Economic Problem

Question 1

What is Free Good

Answer 1

A free good is a good that does not command a value in the market

Question 2

What is an Economic good

Answer 2

An economic good is a good that commands a value in the market. It is a scarce good

Question 3

What is scarcity

Answer 3

Scarcity refers to the premises that humans have unlimited wants and needs and the resource used for these unlimited wants and goods are limited( finite)

Question 4

What does it mean that there is a scarcity

Answer 4

It means that choices need to be made for who, how much is required and for whom to produce the goods and services for

Question 5

What are the four factors of production and what is their factors of payment

Answer 5

Four Factors are:
Land-rent
Labour-wages
Capital-interest
Enterprise-Profit

Question 6

What is each Factor of production used for

Answer 6

Land- generates many different raw materials
Labour-measure of work carried out by humans.
Capital-the physical and non-human input used in production such as machinery
Enterprise-the role of entrepreneurs in an economy

Question 7

How many economics agents are their and what are they

Answer 7

There are 3 economic agents
Households
Government
Firms

Question 8

What do economic agents try to maximise on

Answer 8

Households try to maximise Utility
Firms try to maximise their profits
Government try to stabilise the economic and avoid excess unemployment to achieve economic growth over time

Question 9

What is a the difference between normative and positive statement

Answer 9

A positive economic statement is objective and fact based whilst a normative statement is subjective and value based.

Question 10

What is a positive economic statement

Answer 10

A positive economic statement must be able to be tested and proved or disproved

Question 11

What is a normative economic statement

Answer 11

A normative economic statement are opinion based so they cannot be proved or disproved.