Ch.1 Intro

Question 1

What is Economics?

Answer 1

the study of how individuals and societies use scarce resources to satisfy unlimited human wants.

Question 2

Define scarcity

Answer 2

The condition where resources are limited and cannot produce all the goods and services that people desire.

Question 3

What are the factors of production?

(theres 3)

Answer 3

Land
- nature provides (ex. oxygren, trees, water,land)
Labour
- human resources (intellect, strength,entrepreneurship)
Capital
- everything human-made (machines, buildings,bank,myeconlab,internet, state, laws

Question 4

How do resources satify wants?

Answer 4

resouces = inputs to produce g/s, which in turn, satisfy human wants

Question 5

Define consumption

Answer 5

the use of g/s, which creates satisfaction

Question 6

What is the objective of economic activity?

hint: satisfy human wants

Answer 6

to satisfy unlimited human wants through consumption of g/s produced by limited resources/factors of production

Question 7

What does scarcity imply?

Answer 7

scarcity implies choice
- a choice is needed, as resources are scarce (ex. when producing something using resources, we cannot use the same resource to produce something else) - a choice is required

Question 8

what does choice imply?

Answer 8

choice implies oportunity cost
- using a resource to produce something results in the opportunity to produce something else

Question 9

what is the opportunity cost of ex. you coming to school today?
a) working
b) anime
c) study
d) sleeping

Answer 9

all of the above

Question 10

Define the PPB/PBF

Answer 10

• a model that illustrates all possible combinations of goods that can be produced with fully and efficiently employed resources.
• illustrates 3 concepts: scarcity, choice, and oppportunity cost

Question 11

Define specialization

Answer 11

The allocation of different jobs to different people, allowing individuals to focus on specific tasks they do relatively well.

Question 12

Define technology

Answer 12

the relationship between resouce (input) and production (output). Better technology means = more produced efficiently, by using same or less resources to produce the same output

Question 13

1 of 4 Key economic problems

What is produced and how?

Answer 13

Resource Allocation: This problem deals with how scarce resources are allocated among different uses. It determines the quantities of various goods produced.

Question 14

2 of 4 Key economic problems

What Is Consumed and by Whom?

Answer 14

Distribution of output: This problem focuses on how the total output of an economy is distributed among its people.

Question 15

3 of 4 key economic problems

Why Are Resources Sometimes Idle?

Answer 15

Idle Resources: This problem examines why resources (like labor and capital) are sometimes not fully utilized.

Question 16

4 of 4 key economic problems

Is Productive Capacity Growing?

Answer 16

• Economic Growth: This problem looks at whether the economy’s ability to produce goods and services is increasing over time.
• Factors: Technological advancements, investments in capital, and improvements in labor skills contribute to growth.

Question 17

MACRO VS MICRO

Answer 17

Micro: how resources are allocated through the price system, interaction of individual economic ag ents: consuemrs, producers and government
deals w/ econ problems 1&2
Macro: deals with economic aggregates like total output (GDP), inflation, employment
deals w/ econ problems 3&4

Question 18

Name the 3 basic types of Economic systems

Answer 18

Traditional Economy
Command Economy
Free-Market Economy

Question 19

(1 of 3 basic econ. systems)

What is traditional economy

Answer 19

Economic behavior is primarily guided by customs, traditions, and habits. Mainly operates in small self-sustaining communities without much of a formal market or government intervention.
- ex. jobs being handed down through generations

Question 20

(1 of 3 basic econ. systems)

What is command economy?

Answer 20

In a command econ, central decision maker (government) makes all the decisions.

Question 21

(1 of 3 basic econ. systems)

what is free market economy?

Answer 21

Free-market Economy is characterized by decentralized decision making. Individual buyers and sellers interact with each other in a market environment with price acting as the coordinating device

Question 22

Define Mixed economy

Answer 22

economies w/ characteristics that are a mix of command, free market, and some traditional behaviour.

Question 23

A model
a) takes a few variables
b) makes some assumptions about them
c) uses the variable definitions and assumptions ( and usually some analysis of them) to come up with a prediction

Answer 23

all of the above

Question 24

Define Endogenous variables

Answer 24

The dependent variable: value is determined within the model

Question 25

Define Exogenous variables

Answer 25

The independent variable: value given from outside the model

Question 26

Define Assumptions in models

Answer 26

Relations/conditions about the variables that are assumed to be true by modeler

Question 27

Define Predictions in models

Answer 27

Propositions deduced from the model, result of the model

Question 28

When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer? a) How do we produce the products? b) Who consumes the products? c) What products do we produce?

Answer 28

a) How do we produce the products?

Question 29

The principle of opportunity cost evolves from the concept of _______. a) scarcity b wealth c) consumer spending d) poverty

Answer 29

a) scarcity

Question 30

Where on the PPB represents efficient resource allocation?

Answer 30

anywhere along the curve

Question 31

In what type of economy does the government decide how economic resources will be allocated?

Answer 31

A centrally planned economy

Question 32

macroeconomics can be used to understand all of these topics except ________. a) how the national economy works b) how a consumer decides between the purchase of two different cars c) what causes economic booms and recessions d) national unemployment trends

Answer 32

b) how a consumer decides between the purchase of two different cars.