Week 1

Question 1

define economics

Answer 1

study of how choices are made under conditions of scarcity, unlimited wants limited resources

Question 2

what is the role of an economist

Answer 2

understand optimal way to allocate limited resources

Question 3

what is the scarcity principle

Answer 3

having more of one thing means having less of something else

Question 4

what is the cost-benefit principle

Answer 4

rational decision maker should take an action only if the benefits outweigh the costs

Question 5

what is opportunity costs

Answer 5

next best alternative foregone

Question 6

what is sunk cost

Answer 6

a cost that is not recoverable at the moment a decision is made

Question 7

how to work out marginal cost

Answer 7

change in total cost/change in q

Question 8

what is microeconomic

Answer 8

study of individual choices under scarcity and its implications for the behaviour of prices and q in individual markets

Question 9

what is macroeconomics

Answer 9

study of performance of national economies and the policies that governments use to try to improve that performance

Question 10

what is positive economics

Answer 10

independent of the ethical value system of the economist

Question 11

what is normative economics

Answer 11

statements, reflect or are based on ethical value system of the economist