deck 1

Question 1

Fundamental economic problem

Answer 1

humans have infinite wants, but resources are finite

Question 2

3 economics question

Answer 2

What do we produce (products) How do we produce it (capital) For whom do we produce it

Question 3

Positive statements

Answer 3

statements that can be objectively proven correct or false using facts

Question 4

Normative statements

Answer 4

statements that involve opinions or value judgements.

Question 5

Macroeconomics

Answer 5

study of economics as a whole (nationally)

Question 6

Microeconomics

Answer 6

Study of economy at the level of individuals firms

Question 7

Scarcity

Answer 7

The world’s resources are limited but human wants and needs are infinite, therefore resources have to be allocated

Question 8

Factors of production

Answer 8

Land (physical and natural resources) Labour (workers) Capital (used but not forms part of it) physical, human,and infrastructure Enterprise (organizes the factors of productions, risk takers, and uses time and money to sell product

Question 9

free goods

Answer 9

no opportunity cost (water)

Question 10

economics goods

Answer 10

scarce, has opportunity cost

Question 11

Economic growth

Answer 11

increase in a country’s national output in GDP. One dimensional movement indie the PPC

Question 12

Economic development

Answer 12

increase in potential capacity. result: is standard of living increases. More choices and freedoms available. PPC is shifted

Question 13

Human Development Index

Answer 13

Indicator of Economic development (life expectancy, literacy and school enrollment, GDP per Capita

Question 14

Sustainable growth

Answer 14

refers to economic development that meets the needs of present generation and future ones too.

Question 15

Planned economics

Answer 15

where the government answers the 3 economic questions. All resources are collectively owned.

Question 16

Free market economics

Answer 16

price is used to ration the goods and services. The industry is in private hands where supply and demand are free to set wages and prices.

Question 24

Productive efficiency

Answer 24

goods are produced at the lowest possible average cost (any point on PPC because there is no waste)

Question 25

allocative efficiency

Answer 25

when supply = demand (is somewhere on the PPC, only one point)

Question 26

Demand

Answer 26

quantity of a good consumers are willing and able to consume at any given price.

Question 27

law of demand

Answer 27

as the price of a good rises, the quantity demanded decreases

Question 28

Ceteris Paribus

Answer 28

all other things being equal

Question 29

income effect

Answer 29

if the price of a good or service rises, people will feel poor and buy less.

Question 30

substitution effect

Answer 30

when price of a good or service rises, people will look elsewhere for other options to satisfy their needs.

Question 31

Quantity demanded

Answer 31

amount of a good consumers are willing and able to buy at a given price

Question 32

Tripe

Answer 32

tastes and preferences (fashion) related goods income population Expectations (forecasting)

Question 33

Utility

Answer 33

the value of a good to consumers

Question 34

Market

Answer 34

A place (virtual or real) where buyers and sellers meet to exchange goods or services.

Question 35

Demand Curve

Answer 35

slopes downwards because of income and substitution effects

Question 36

Diminishing marginal utility

Answer 36

decrease in the extra utility gained from consumption of one more unit

Question 37

Supply

Answer 37

the quantity of a good or service that producers are willing and able to produce at any given price

Question 38

law of supply

Answer 38

as price of a good rises, the quantity supplied will increase

Question 39

quantity supplied

Answer 39

the amount of a good or service producers are willing and able to produce at a given price

Question 40

non-price determinants of supply

Answer 40

Cost of factors of production State of Technology Government intervention other goods suppliers could produce Random shocks and unpredicted events expectations Fe Gost

Question 41

Consumer surplus

Answer 41

difference between what consumers are willing and able to pay, and what they have to pay

Question 42

producer surplus

Answer 42

difference between the price producers are willing and able to supply at and and the market price

Question 43

Minimum price

Answer 43

price level illegal to sell goods and services below

Question 44

maximum price

Answer 44

vice versa

Question 45

Minimum wage

Answer 45

legal minimum employees must be paid.

Question 46

equilibrium

Answer 46

stable state...