Unit 1 Introduction To Microeconomics

Question 1

What is economics

Answer 1

The study of scarcity the study of how people use resources and respond and respond to incentives or the study of decision making

Question 2

Basic economic problem

Answer 2

Individuals have unlimited wants yet have limited resources to satisfy such wants

Question 3

Definition of a need

Answer 3

Something needed to survive

Question 4

Definition of want

Answer 4

Something that is desired

Question 5

What is a normative statement

Answer 5

Statements that make a vague judgement about what ought to be or what should be

Question 6

Positive statement economic

Answer 6

Statements that describe the world as it is, without making any value judgementa

Question 7

What sea free good

Answer 7

A good that is not scarce and therefore is available without limit

Question 8

What is an economic good

Answer 8

Items that satisfy human wants and provide utility or usefulness and are scarce

Question 9

Difference between micro and macro economics

Answer 9

Microeconomics is economic behaviours within households and companies and macro economies is the economy regionally and across the world

Question 10

Utility definition

Answer 10

The usefulness or enjoyment s consumer can get from a service or good

Question 11

What are three questions of resource allocation

Answer 11

What ?how? And for whom?

Question 12

What are 4 factors of production

Answer 12

Land
Labour
Capital
Entrepreneurship

Question 13

Rewards of 4 factors of production

Answer 13

Land-rent
Labour-wages
Capital-interest
Entrepreneurship -profit

Question 14

What is opportunity cost

Answer 14

Money or benefits lost by not selecting a particular option during the decision making progress

Question 15

What is meant by rationality

Answer 15

When you make a choice join will choose the thing you like the best

Question 16

3 different economic systems

Answer 16

A command economy
Market economy
Mixed economy

Question 17

Command economy resources

Answer 17

Are allocated through the state and government

Question 18

Command economy resources

Answer 18

Are allocated through the state and government

Question 19

How are resources allocated in market economy

Answer 19

Market use price as signals to allocate resources to there highest valued uses

Question 20

Mixed economy resources

Answer 20

Allocated by a combination of five rent firms and the market

Question 21

Productive efficiency

Answer 21

The ability of a firm to produce goods or services at the lowest possible costs given through level of output and the available technology

Question 22

Allocative efficiency

Answer 22

An efficiency market whereby all goods and services meet the need and wants of society

Question 23

3 economic agents

Answer 23

Producers
Consumers
Government

Question 24

Economic agents allocation of resources

Answer 24

They respond to incentives which can allocate scarce resources to provide the highest utility to each agent

Question 25

assumption of rationality in mainstream economics

Answer 25

People would rather take actions that benefit them versus actions that are neutral or harm them

Question 26

How do you use a ppc diagram to illustrate opportunity costs

Answer 26

A straight line represents constant opportunity cost and a bowed out line repesents increasing opportunity costs

Question 27

How does a ppc diagram illustrate economic growth

Answer 27

Represent by a shift of the ppc

Question 28

How does a ppc diagram illustrate unemployment

Answer 28

When production is inside the production possibilities curve

Question 29

How does a ppc diagram illustrate allocative efficiency

Answer 29

A point on the ppc that meets the need of a particular society

Question 30

How is productive efficiency illustrated in a ppc diagram

Answer 30

Pointe on the ppc that are efficient

Question 31

Why are incentives so important in economics

Answer 31

Motivate people to behave in a certain manner

Question 32

What roles do house hold play in the economy

Answer 32

Sellers in the market for resources

Question 33

What roles do firms play in the economy

Answer 33

They allocate resources to the market

Question 34

What role do the government play in the economy

Answer 34

Provide the legal and social frameworks , maintain competition, provide public good and services and keep a stable economy

Question 35

Advantages of free market economic system

Answer 35

Efficient resource allocation, competition, innovation and product variety

Question 36

What are the disadvantages of free market economy

Answer 36

Monopolies, no government , poor working conditions and unemployment

Question 37

Advantages of free market economy

Answer 37

Efficient resource allocation, competition, innovation and product variety

Question 38

Disadvantages of mixed market

Answer 38

Potentially government failure such as corruption and lack of innovation

Question 39

Advantages of mixed economy

Answer 39

Freedom to posses the means of production , can protest, but sell and hire as needed

Question 40

Advantages of command economy

Answer 40

Government can ensure full employment Government can control inflation Government can develop specific industries

Question 41

Disadvantages of command economy

Answer 41

There is less economic freedom Government can distort pricing signals which lead to inefficiencies in economy

Question 42

Characteristics of command economy

Answer 42

Gove,rental control of wages and pricing, limited property rights,government ownership of key business industries

Question 43

What is the normal range of government spending within which an economy is deemed to be a mixed economic system

Answer 43

mixed economy is an economic system that accepts both private businesses and nationalized government services, like public utilities, safety, military, welfare, and education. A mixed economy also promotes some form of regulation to protect the public, the environment, or the interests of the state.