Chapter 1: Economics SW Flashcards
(37 cards)
What is the meaning of scarcity?
The reality that Human Resources are not unlimited, but are limited to a certain amount.
What is the effect of scarcity?
Scarcity can affect all nations, regardless of their size, population and economic development.
What is the meaning of Relative Scarcity?
A concept where some countries have less particular resources compared to other countries.
How is Scarcity caused?
Scarcity can be caused when a specific item goes high in demand but the stock of the item remains the same. (demand-induced). It can also be caused when the demand of a certain item decreases (supply induced)
What is economics?
Economics is a social science that studies the behaviors of humans.
What is opportunity cost or trade off?
Choosing how to use a resource, giving up a certain item to receive a different item in return.
Explain the basic economic question: “How Much to Produce”
Producers must figure out how much of a certain product they should produce to avoid wasting their resources.
Explain the basic economic question: “For Whom to Produce”
Producers need to have a market for their products. They need to be able to produce things that consumers will need to buy.
Explain the basic economic question: “What to Produce”
Producers need to know what the market needs (what is currently high on demand). This will determine what resources to use in order to maximize them.
Explain the basic economic question: “How to Produce”
Producers must determine what type of production should be used.
Explain what the Production Possibilities Curve is.
It is a graph that is used by economists to show the concept of scarcity and opportunity cost.
Give me the two divisions of economics.
The two divisions of economics are: Microeconomics, and Macroeconomics.
What is Microeconomics?
Microeconomics deals with the behavior of small units of economy.
What is Macroeconomics?
Macroeconomics studies the economy as a whole. Looks at the activities and decisions made by large economic units such as the government.
What is the importance of studying economics?
It broadens the people’s perspective of society. It shows us the reality that people across the
world are economically interdependent and that our
activities affect each other’s ability to satisfy our needs.
Give me the four basic economic questions.
The four basic economic questions are: How Much to Produce, For Whom to Produce, What to Produce, and How to Produce
Define what “needs” are.
Needs can be defined as the basic requirements for survival.
What are all the human needs that fall in the five categories.
Psychological Needs, Safety and Security Needs, Love/Belonging Needs, Esteem Needs, Self Actualization.
Explain the ERG Theory.
Written by Clayton Paul Alderfer, it follows the Maslow Theory. States that people are capable of satisfying their
needs simultaneously, without necessarily following an order or hierarchy.
What are “Wants”?
Wants are things that we consume to satisfy our desires.
Is there a difference between wants and needs?
For economists, they say that there is no different between wants and needs as they are both essential to human existence.
What are wants and needs classified into?
They are classified into economic and non-economic wants.
What is an economic want?
An economic want is satisfied through consumption of tangible goods and product services.
What is a non-economic want?
A non-economic want can be satisfied without spending any money. An example would be love, friendship, and etc.
