What is Economics?

Question 1

Social Sciences

Answer 1

academic disciplines that studies human society and social relationships

Question 2

Microeconomics

Answer 2

examines the behaviour of individual decision making units, consumers and firms

Question 3

macroeconomics

Answer 3

examines the economy as a whole to obtain a broad or overall picture of the economy

Question 4

scarcity

Answer 4

resources are insufficient to satisfy unlimited human needs or wants

Question 5

choice

Answer 5

due to scarcity, resources can’t satisfy unlimited needs or wants, therefore a choice must be made about what will be produced and what will be forgone

Question 6

efficiency

Answer 6

the best possible use of scarce resources to avoid waste

Question 7

allocative efficiency

Answer 7

state in the economy where production represents consumer preferences. Using resources whilst pleasing the wants/needs of people

Question 8

equity

Answer 8

the idea of being fair and just, rather than equal. People who have less are more supported by systems including the government and can be displayed in a gini coefficient.

Question 9

economic wellbeing

Answer 9

this includes security (income, job, housing), ability to pursue your goals and have a satisfactory quality of life. additionally, the ability to maintain this overtime

Question 10

sustainability

Answer 10

maintaining the ability of the environment and the economy to continue to produce and satisfy the needs into the future. This involves using resources in ways and at rates that do not reduce their quality or quantity into the future.

Question 11

change

Answer 11

change is an important aspect in economics in Bothe economic theory and real life events

Question 12

interdependence

Answer 12

idea that economic decision-makers interact and depend on each other (occurs on multiple levels - individual, nation, ect). No one is self-sufficient and we depend on one another for the achievement of their economic goals.
increase globalisation = increase interdependence

Question 13

intervention

Answer 13

the government becomes involved with the workings of the market. It is often to achieve quite, sustainable economic wellbeing or efficiency. e.g. welfare payments

Question 14

economics

Answer 14

the study of choices leading to the best possible use of the scarce resources in order to best satisfy unlimited human needs and wants

Question 15

resource

Answer 15

what is used to produce a good or service

Question 16

GDP

Answer 16

measure of the total wealth produced in a country in a year

Question 17

factors of production - land

Answer 17

all natural resources including agricultural and non-agricultural land, as well as anything above and below the land. e.g minerals, oil reserves, forest, river

Question 18

factors of production - labour

Answer 18

physical and mental effort that people contribute to the production of goods and services. e.g. teacher, doctor, farmer

Question 19

factors of production - capital (physical)

Answer 19

manmade factor of production ( it itself is produces) used to produce goods and services. e.g tractor, machinery, factories

Question 20

factors of production - entrepreneurship

Answer 20

human skill involving the ability to innovate by developing new ways of doing things and organises the other three factors of production

Question 21

opportunity cost

Answer 21

the value of the next best alternative that must be given up or sacrificed in order to obtain something else

Question 22

free good

Answer 22

a good that is not scarce and therefore has no opportunity cost. this does not include free benefits from the government because they still have to pay for it (like state schools)

Question 23

economic good

Answer 23

any good that is scarce because it is a naturally occurring scarce resource (gold, coal, oil) or because it is produced by scarce resources.

Question 24

resource allocation

Answer 24

assigning of available resources or factors of production to specific uses chosen among many possible alternatives

Question 25

reallocation of resources

Answer 25

a change to resource allocation where different amounts of products are produced

Question 26

overallocation

Answer 26

too much of a resource is allocated to produce a good or service

Question 27

under allocation

Answer 27

not enough of a resource is allocated to produce a good or service

Question 28

distribution of output

Answer 28

how much output different people receive and it depends on the distribution of income

Question 29

distribution of income

Answer 29

how much income people receive this affects the distribution of output

Question 30

redistribution of income

Answer 30

distribution of income or output changes so social groups receive more or less income/ output compared to their previous state

Question 31

market method (free market economy)

Answer 31

decisions are made by individuals and consumers, the government is not involved. resources are owned by private individuals and its consumers and firms who make economic decisions be responding to prices determined in markets

Question 32

command markets (planned economy)

Answer 32

resources (particularly land and capital) are owned by the government, which makes economic decisions on command (legislation and regulations)

Question 33

mixed economy

Answer 33

real-world economies are a mix on a free market economy and a planned economy

Question 34

government intervention

Answer 34

governments make decisions that effect the economy. it usually changes the allocation of resources which markets usually achieve on their own.

Question 35

model

Answer 35

simplified representation of something in the real world. It allows is to focus on important relationships

Question 36

economic growth

Answer 36

refers to the increase in the quantity of output produced in an economy over a period of time. It is often measure by GDP

Question 37

circular flow of income model

Answer 37

model that shows the flow of resources from consumers to firms, and the flow of products from firms to consumers. As well as money flow consisting of consumers income from the sale of their resources and firms revenues from the sale of their products.

Question 38

logic

Answer 38

reasoning which involves making a series of statements each of which is true if the previous statement is true. the truth of a final statement is based on the truth of the previous statements

Question 39

hypotheses

Answer 39

an educated guess on a cause and effect relationship about and event.

Question 40

ceteris paribus

Answer 40

idea that only one independent variable is being changed and the rest are being kept constant

Question 41

empirical evidence

Answer 41

real world information, observations and data that we acquire through our experiences. this is used to support or reject hypotheses

Question 42

theories

Answer 42

tries to explain and giver a logical explanation to WHY certain events happen. it attempts to organise complex and interrelated events and present them in a coherent way to explain why these events happen

Question 43

laws

Answer 43

predicts about certain initial conditions and is primarily concerned about WHAT HAPPENS. it also has to have international validity (valid everywhere) and are the building blocks to theories.

Question 44

refutation

Answer 44

to contradict something, disprove it or show it to be false

Question 45

utility

Answer 45

satisfaction drom consuming something

Question 46

marginal utility

Answer 46

additional satisfaction from each additional unit consumed until it reaches a point were you don’t want it any more even if it’s free