Chapter 1

Question 1

10 Key Concepts to retain for life (The Individual (4) )

Answer 1

Facing Trade Offs, Opportunity Costs, Choosing little more/less, Influence of Incentives

Question 2

10 Key Concepts to retain for life (Interaction among individuals (3) )

Answer 2

Specialization and Trade, Role of Governments, Effectiveness of Markets

Question 3

10 Key Concepts to retain for life (Economy as a whole (3) )

Answer 3

Production and standard of living, money and inflation, Inflation-Unemployment trade off

Question 4

Facing Trade Offs

Answer 4

Products are scare, you must make trade offs and choices

Question 5

Opportunity Cost

Answer 5

cost of the choice you make is what you give it up for

Question 6

Choosing a little more/less

Answer 6

Choices made at margin do I buy more or less

Question 7

Influence of incentives

Answer 7

choices influenced by motives and encouragements

Question 8

Specialization and trade

Answer 8

trade usually will improve well being of participants

Question 9

effectiveness of markets

Answer 9

coordinates trade among individuals groups and nations

Question 10

Role of Governments

Answer 10

occasionally improve the coordinating function of markets

Question 11

production and standard of living

Answer 11

standard living of a person in country is dependent on its production of goods and services

Question 12

Money and Inflation

Answer 12

more money printed means growth of output of goods and services, this can lead to inflation

Question 13

unemployment trade off

Answer 13

in short run society faces a short run trade off between inflation and its level of unemployment

Question 14

Economic problem

Answer 14

wants greater then resources needed to make those desires

Question 15

scarcity

Answer 15

resources limited so restricts options and requires choices

Question 16

human utility

Answer 16

pleasure happiness satisfaction obtained from consuming good or service

Question 17

no free lunch?

Answer 17

choices always come with a cost

Question 18

purposeful behaviour

Answer 18

individuals are rational humans want to make optimal choices but emotions ruin it

Question 19

Marginal Analysis

Answer 19

Comparing Benefits and Cost

Question 20

Economic Principle

Answer 20

Widely accepted economic theory about economic behaviour

Question 21

Economic Theories contain (4)

Answer 21

purposeful simplification, generalization, other things equal, graphical expression

Question 22

purposeful simplification

Answer 22

full economic reality itself is too complex simplify is better analysis

Question 23

generalization

Answer 23

principles are generalized relating to groups, facts, data. observations to identify a part of the whole as the whole

Question 24

other things equal

Answer 24

only 1 variable changes, all other factors remain constant

Question 25

microeconomic

Answer 25

concerned with decision making by individual customer, workers, household, firms ex price of product, income,

Question 26

macroeconomics and what does it focus on

Answer 26

examines performance and behaviour of economy as a whole, focus on economic growth, business cycle, interest rate, aggregates

Question 27

aggregate

Answer 27

collection of specific economic units treated as one unit

Question 28

positive economic statement

Answer 28

the facts, WHAT IS actually happening, numbers

Question 29

normative economic statement

Answer 29

subjecting, describes what economy SHOULD be like

Question 30

economic problem

Answer 30

need to make choices, wants unlimited while resources and means limited. Choices have trade off and have oppt cost

Question 31

Budget Line Contrast (5)

Answer 31

point on graph=consumption bundle, fractions allowed, attainable and efficient=on line, attainable and inefficient=inside line, unattainable=outside line

Question 32

Is oppt cost constant on budget line

Answer 32

yes

Question 33

Factors of production/inputs

Answer 33

all natural, human, and manufactured, resources, that go into production of goods and services

Question 34

Land

Answer 34

gifts of nature, natural resource

Question 35

labour

Answer 35

physical actions and mental activities that people contribute to the production of g/s

Question 36

capital

Answer 36

manufacturing aids used in production of goods ex machines tools

Question 37

Entrepreneurial ability 1. is it apart of labour 2. What are the roles of it (5)

Answer 37

1. No | 2. make routine pricing decisions, innovate, create market demand, take risk and make decisions

Question 38

Assumptions of Production Possibility Curve (4)

Answer 38

Full employment, Fixed resources, fixed technology, two goods

Question 39

full employment

Answer 39

economy is employing all its available resources

Question 40

fixed resources

Answer 40

quantity and quality of the factors of production are fixed

Question 41

fixed technology

Answer 41

methods used to produce output is constant

Question 42

consumer goods

Answer 42

products that satisfy wants

Question 43

capital goods

Answer 43

products we produce

Question 44

law of increasing opportunity costs (3)

Answer 44

shape is concave, resources not completely adaptable to alternate uses. the more we make the more each additional costs

Question 45

marginal benefit

Answer 45

satisfaction or utility a consumer receives when additional good or service is purchased

Question 46

marginal cost

Answer 46

change in total cost to produce additional good or service

Question 47

MB>MC MB=MC MB < MC

Answer 47

Produce more remain same scale back

Question 48

Pointes under PPF Curve

Answer 48

unemployment and productive inefficient

Question 49

unemployment and productive inefficiency

Answer 49

economy not operating at full potential, using all available resources, or producing optimal amount

Question 50

ways to grow economy and shift production possibilities curve

Answer 50

increase factor supply, and quantity, advance technology.

Question 51

STUDY GRAPHS

Answer 51

budget line, PPF, oppt cost, economic growth, MB/MC