 17

True or False

Without microeconomics, we can understand macroeconomics

Answer 17

False. Although we differentiate the two levels, there is a strong relationship between the two levels. In other words, without microeconomics, we can’t understand macroeconomics.

Question 18

In this model, the economy is simplified to include the two types of decision makers, the firms and household.

Answer 18

Circular Flow Diagram

Question 19

Give three examples of inputs that a firm produces

Answer 19

labor, land and capital (buildings and machines)

Question 20

They own the factors of production and consume the goods and services that firms produces

Answer 20

Household

Question 21

They produce the goods and services using inputs such as labor, land and capital

Answer 21

Firms

Question 22

The two types of market that firms and household interact on

Answer 22

market for goods and services and market for the factors of production

Question 23

In market for goods and services, household are ____ and _____ are sellers

Answer 23

buyers, firms

Question 24

In market for factors of production, household are ______ and _____ are buyers

Answer 24

sellers, firms

Question 25

They hire and use factors of production

Answer 25

Firms

Question 26

What’s missing in the circular flow diagram model?

Answer 26

Government