WEEK 1

Question 1

economics

Answer 1

study of how individuals and societies choose to use the scarce resources that

• nature
• previous generations

have provided in order to produce and distribute valuable commodities

Question 2

opportunity cost

Answer 2

best alternative forgone when make a decision

Question 3

marginalism

Answer 3

process of analyzing additional costs and benefits arising from a decision

Question 4

positive economics

Answer 4

seeks to understand behaviour and operations without judgment

Question 5

normative economics

Answer 5

• analyzes outcomes of economic behaviour
• may prescribe courses of action
• aka policy economics

Question 6

model

Answer 6

• formal statement of theory
• presumed relationship between variables

Question 7

variable

Answer 7

measure that changes

• over time
• between observations

Question 8

ceteris paribus

Answer 8

device used to keep values of unstudied variables constant

Question 9

empirical economics

Answer 9

collection and use of data to study theories

Question 10

What are the four ways to judge economic outcomes?

Answer 10

1. efficiency: produce what people want at least cost
2. equity: fairness
3. economic growth: increase in total output of economy
4. stability: national output grows steadily with low inflation and full employment of resources

Question 11

microeconomics

Answer 11

branch of ecnomics that exames

• function of individual industries
• behaviour of individual decision-making units

Question 12

macroeconomics

Answer 12

branch of economics that examines economic behaviour of aggregates on a national scale

Question 13

Ockham’s razor

Answer 13

principle that irrelevant detail should be cut away

Question 14

post hoc, ergo propter hoc

Answer 14

fallacy that if event A happens before event B that it is necessarily true that A caused B

Question 15

fallacy of composition

Answer 15

fallacy that what is true for a part is necessarily true for the whole