Microeconomics (4.1.1.1)

Question 1

Define Economics

Answer 1

The study of financial systems and how markets work in society.

Question 2

Define Scarcity

Answer 2

When there is not enough of a product/service/resource to satisfy everyone’s wants at a zero price.

Or demand exceeds supply

Question 3

Define Scarce good

Answer 3

Goods which would have a greater demand than supply if their price were zero.

Question 4

Define Free good

Answer 4

Goods that are not scarce and is available infinitely.

Question 5

Define Normative statements

Answer 5

A statement that is a subjective matter of opinion, is a value-based judgement.
E.g. “Income equality should be reduced by raising taxes on high-income earners.

Question 6

Define Positive statement

Answer 6

A statement that is not necessarily true but can be tested against the facts. The result can either be quantitative or qualitative.
E.g. “Raising taxes on the wealthy for government programmes promotes economic growth” - This has worked in real life - so can be tested.

Question 7

Define “Ceteris paribus”

Answer 7

With other conditions remaining the same, other things are equal.
E.g. Less labour = Less output
x Action ➡ x Output