1. Intro To Microeconkmics

Question 1

what is the basic economic problem

Answer 1

people have an infinite amount of wants and needs, but a finite number of resources

Question 2

define scarcity

Answer 2

a situation that arises as people have unlimited wants in face of limited resources

Question 3

what are economic goods

Answer 3

goods that are scarce

Question 4

define free goods

Answer 4

goods that are not usually regarded as being scarce (e.g earths atmosphere)

Question 5

define poverty

Answer 5

situation in which individuals lack the basic necessities of life or have low incomes relative to their flow citizens

Question 6

what are firms

Answer 6

an organisation that produces goods and services

Question 7

compare positive to normative statements

Answer 7

positive statements are based on facts whereas normative involve value judgement on what ought to be

Question 8

what are the three economic agents

Answer 8

firms
households
governments

Question 9

what is the main motive of households

Answer 9

to maximise benefits

Question 10

what is the main motive of firms

Answer 10

maximise profits

Question 11

what is the main motive of governments

Answer 11

to maximise social well fare

Question 12

what are the four factors of production and their benefits

Answer 12

land-rent
labour-wage
capital-interest
enterprise-profit

Question 13

define opportunity costs

Answer 13

value of the next best alternative forgone

Question 14

what is the production productivity curve

Answer 14

curve showing the maximum combination of two goods or services that can be produced in a set period of time given available resources

Question 15

what does it mean if the point is within the PPC curve

Answer 15

-indicates inefficient use of resources

Question 16

what does it mean if the point is on the PPC curve

Answer 16

-indicates allocative efficiency, it is the maximum possible output of goods

Question 19

Define opportunity cost

Answer 19

The value of the next best alternative forgone

Question 20

What are the 3 types of efficiency

Answer 20

Allocative
Productive
Pareto

Question 21

What is Pareto efficiency

Answer 21

When nobody can be made better off without making someone worse off

Making more of one thing that another

Question 22

What is allocative efficiency

Answer 22

What is benign produced is satisfying consumer wants

Question 23

What is productive efficiency

Answer 23

Any point on the ppf where resources are being used to their maximum potential

Question 24

What is a trade off

Answer 24

Situation in which choice of one alternative requires sacrifice of another

Question 25

3 positives of specialisation

Answer 25

Better allocation of resources Allows for trade More productivity

Question 26

What is a barter system

Answer 26

Economy without money so that goods and services rely on direct exchange

Question 27

Main government motive

Answer 27

Maximise social wellfare

Question 28

What are the 3 assumption of the ppc curve

Answer 28

Simplified production into 2 goods only Resources are mobile between production of the two FOP are fixed

Question 29

Define specialisation without econ

Answer 29

Process of concentrating on it to become expert

Question 30

Define division of labour

Answer 30

Process where production procedure is broken down into a sequence of stages and workers are assigned particular stage s

Question 31

3 benefits of specialisation

Answer 31

Increased efficiency Higher output Lower COP Innovation

Question 32

Costs of specialisation

Answer 32

Over reliance on trade Structural unemployment of industry declines Loss of skills Repetitive

Question 33

What is comparative advantage

Answer 33

When a country is better at producing more effectively that another

Question 34

What are benefits of trade

Answer 34

Access to a wider market Variety of foods for consumers More competition

Question 35

Costs of trade 3

Answer 35

Over reliance Trade imbalance Negatively impact domestic industries

Answer 36

Over reliance Trade imbalance Negatively impact domestic industries