Micro assessment week 1

Question 1

What is ceteris paribus

Answer 1

all other factors are constant

Question 2

What’s a social science

Answer 2

Studies human behaviour

Question 3

What’s a positive statement

Answer 3

objective statement that can be tested with evidence

Question 4

What’s a normative statement

Answer 4

subjective statement of opinion that have a value judgement

Question 5

What’s the economic problem

Answer 5

Scarcity - limited resources but unlimited wants

Question 6

What are the Factors of production

Answer 6

Land
Labour
Enterprise
Capital

Question 7

What’s Land

Answer 7

natural resources

Question 8

What’s Labour

Answer 8

human effort in production

Question 9

What’s capital

Answer 9

man made resources to production

Question 10

What’s enterprise

Answer 10

organisation of other FoPs

Question 11

What’s opportunity cost

Answer 11

Next best alternative forgone when a choice is made

Question 12

What do PPFs show

Answer 12

maximum output of an economy with current FoPs

Question 13

What does it mean if a point is on the PPF

Answer 13

Efficient and Possible point of production

Question 14

What does it mean if a point is under the PPF

Answer 14

Inefficient and Possible point of production

Question 15

What does it mean if a point is above the PPF

Answer 15

Inefficient and Impossible point of production

Question 16

What are the two types of economic growth

Answer 16

potential growth
actual growth

Question 17

How is potential growth shown on a PPF

Answer 17

Whole PPF shift outwards

Question 18

How is actual growth shown on a PPF

Answer 18

Single point shifting outwards

Question 19

What is specialisation

Answer 19

When an economic agent focus on producing specific goods and services

Question 20

Division of Labour

Answer 20

When production process is split into various tasks

Question 21

Who created division of labour

Answer 21

Adam Smith

Question 22

Advantages of div of labour

Answer 22

lower average costs
higher quality output
output increase
worker productivity increase

Question 23

Disadvantages of div of labour

Answer 23

Workers become bored
Structural unemployment

Question 24

What are the 4 functions of money

Answer 24

medium of exchange
store of value
unit of account
standard of deferred payment

Question 25

Explain how money is a medium exchange

Answer 25

intermediary between 2 parties

Question 26

Explain how money is a store of value

Answer 26

can be kept for use

Question 27

explain how money is a unit of account

Answer 27

allows us to measure values and compare

Question 28

explain how money is a standard of deferred payment

Answer 28

allows us to pay for things in the future

Question 29

What is diminishing marginal utility

Answer 29

price one is willing to pay at first decreases as the quantity of a product increases

Question 30

What are the shifters of demand and the acronym

Answer 30

P: Population
A: Advertising
S: Substitute goods
I: Income (normal, inferior)
F: Fashion and trends
I: Interest Rates
C: Complementary goods

Question 31

What are the shifters of supply and the acronym

Answer 31

P: Productivity
I: Indirect tax
N: Number of firms
T: Technology
S: Subsidies

W: Weather
C: Cost of production

Question 32

What is equilibrium price

Answer 32

When quantity supplied equals quantity demanded

Question 33

What is a shortage

Answer 33

quantity demanded is bigger than quantity supplied

Question 34

What is a surplus

Answer 34

quantity supplied is bigger than quantity demanded

Question 35

What happens to price at a shortage

Answer 35

Prices increase

Question 36

What happens to prices at a surplus

Answer 36

Prices decrease