Topic One

Question 1

define economics

Answer 1

study of how people interact with each other & with their natural surroundings in providing their livelihoods and how this changes overtime.

Question 2

define macro economics

Answer 2

the study of the aggregate economy as a whole

Question 3

define micro economics

Answer 3

the study of the behavior of individuals, firms, governments or markets.

Question 4

what’s an economic model and its features

Answer 4

An economic model is an explanation of how the economy or part of the economy works.
1) Its clear
2) It predicts accurately
3) Improves communication
4) It is useful

Question 5

extrapolation Error

Answer 5

looking at two observations and assuming those trends are going to continue. c

Question 6

Faulty Causation Fallacy

Answer 6

When two things are moving together but we assume that one of them is causing the other.

Question 7

ceteris paribus

Answer 7

assumption that all other things are held equal

Question 8

Incentives

Answer 8

economic rewards or punishments that influence the benefits and costs of the alternatives that a decision maker can choose

Question 9

Relative Prices

Answer 9

the price of one good compared to another. this helps us compare alternatives

Question 10

Economic rent

Answer 10

A payment or other benefit that the decision maker receives (try’s to maximize)

Question 11

Opportunity Cost

Answer 11

The cost of not pursuing the opportunity of doing something else.