Topic 1: Introduction to Economics

Question 1

MICRO ECONOMICS

Answer 1

the behaviour of an individual unit of the economy

Question 2

MACRO ECONOMICS

Answer 2

the behaviour of the economy as a whole

Question 3

ECONOMIC PROBLEM

Answer 3

unlimited wants and limited resources
- scarcity of resources means we cannot satisfy all our wants so we must choose between them

Question 4

NEEDS

Answer 4

anything required for human survival
e.g food and water

Question 5

WANTS

Answer 5

anything people would like to have or desire
e.g bike and cell phone

Question 6

COLLECTIVE WANTS

Answer 6

things required by a community as a whole
e.g hospitals and schools

Question 7

INDIVIDUAL WANTS

Answer 7

goods, services or products that humans desire or aspire to have
e.g chocolate and fairy floss

Question 8

SINGLE USE CONSUMER GOODS

Answer 8

goods that can only be used once
e.g bread and butter

Question 9

CONSUMER DURABLES

Answer 9

foods that do not need to be purchased very often and last at least 3 years
e.g cars and furniture

Question 10

RECURRING WANTS

Answer 10

wants that occur again and again
e.g good and petrol

Question 11

COMPLEMENTARY WANTS

Answer 11

two wants that experience joint demand - once good’s demand is linked to the demand of another
e.g car but needs petrol or hotdogs but they need buns

Question 12

SUBSTITUTE WANTS

Answer 12

product or service that can easily be replaced by another by consumers
e.g butter and margarine or glasses and contacts

Question 13

CHOICE

Answer 13

individuals make choices based on factors such as level of income and the desire to maximise their utility (satisfaction)

Question 14

4 FACTORS OF PRODUCTION: LAND

Answer 14

all things provided by nature, the natural resources like forests, minerals, soil, land, animals, fish, water
- the factor return (income) for the use of land is rent
- e.g renting a field to a farmer

Question 15

4 FACTORS OF PRODUCTION: LABOUR

Answer 15

refers to the human effort and jobs (mental and physical) put into the production of goods and services
- the factor return (or income) for labour is wages
- e.g jobs you have like at Maccas earn you wages

Question 16

4 FACTORS OF PRODUCTION: CAPITAL

Answer 16

refers to the ‘produced means of production’ or the goods used to produce more goods and services in the future such as machinery, plant and equipment
- the return is called interest

Question 17

4 FACTORS OF PRODUCTION: ENTERPRISE

Answer 17

entrepreneurship consists of organisational skills and willingness to take risks in organisational skills to produce g/s
- the factor return (or income) to an entrepreneur is called profit

Question 18

OPPORTUNITY COST

Answer 18

by choosing one thing over another, we must give something up
- it is the loss of other alternatives when one alternative is chosen
- give up / gain