purpose of economics

Question 1

Explain the fundamental economic issue

Answer 1

The idea that there is unlimited wants but limited resources in the world

Question 2

Distinguish between a positive and normative statement

Answer 2

A positive statement can be scientifically tested. A normative statement is based on opinion

Question 3

Distinguish between a need and a want in economics

Answer 3

A need is something required to survive. A want improves a person’s well-being but is not necessary

Question 4

Explain what is meant by economic welfare

Answer 4

the economic well being/ happiness of an individual or group within society

Question 5

Define a free market economy

Answer 5

firms choose which goods and services to produce without much intervention from the government

Question 6

Describe the basic economic problem

Answer 6

Resources are scarce relative to needs and wants

Question 7

Features of the fundamental economic problem

Answer 7

includes both trade-offs and conflicting objectives

Question 8

The central purpose of economic activity

Answer 8

the satisfaction of needs and wants

Question 9

The central purpose of the production of goods and services

Answer 9

satisfy consumer wants

Question 10

The central purpose of economic activity

Answer 10

achieve productive efficiency