Chapter 1-economic activity in context

Question 1

4 essential economic activities:

Answer 1

1) resource management
2) production
3) distribution
4) consumption

Question 2

Positive questions

Answer 2

How things are

Deskriptiv

Question 3

Normativ questions

Answer 3

How things should be

Question 4

Intermediate goals

Answer 4

Desireable because it’s achievement will bring you closer to your final goal
(Zwischenziel)

Question 5

Final goal

Answer 5

Requires no further justification

Selbstzweck

Question 6

GDP

Answer 6

Market value of all final goods and services produced within a country’s borders over a year

Question 7

Economic efficiency

Answer 7

Highest possible output with using lowest possible input

Question 8

Critic on economic efficiency

Answer 8

• implicit value is money/market value/price
• willingness to pay for something is influenced by ability to pay.
  (—> more power over what is valued for ppl with more money)
• no price =no value?

Question 9

Dimensions of better life index

Answer 9

• Housing
• income
• jobs
• Community
• Environment
• civic engagement
• health
• life satisfaction
• safety
• work- life Balance

Question 10

Negative/positive externalities

Answer 10

Harmful/positive side effects or unintended consequences of economic activity that affect those who are not involved in the activity

Question 11

Three basic economic question

Answer 11

1) what?
2) how?
3) for whom?

Question 12

Scarcity

Answer 12

(Knappheit/Begrenztheit)

Resources are not sufficient to allow all goals to be accomplished at once

Question 13

Production-possibilities frontier (PPF)

Answer 13

Indifferenzkurve

Question 14

Trade-offs

Answer 14

Scarcity produces need for trade-offs

Abtausch,Tausch

Question 15

Opportunity costs

Answer 15

The value of the best alternative that is forgone when a choice is made

Question 16

SDG, costs per year

Vs military spent per year

Answer 16

(Sustainable Development Goals)
1,4 Trillion
Military
1,7 Trillion

Question 17

technological progress

Answer 17

The development of new methods of converting inputs (resources) into outputs(products and services)

Question 18

Microeconomics

Answer 18

Focus -> inside/within a society

Question 19

Macroeconomics

Answer 19

Focus: -> Economy as a whole

Question 20

Modell

Answer 20

An analytical tool that highlights some aspects of reality while ignoring others

Question 21

Differences in traditional economy?

Answer 21

• only 3 economic activity’s (no resource dimension)
• production is only performed by firms
• all exchange is performed in markets
• consumption is only done by households

Question 22

Circular flow diagram

Answer 22

Pic

Graphical representation of the traditional view on economy consisting of households and firms engaging in exchange

Question 23

Factor markets

Answer 23

For the service of land, labor and capital

Question 24

Product markets

Answer 24

Markets for newly produced goods and services

Question 25

Core sphere

Answer 25

Households, families, and informal community groups

Question 26

Business sphere

Answer 26

Firms that produce goods and services for profitable sale

Question 27

Public purpose sphere

Answer 27

Governments as well as other organizations that seek to enhance well-beeing without making a profit