1.Economics

Question 1

What is economics?

Answer 1

A social science and a way of thinking and analyzing that can be applied to all decisions we make using economic and scientific models

Question 2

What are Diane Coyle’s “incontrovertible principles”?

Answer 2

1. Everything has a cost
2. Supply and Demand work
3. Prices make the best incentives
4. Economics is about happiness
5. People can do what they want.
6. There’s no easy profit

Question 3

What is capitalism?

Answer 3

An economic system in which private capital is used to produce or distribute goods, and prices are determined mainly in a free market.

Question 4

What are the factors of production?

Answer 4

Land, Labor, and Capital

Question 5

Macroeconomics

Answer 5

Economic as a whole, levels of employment, how wealth is created on national and global state.

Question 6

Microeconomics

Answer 6

Studies individual firms and its managers, the choices made to allocate their limited resources and how it enables some firms to grow.

Question 7

What are the two models economists work with?

Answer 7

Positive (as it is) and normative (ought to be)

Question 8

To function well, markets needs:

Answer 8

1. Transaction costs kept in check
2. People can be trusted
3. Competition is fostered
4. Property rights are protected
5. Externalities are curtailed
6. Information flows smoothly

Question 9

What is the supply and demand model?

Answer 9

An economic model that explains the behavior of consumers and producers

Question 10

Label the supply and demand model

Answer 10

Look at the notebook
Key words: demand, supply, equilibrium, shortage, surplus

Question 11

What is Heilbronner’s Fundamental Economic Problem? What are the possible solutions?

Answer 11

How do we make sure that we have what we need? Tradition, command, and market

Question 12

Behavioral Economics

Answer 12

The study of how social, cognitive, and emotional factors affect the economic decisions of individuals and institutions; the blending of psychology, neuroscience, and microeconomics theory.

Question 13

Variable costs

Answer 13

Direct cost, direct labor, materials, distribution (vary input and output)

Question 14

Fixed costs

Answer 14

Costs not affected by volume depreciation, rent, labor management, electricity, utilities

Question 15

The three pillars on which business decisions are made

Answer 15

Cost, Value, Price

Question 16

What is value in use?

Answer 16

Wanting satisfying power of a commodity

Question 17

What is value of exchange?

Answer 17

The amounts of goods and services we may obtain in market in exchange for a particular thing