week 1 Flashcards
(23 cards)
what is economics?
economics is the social science that studies the choices individuals, businesses, governments and societities make as they cope with scarcity
what is microeconomics?
microeconomics is the study of choices that individuals and businesses make, the way these choices interact in markets and the influence of government
what is macroeconomics?
macroeconomics is the study of the national economy and the global economy
what is scarcity?
scarcity is our inability to satisfy our unlimted wants
what are the 3 fundamental economic questions on choice?
- what to produce?
- how to produce?
- for whom shall the goods be produced?
what does land earn?
rent
what does labour earn?
wages
what does capital earn?
interest
what does entrepreneurship earn?
profit
what is opportunity cost?
opportunity cost is the value of the best alternative sacrficed for a chosen alternative
what is the opportunity cost of a movie?
money - could be used to buy other essentials eg. food
time - could be used for studying -> sacrificed those additional marks
what are the different economic systems?
- capatalism
- mixed market
- command economy
what is capitalism?
resources are owned by individuals
decisions are made entirely by individuals and firms
what is mixed market
some resources are owned by individuals and some by government
decisions are made by both individuals and government
what is command economy?
resources are manily owned by government
decisions are made entirely by government
why do we need to ask “what to produce?”
the problem of scarcity restricts our ability to produce every thing we want during a given time. Therefore, if we want to produce more of something, we must produce less of another.
why must we ask “how to produce?”
looks for a method that should be used to produce the goods.
what are the methods to produce a shirt?
- sewn by hand
- partially by hand and partially by machine
- mainly by machine
what are some factors of production or resources the country have?
land - natural resources like oil, land, coal, water, air
labour - work time and work effort people put into
capital - tools, instruments, machines, buildings
entrepreneurship - human resources that organise labour, land and capital
why do we ask the question “for whom shall the goods be produced for?”
who get the goods and services produced depends on one’s income
why does scarcity exist?
scarcity exists as there is limited resources and unlimited wants
difference between microeconomics and macroeconomics
microeconomics - focuses on the individual decision making unit
macroeconomics - the economy as a whole
why choices are neccessary?
scarcity means we cannot have everything that we want. therefore, choices have to be make
