Section1

Question 1

Scarcity

Answer 1

Scarcity means that society has limited resources and cannot produce all the goods and services people wish to have.

Question 2

Economics

Answer 2

Economics is the study of how societies use scarce resources to produce, consume, and distribute goods and services to maximize societal well-being.

Question 3

Efficiency

Answer 3

Efficiency refers to society getting the most it can from its scarce resources.

Question 4

Equity

Answer 4

Equity is the fair distribution of economic prosperity among the members of society.

Question 5

Opportunity Cost

Answer 5

The opportunity cost of an item is what you give up to obtain it, including both monetary costs and time.

Question 6

Trade-off

Answer 6

A trade-off is the balance achieved between two desirable but incompatible features, such as leisure vs. work.

Question 7

Market Economy

Answer 7

A market economy is an economic system where production and consumption are determined by firms and households based on supply and demand.

Question 8

Planned Economy

Answer 8

In a planned economy, the government makes all decisions about the production and distribution of goods and services.

Question 9

Rational Thinking

Answer 9

Rational thinking refers to making decisions by comparing the marginal benefits and marginal costs of actions.

Question 10

Behavioural Economics

Answer 10

Unlike neoclassical economics, behavioural economics:

• considers psychological factors
• recognising that individuals are not always rational