Week 2

Question 0

Positive Economics is about:

Answer 0

Objective explanation or how people ‘will’ behave

Question 1

Microeconomics can be best defined as dealing with:

Answer 1

The economic behavior of groups of consumers, firms and resource owners

Question 2

Normative Economics is about:

Answer 2

What ought to be done or how people ‘should’ behave

Question 3

Opportunity Cost is…

Answer 3

The value forgone in order to undertake an activity, often based on evaluating the counter factual. Is crucial to ensuring all resources are used efficiently. Involves calculating all the costs of the best option taken

Question 4

True or false, Rational people act only when the marginal benefit of the action exceeds the marginal cost

Answer 4

true

Question 5

Why are trade offs required?

Answer 5

Because wants are unlimited and resources are scarce

Question 6

Suppose you find €20. If you choose to use the €20 to go to a football match, your opportunity cost of going to the game is

Answer 6

€20 (because you could have used the €20 to buy other things) plus the value of your time spent at the game