Unit 1 - What is Economics

Question 1

What is Economics?

Answer 1

Economics is the science of scarcity, studying how people and societies allocate limited resources to meet unlimited wants.

Question 2

Good vs Bads

Answer 2

Goods: Provide satisfaction (e.g., food, clothing).
Bads: Cause dissatisfaction (e.g., pollution).

Question 3

Opportunity Costs

Answer 3

The trade-off of choosing one option over another.
Helps in making better decisions by weighing benefits and losses.

Question 4

Ceteris Paribus

Answer 4

A principle that means “all other things being equal.”
Simplifies economic analysis by isolating one variable at a time.

Question 5

Marginal Calculations

Answer 5

Assess the extra benefits or costs of a decision.
Important for optimizing choices.

Question 6

Microeconomics

Answer 6

Focuses on individuals and firms.
Explores how they make decisions (e.g., pricing, production).

Question 7

Macroeconomics

Answer 7

Looks at the economy as a whole.
Examines national trends like GDP, inflation, and unemployment.

Question 8

Positive Economics

Answer 8

Objective and fact-based.
Explains “what is” happening in the economy.

Question 9

Negative Economics

Answer 9

Subjective and value-based.
Discusses “what should be” in economic policies.

Question 10

Scarcity

Answer 10

Scarcity: Limited resources force prioritization and efficient use.

Question 11

Resources

Answer 11

Resources: Categorized into land, labor, capital, and entrepreneurship—essential for production.

Question 12

Decision Making

Answer 12

Decision-Making: Opportunity cost and marginal analysis guide individuals and businesses to optimize choices.