1- The Economic Problem

Question 1

Intro to Econ-

What is economics by definition?

Answer 1

Attempting to satisfy unlimited wishes & needs with limited resources.

Question 2

Intro to Econ-

What does economics do?

Answer 2

Calculates & discovers how best to effectively & efficiently satisfy unlimited wishes & needs with limited resources.

Question 3

Intro to Econ-

What does economics study?

Answer 3

The behaviour of humans & their relations to the economy either as individuals or as part of organisations, & their use of scarce resources.

Question 4

Intro to Econ-

Economists develop…

Answer 4

Theories & create economic models to explain phenomena.

Question 5

Intro to Econ-

Economists use…

Answer 5

Simplifying assumptions to limit the number of variables in an investigation.

Question 6

Intro to Econ-

Economists use empirical data to…

Answer 6

Improve & revise their economic models.

Question 7

Intro to Econ-

Economists use economic models to make…

Answer 7

Predictions.

Question 8

Intro to Econ-

What is empirical data?

Answer 8

Empirical data is data collected from experiments or real-life observations.

Question 9

Intro to Econ-

What is the translation of Ceteris Paribus from Latin?

Answer 9

‘All other things remaining equal.’

Question 10

Intro to Econ-

What is Ceteris Paribus?

Answer 10

The assumption that all other variables will remain the same in a study between the relationship of two factors.

Question 11

Into to Econ-

Why is Ceteris Paribus used?

Answer 11

To simplify what is being researched, it provides the ability to navigate the problem of the existence of multiple variables in an economy.

Question 12

Intro to Econ-

What does Ceteris Paribus enable economists to do?

Answer 12

Develop theories and models, and make predictions.

Question 13

Intro to Econ-

What are normative statements?

Answer 13

People’s opinion, subjective statements containing a value judgement, to agree or disagree with.

Question 14

Intro to Econ-

What are positive statements?

Answer 14

Objective statements that can be tested against by empirical data.

Question 15

Intro to Econ-

Why are normative statements important?

Answer 15

They influence decision making and government policy.

Question 16

Intro to Econ-

Why are positive statements important?

Answer 16

They can be tested to see whether economic ideas are correct.

Question 17

Intro to Econ-

Why may economic decisions not make economic sense?

Answer 17

• Normative statements
• Moral views and value judgments
  -Political judgments
  -Short term positive consequences

Question 18

The Economic Problem-

What are the four factors of production?

Answer 18

Capital
Enterprise
Land
Labour
(CELL)

Question 19

The Economic Problem-

What is Land?

Answer 19

Territory and Earth’s natural resources.

Question 20

The Economic Problem-

What are some non-renewable resources?

Answer 20

Natural fuel, oil, coal etc.

Question 21

The Economic Problem-

What are some renewable resources?

Answer 21

Wind, tidal power, trees etc.

Question 22

The Economic Problem-

What are the three other natural resources other than renewable and non-renewable?

Answer 22

Materials (minerals extracted from mining eg gold, iron) water & animals.

Question 23

The Economic Problem-

Nearly all resources falling under the category of Land are…

Answer 23

Scarce.

Question 24

The Economic Problem-

True or false:
You can sell non- scarce resources.

Answer 24

False.
You can only sell scarce resources as they hold value.

Question 25

The Economic Problem- How is air considered a scarce resource?

Answer 25

Some land holds less polluted air making it more valuable, good air is scarce.

Question 26

The Economic Problem- Is the environment considered a scarce resource?

Answer 26

Yes.

Question 27

The Economic Problem- What is Labour?

Answer 27

The work done by people who contribute to the production process.

Question 28

The Economic Problem- What is the labour force?

Answer 28

The population who are available to do work.

Question 29

The Economic Problem- What is human capital?

Answer 29

How valuable an individual is for the economy.

Question 30

The Economic Problem- What factors increase a person’s human capital?

Answer 30

High levels of education, qualifications, experience, training.

Question 31

The Economic Problem- What is capital?

Answer 31

The equipment used in producing goods and services.

Question 32

Production Possibility Frontiers- What is another name for PPFs?

Answer 32

PPC: production possiblity curves. PPB: production possibility boundaries.

Question 33

Production Possibility Frontiers- What do PPFs show?

Answer 33

The maximum possible output.

Question 34

Production Possibility Frontiers- At what point of the PPF graph shows the most efficient in use of resources?

Answer 34

On the curve.

Question 35

Production Possibility Frontiers- What is a PPF graph used for?

Answer 35

To calculate and observe the most productive use of resources when evaluating two products. (Eg capital vs consumer goods)

Question 36

Production Possibility Frontiers- What is a ‘trade-off’?

Answer 36

When you have to choose between conflicting objectives, it involves compromising.

Question 37

Production Possibility Frontiers- All points of a PPF graph represent…

Answer 37

A different choice or opportunity.

Question 38

Production Possibility Frontiers- Why do we attempt to use all resources as efficiently as possible?

Answer 38

To produce the maximum possible output.

Question 39

Production Possibility Frontiers- What makes some points on a PPF graph’s curve