General Terms

Question 1

Define economics

Answer 1

study of the use of scarce resources to satisfy unlimited material human needs and wants

Question 2

Needs

Answer 2

Food, shelter, clothing

Question 3

Wants

Answer 3

Things that a person would like to have but are not needed for survival

Question 4

micro questions

Answer 4

What and how to produce?
How to share?

Question 5

macro questions

Answer 5

Why do some resources lie idle?
How does productive capacity grow?

Question 6

Define opportunity cost

Answer 6

The true cost of one’s best option is what you give up to get it.
ALWAYS the next best option.

Question 7

What is micro economics

Answer 7

examines individual household’s or firm’s decisions and/or looks at individual product or factor markets. It is a “bottom-up” view of the circular flow.

Question 8

What is macro economics

Answer 8

A “top-down” look focusing on the entire flow and broad aggregates and averages.

Question 9

the opportunity cost of training as a lawyer instead of football player

Answer 9

TIME is the scarce resource given up

Question 10

opportunity cost of buying $1000 iPad

Answer 10

• money for savings or spending on the next best thing.

Question 11

opportunity cost of going to pub during exam season

Answer 11

TIME is the scarce resource given up

Question 12

Define factors of production
give three

Answer 12

Recourses used to produce goods and services.
- land
- labor
- capital

Question 13

Define goods

Answer 13

tangible products

Question 14

Define services

Answer 14

intangible products

Question 15

Define production

Answer 15

the act of making goods and services

Question 16

Define consumptions

Answer 16

the acting of using goods or services to satisfy wants

Question 17

What does scarcity imply?

Answer 17

Scarcity implies that choices must be made, and making choices implies the existence of costs.

Question 18

When are opportunity cost incurred?

Answer 18

Every choice you make
- Scarce resources force a choice among competing alternatives

Question 19

Define Production Possibilities Boundary (PPB)

Answer 19

The boundary between obtainable and unobtainable
- a curve of alternative combinations of output when resources are used efficiently

Question 20

How does PPB represent scarcity?

Answer 20

unattainable combinations outside PPB

Question 21

How does PPB represent choice?

Answer 21

Different combinations on PPB

Question 22

How does PPB represent opportunity cost?

Answer 22

negative slope of PPB

Question 23

Define resource allocation

Answer 23

the allocation of an economy’s scarce resources among alternative uses

Question 24

Define Specialization of Labour

Answer 24

Specialization of individual workers in the production of particular goods or services

Question 25

Why must specialization be accompanied by trade?

Answer 25

People who produce only a few things must trade with other people to obtain all the other things they want.

Question 26

Define barter

Answer 26

trading goods for goods (good old fashion days)

Question 27

Define globalization

Answer 27

increased importance of international trade

Question 28

Why did money come to exist?

Answer 28

facilitates trade, which facilitates specialization

Question 29

normative economics

Answer 29

“ought to” or “should”

Question 30

positive economics

Answer 30

“if … then” statements