Lesson 2

Question 1

Is the study of economics in relation to real world situations.

-It is the application of economic principles and theories to real situations and trying to predict what the outcomes might be.

-The study of observing how theories work in practice.

Answer 1

Applied Economics

Question 2

The term “ applied economics” is believed to have started 200 years ago in the writing of two Economist:

Answer 2

*Jean-Baptiste Say (1767-1832)
*John Stuart Mill (1806-1873)

Question 3

The importance of Applied Economic Application:

Answer 3

*Applying economics to the status of the economy of the company, household or a country
*Applied Economics acts as a mechanism to determine what steps can be reasonably taken to improve the current economic situation.
*Applied Economics can teach valuable lessons on how to avoid the recurrence of a negative situation, or at least minimize the impact.

Question 4

Applied Economics acts as a mechanism example:

Answer 4

Purchase of goods and services, Usage of Raw Materials, Division of labor within the entity.

Question 5

the application of statistical and mathematical theories to economics

Answer 5

Econometrics

Question 6

purpose of
Econometrics:

Answer 6

Testing Hypothesis
Forecasting Future Trends

Question 7

Basic economic problems

-Satisfying various needs is the central problem of our economic life.

-It is also refers to the tension between our limited resources and our unlimited wants and needs

Answer 7

Scarcity

Question 8

And because of scarcity, __________________ arises.

Answer 8

poverty, unemployment, inflation, and slow growth

Question 9

Because of the scarcity of resources, every economic system is faced with the following problems:

Answer 9

*What to produce?
*How to produce?
*For whom shall goods and services be produced?
*Are the country’s resources being utilized, or are some of them lying idle and unemployed?
*Is the economy’s capacity to produce goods growing or remaining the same overtime

Question 10

The system must determine the desire of the people

Answer 10

What to produce?

Question 11

The system must select the proper combination of economic resources in producing the right amount of output.

Answer 11

How to produce?

Question 12

This is something to do with the distribution. Once the goods are produced, how shall they be distributed?

Answer 12

For whom shall goods and services be produced?

Question 13

When resources are scarce, it is absolutely not right to keep some of the available ones idle.

Answer 13

Are the country’s resources being utilized, or are some of them lying idle and unemployed?

Question 14

To achieve a growth is productive capacity is a universal objective.

Answer 14

Is the economy’s capacity to produce goods growing or remaining the same overtime