Microeconomics

Question 1

DEF; ECONOMICS

Answer 1

The study of how decisions are made regarding the use of scarce recourses

Question 2

ECONOMICS AS A SCIENCE

Answer 2

Economics is is regarded as social science, because it is concerned with human behaviour but not regarded as an exact science like physics and chemistry.

Question 3

CETERIS PARIBUS PRINCIPLE

Answer 3

Latin term for all things being equal.

Question 4

POSITIVE ECONOMICS

Answer 4

A branch of economics that deals with economic facts and data, which is objective in its approach and analyses the cause and effect o f relationship between variables

Question 5

NORMATIVE ECONOMICS

Answer 5

A branch of economics which is subjective in its nature of approaches and based on value judgments and opinions rather than fact

Question 6

SCARCITY AND ECONOMICS RELATION

Answer 6

There is not enough resources to satisfy the wants of everyone. The best way is to have a way to make the best use of these scarce resources in the best interest of the society.

Question 7

ISSUES THAT CONCERN ECONOMICS

Answer 7

Scarcity

Inflation

Unemployment

International trade

Economic growth

Money

Question 8

MICRO ECONOMICS

Answer 8

A branch of economics that studies economic behaviour at an individual or company level.

Question 9

MACROECONOMICS

Answer 9

Is the study of the behaviour and performance of the national economy as a whole.

Question 10

MAJOR FLOWS IN THE ECONOMY

Answer 10

• Production
• Income
• Spending

Question 11

FACTOR MARKET

Answer 11

The market for factors of production

Question 12

GOODS AND SERVICES MARKET

Answer 12

The market where firms sell their output to the customers

Question 13

FACTORS OF PRODUCTION

Answer 13

• Land ( refers to natural resources , minerals, air, water, land etc
• Labour ( refers to physical Labour and skills )
• Capita ( refers to goods/ things used for further production e.g.machinery )
• Entrepreneurship ( refers to assembling of resources to produce new or improved products and technologies)

Question 14

SPENDING ENTITIES OF AN ECONOMY

Answer 14

• Business
• House holds
• Governments
• Foreign Sector

Question 15

MAIN COMPONENTS OF TOTAL SPENDING IN THE ECONOMY

Answer 15

There are four sectors in the economy: households, firms, governments and the foreign sector.
- Households spend on consumer goods and services. ( consumption spending)

• Firms purchase capital goods. ( investment spending )
• Governments invest/ support firms ( government spending )
• Foreign sector spends to purchase our exports.

Question 16

WITHDRAWALS ( LEAKAGE FROM CIRCULAR FLOW OF INCOME AND SPENDING IN THE ECONOMY

Answer 16

• Saving ( this less spending )
• Taxes ( less money to spend )
• Taxes on imports

Question 17

INJECTION INTO THE CIRCULAR FLOWOF INCOME AND SPENDING INTHE ECONOMY

Answer 17

• Investment spending by firms
• Government spending
• Exports