U1 AOS1 Revision 3 Flashcards
What is economics?
Economics is the study of how individuals, businesses, and governments allocate scarce resources to satisfy unlimited wants.
True or False: Microeconomics focuses on the economy as a whole.
False
Fill in the blank: The basic economic problem is _____ scarcity.
relative
Which of the following is NOT a factor of production? A) Land B) Labor C) Money D) Capital
C) Money
What does the law of demand state?
The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases, and vice versa.
What is the definition of opportunity cost?
Opportunity cost is the value of the next best alternative that is forgone when a decision is made.
True or False: The production possibilities curve (PPC) illustrates the trade-offs between two goods.
True
Fill in the blank: The slope of the PPC represents the __________.
opportunity cost
Which of the following scenarios best illustrates the concept of opportunity cost? A) Choosing to study for an exam instead of going to a party B) Buying a new car C) Investing in stocks D) None of the above
A) Choosing to study for an exam instead of going to a party
What does a point inside the PPC indicate?
A point inside the PPC indicates that resources are not being used efficiently.
True or False: In the circular flow of income, households provide factors of production to firms.
True
Fill in the blank: In the circular flow model, the two main sectors are ______ and ______.
households, firms
Which of the following is NOT a component of the circular flow of income model? A) Households B) Government C) Natural resources D) Firms
C) Natural resources
Short Answer: What role does the government play in the circular flow of income model?
The government collects taxes and provides public goods and services, influencing the flow of income.
What is the primary purpose of economic activity?
The primary purpose of economic activity is to produce goods and services to satisfy human needs and wants.
True or False: Economic activity can negatively impact living standards.
True
Fill in the blank: Economic growth typically leads to an increase in _______.
living standards
Which of the following is a direct effect of increased economic activity? A) Decreased employment B) Higher income C) Lower production
B) Higher income
