Unit 1 - Fundamentals

Question 1

Opportunity costs

Answer 1

These are what must be given up in order to gain something else.

Question 2

What is the human decision-making process?

Answer 2

It means weighing alternatives and resolving conflicting goals.

Question 3

Factors of production

Answer 3

These are resources which, from an economic standpoint, are required for the production of goods.
Land, labor and capital.

Question 4

Land

Answer 4

All the natural resources produced by earth such as underground mineral deposits, marine fish stocks etc

Question 5

Labor

Answer 5

Is the physical and mental performance of individuals that goes into any production process.

Question 6

Capital

Answer 6

Refers to the facilities and equipment required for producing goods and services.

Question 7

For each company, there are 3 basic questions:

Answer 7

1. Which goods and services should be produced?
2. How much of those goods and services should be produced?
3. Who should recieve the produced goods and services?

Question 8

Market

Answer 8

Is a collection of buyers and sellers that determine the price of goods and services through potential or real interactions.

Question 9

Goods

Answer 9

This is a generic term for products (tangible goods) and services (intangible goods).

Question 10

Market economy system, how does it work?

Answer 10

The price and quantity of goods are determined by the joint interaction between buyers and sellers.
Decentralized decisions made by numerous companies and households.

Question 11

Centrally administrated economy, how does it work?

Answer 11

Activity is directed by a central government autority.

Question 12

Economic cake

Answer 12

This image is used to describe the sum of the economic activities of all persons in an economy.

Question 13

Microeconomics

Answer 13

Deals with the behavior of individual economic entities and their interaction with the markets.

Question 14

Macroeconomics

Answer 14

Deals with variables regarding the economy as a whole such as the unemployment rate, interest rate levels, or price increases.

Question 15

Saving paradox

Answer 15

The microeconomic increase in the propensity to save which leads to a reduction in overall economic wealth.

Question 16

Inductive method

Answer 16

Scientific method for gaining knowledge by drawning conclusions from empirical, individual observations about the general.

Question 17

Deductive method

Answer 17

Scientific method for gaining knowledge in which conclusions are drawn from the general to the particular.

Question 18

Falsification

Answer 18

The refutation of a scientific theory or hypotesis through a counter-example.

Question 19

Omitted variable

Answer 19

Is a factor that has not been taked into account and that can explain the results of the investigation.

Question 20

Natural experiment

Answer 20

An empirical research method in which the research units are divided into an experimental group and a control group based on natural events that cannot be controlled by the researcher.

Question 21

Laboratory experiment

Answer 21

Is a man-made experimental arrangement in which a scientist exercises specific control and can exert influence.

Question 22

Why lab experiment have an advantages over empirical work?

Answer 22

They are flexible and repeatable.

Question 23

Model

Answer 23

Image of the real world in which details irrilevant to the investigation of a specific question are excluded based on a set of assumptions.

Question 24

Positive analysis

Answer 24

Maked verifiable statements to describe the relationship between cause and effect.
Describe how the world actually is.

Question 25

Normative analysis

Answer 25

Is concerned with the examination of the following question “What should be?”
Are prescriptive and aim to show how the world should be.

Question 26

Cannibalization effect

Answer 26

Competition and partial substitution of an existing product due to the marketing of a new product by the same supplier.

Question 27

Platform economy

Answer 27

Internet-based business models that connect providers with interested parties or customers in a digital marketplace.

Question 28

How can it happen that economist contradict each other?

Answer 28

Economist disagree on whether a positive theory for how the world works is actually valid.

Economist have different normative views on how the world should be and what politics should strive to achive.