i hate econs

Question 1

microeconomics

Answer 1

individual parts of the economy + demand and supply of particular goods and services

Question 2

macroeconomics

Answer 2

economy as a whole + aggregate demand and aggregate supply

Question 3

positive statement

Answer 3

statement of fact + can be proven through facts

Question 4

normative statement

Answer 4

statement of opinion + cannot be proved/ disproved by facts

Question 5

what is the problem of scarcity?

Answer 5

limited resources and unlimited wants

Question 6

factors of production (FOP)

Answer 6

CELL - capital, entrepreneurship, land, labour

Question 7

capital

Answer 7

manmade resources (physical capital NOT money)

Question 8

entrepreneurship

Answer 8

overall responsibility of decision-making process

Question 9

land

Answer 9

natural resources

Question 10

labour

Answer 10

human capital

Question 11

opportunity cost

Answer 11

(expected) benefits from the next best alternative (only one) forgone + includes explicit (money) and implicit costs (time, energy, etc)

Question 12

what assumption is made regarding economic agents

Answer 12

they are rational - aim to max. own benefit and min. costs of choice

Question 13

marginalist principle

Answer 13

decisions made at the margin

Question 14

marginal benefit

Answer 14

additional benefit derived from one additional unit of the good

Question 15

marginal cost

Answer 15

additional (opportunity) cost incurred for one additional unity of the good

Question 16

consumer: aim

Answer 16

maximise satisfaction/ utility, subject to income constraints

Question 17

consumer: benefits

Answer 17

marginal private benefit = marginal utility

Question 18

Law of Diminishing Marginal Utility (LDMU)

Answer 18

as the quantity of a good consumed increases, the marginal utility falls

Question 19

consumer: costs

Answer 19

marginal private cost: price paid

Question 20

consumer: decision making

Answer 20

consume if MU>MC
stop when MU=MC
consume less if MU<MC

Question 21

producer: aim

Answer 21

maximise profit

Question 22

producer: benefits

Answer 22

marginal private benefit = marginal revenue

Question 23

producer: costs

Answer 23

marginal cost

Question 24

Law of diminishing marginal returns

Answer 24

increase variable FOP with a given amt of fixed factor, there will be a point when each extra unit of variable FOP will produce less extra output than prev unit

Question 25

producer: decision making

Answer 25

prod more if MR>MC stop when MR=MC prod less when MR

Question 26

government: aim

Answer 26

maximise social welfare and achieve both micro and macroeconomic objectives

Question 27

government: benefit

Answer 27

marginal social benefit

Question 28

government: cost

Answer 28

marginal social cost

Question 29

government: decision making

Answer 29

continue if MSB>MSC stop if MSB=MSC do less if MSB

Question 30

3 key econs qns

Answer 30

what and how much to produce how to produce for whom to produce

Question 31

free market economy

Answer 31

allocate resources through price mechanism based on forces of market demand and supply + limited role of gov

Question 32

planned or command economy

Answer 32

state allocates resources

Question 33

mixed economy

Answer 33

mixed lor

Question 34

what is production possibility curve (ppc)

Answer 34

it shows all maximum attainable combinations of two goods that a country can produce with all its resources fully and efficiently employed (within specified time period)

Question 35

scarcity in ppc

Answer 35

attainable vs unattainable points

Question 36

choice in ppc

Answer 36

only one combi can be chosen

Question 37

opportunity cost in ppc

Answer 37

increasing OC: downward sloping gradient or ppc concave to origin constant OC: straight line ppc

Question 38

productive efficiency

Answer 38

all available resources are fully and efficiently employed

Question 39

productive efficiency in ppc

Answer 39

all points on ppc

Question 40

allocative efficiency

Answer 40

society produces and consumes a combination of goods and services that maximises its welfare

Question 41

allocative efficiency in ppc

Answer 41

only one point on ppc

Question 42

actual economic growth

Answer 42

increase in real national output

Question 43

actual growth in ppc

Answer 43

movement from point within ppc to closer/ on the ppc

Question 44

potential economic growth

Answer 44

increase in economy's ability of produce goods and services (productive capacity) affected by: change in quantity and quality of resources, change in tech (increase productivity of resources)

Question 45

potential growth in ppc

Answer 45

shift of entire ppc