What is Economics?

Question 1

What is social science?

Answer 1

Study of people in society and how they interact

Question 2

What is economics?

Answer 2

The study of the choices that people make in problems because resources are limited and needs and wants are unlimited.

Question 3

Opportunity cost

Answer 3

The next best alternative that you give up when an economic decision is made

Question 4

Production choices - 3 questions due to scarce resources

Answer 4

What should be produced and how many, how should things be produced and for whom should things be produced?

Question 5

Microeconomics

Answer 5

Study of individuals, households and firm’s behaviours in decision-making in the allocation of resources

Question 6

Macroeconomics

Answer 6

Study of the behaviour and performance of an economy as a whole, focusing on the aggregate (total) changes

Question 7

Aggregate

Answer 7

Total

Question 8

Scarcity

Answer 8

Limited availability of resources relative to the unlimited demand for goods and services

Question 9

Interdependence

Answer 9

The concept that consumers all interact with each other and rely on each other to achieve their economic goals

Question 10

Intervention

Answer 10

When the government involves itself in the workings of markets if certain societal goals are not going to be met.

Question 11

4 factors of production

Answer 11

Land, labour, capital, entrepreneurship

Question 12

Ceteris paribus

Answer 12

All other things being equal

Question 13

Positive economics

Answer 13

Factual and objective claims backed by evidence

Question 14

Normative economics

Answer 14

Subjective and value judgements that are opinion-based

Question 15

Why does a production possibility curve assume that choices must be made?

Answer 15

Because resources are scare and there is a production limit, so trade-offs and choices must be made - producing more of one good means producing less of another

Question 16

Theory of constant opportunity costs - straight line on a PPC

Answer 16

Resources used to produce goods are similar, opportunity cost is constant and there is a limit of resources and technology available

Question 17

What is the difference between a need and a want?

Answer 17

A need is things we must have to survive, while a want is not necessary for our immediate physical survival

Question 18

Why does scarcity exist?

Answer 18

Because of the conflict between finite resources and the infinite material needs and wants

Question 19

Goods associated with a monetary cost are known as …

Answer 19

Economic goods

Question 20

Goods with no economic cost are known as…

Answer 20

Free goods

Question 21

Choice

Answer 21

As needs and wants cannot be satisfied due to scarce resources, then we must make decisions between competing alternatives, resulting in opportunity cost

Question 22

Efficiency

Answer 22

Making the best possible use of scarce resources to produce the combinations of goods and services that are best for society, with the least amount of waste

Question 23

Equity

Answer 23

Fairness - may apply to the distribution of income and economic opportunity

Question 24

Economic well being

Answer 24

The quality of living standards - the ability to meet basic living needs, freedom to make choices, ability to maintain income levels

Question 25

Sustainability

Answer 25

Ability of present generations to meet their needs without compromising the needs of future generations

Question 26

Change

Answer 26

Economists must adapt their thinking when economic theories are applied, the outcome is not always the same

Question 27

Interdependence

Answer 27

The concept that consumers, producers and households all interact with each other and rely on each other to achieve economic goals

Question 28

De facto

Answer 28

Actual

Question 29

Why does a bowed shape curve occur?

Answer 29

As resources that are non-specific are transferred, the return increases slightly. When specific resources are transferred, the return increases massively. - theory of increasing returns/diminishing opportunity cost or vice verse

Question 30

Potential economic growth

Answer 30

New resources/technology are found which makes it possible to produce more goods and services. It does not mean that more is being produced.

Question 31

Diminishing returns

Answer 31

When the benefit of receiving something (specific resources to non-specific resources etc) decreases

Question 32

Production efficiency

Answer 32

When all resources are being fully used ie any point on the curve

Question 33

Production inefficiency

Answer 33

When resources are not fully utilised ie production point is inside the curve

Question 34

Free goods

Answer 34

Goods with no cost (economic or opportunity) associated with then

Question 35

Economic goods

Answer 35

Goods with a monetary cost associated with them

Question 36

Need

Answer 36

Things needed for immediate physical survival

Question 37

Want

Answer 37

Things we would like to have but are not necessary for our immediate physical survival

Question 38

Why is there increasing opportunity cost?

Answer 38

Resources are more suited to production of one good over the other so as non-specific resources are transferred, return diminishes

Question 39

How is economic growth shown on a PPC?

Answer 39

Dot moving closer to the curve

Question 40

What is a circular flow diagram?

Answer 40

A diagram made to represent the flow of money in an economy

Question 41

GDP

Answer 41

Gross domestic product - a monetary measure of the market value of all the final goods and services

Question 42

Examples of money injected into the economy

Answer 42

Export receipts

Question 43

Examples of money withdrawn from the economy

Answer 43

Saving, tax, import payments

Question 44

Investment economics definition

Answer 44

Adding to capital resources such as purchasing machinery etc

Question 45

What is an open economy?

Answer 45

When you trade with foreign markets

Question 46

What is a planned economy?

Answer 46

An economy that the government decides all aspects of production - amount of resources and goods avaliable, wages etc

Question 47

What is a free market economy?

Answer 47

Production is in the hands of individual firms and prices are used to ration goods based of the relative scarcity of the good.

Question 48

Resources

Answer 48

The factors of production used by firms to produce goods and services (land, labour, capital and entrepreneurship)