Basic Economic Concept

Question 1

Want

Answer 1

Want is human desire, which has nothing to do with purchasing power

Question 2

Demand

Answer 2

Refers to a desire backed up by the ability to satisfy that desire

Question 3

Scarcity definition

Answer 3

Refers to a situation which the amount of resources is insufficient to satisfy all our wants

Question 4

Characteristics of scarcity

Answer 4

General and permanent phenomenon
Relative concept
People want or prefer to have more of it
There is a price for scarce goods

Question 5

Definition of opportunity cost

Answer 5

The highest-valued option forgone

Question 6

Competition and discrimination

Answer 6

Unlimited wants and limited resources leads to scarcity—> choice—> opportunity cost/ conflict—> competition—> discrimination

Question 7

Definition of competition

Answer 7

Resolve the interpersonal conflict

Question 8

Definition of discrimination

Answer 8

Criterion to separate winner from the loser

Question 9

Free good

Answer 9

The quantity available is enough to satisfy human wants
People do not want to have more of it
It does not have market price
There is no opportunity cost in the process of production

Question 10

Economics goods

Answer 10

The quantity available is not enough to satisfy human wants
People want to have more of it
It has market price
It involves opportunity cost in the process of production

Question 11

3 basic economic problems

Answer 11

What to produce? (Types and quantities of goods and services)
How to produce? (Method)
For whom to produce (allocation and distribution)

Question 12

Four types of economy

Answer 12

Traditional economy
Uses customs or religion to solve three basic economic problems
Market economy (capitalist economy)
Uses price mechanism to solve three basic economic problems and respect, private poverty right (right to use, right to divide and right to transfer)
Planned economy (communist economy and command economy)
The central government solves three basic economic problems in planned economy, and most of resources are owned by the government
Mixed economy
Composition of traditional ,market and planned economy to solve the 3 basic economic problem

Question 13

Positive statements

Answer 13

There is no value judgement
It can be tested and rejected by facts
It is a theory with predictive power

Question 14

Normative statements

Answer 14

Involves one’s own valued judgement
Cannot be tested and rejected by facts
Not a theory and no predictive power

Question 15

Viewpoint of interest from the lender

Answer 15

Compensation for postponing resources usage

Question 16

Viewpoint of interest from the borrower

Answer 16

Cost for the earlier availability of resources

Question 17

Private goods

Answer 17

Refers to those goods when people are consuming of it. Its quantity available for others will decrease (I.e. rival)
And the owners can stop others from using them (I.e. Excludable)

Question 18

Public goods

Answer 18

Refers to those goods when people are consuming of it. Its quantity available available for others will not be affected (I.e. non-rival) and the owners cannot stop others from using them (I.e. non-excludable)