World Economy

Question 1

It is a branch of knowledge concerned with production, consumption, and transfer of wealth

Answer 1

Economics

Question 2

Refers to the choices made by large groups such as countries (ex. growth, employment, etc.)

Answer 2

Macro-economics

Question 3

Refers to how individuals make economic decisions

Answer 3

Micro-economics

Question 4

As a society, what must we figure out?

Answer 4

a. What to produce? — Make
b. How much to produce? — Quantity
c. How to produce? — Manufacture
d. For whom to produce? — Who gets what
e. Who gets to make these decisions?

Question 5

These are used to make other goods

Answer 5

Capital goods

Question 6

These are final products that are purchased directly by the consumer

Answer 6

Consumer goods

Question 7

Can also refer to things used to make other goods

Answer 7

Resources

Question 8

4 Factors of Production

Answer 8

1. land, water, natural gas, oil, trees
2. labor / manpower
3. capital - things we use to make things (ex. brainpower, ideas, innovations)
4. entrepreneurship - investment

Question 9

What we need to make goods and services

Answer 9

Factors of production

Question 10

Company that makes goods and/or delivers services

Answer 10

Producer

Question 11

People who buy goods and services

Answer 11

Consumers

Question 12

Fundamental problem in Economics

Answer 12

Scarcity - unlimited wants and needs but limited resources

Question 13

Wants vs Needs

Answer 13

Wants - luxuries
Needs - things people must have TO SURVIVE

Question 14

Maslow’s Hierarchy of Needs

Answer 14

1. Self-actualization
2. Esteem
3. Love and Belongingness
4. Safety Needs
5. Physiological Needs

Question 15

Picking one thing over all the other possibilities

Answer 15

Trade-offs

Question 16

Value of the next best choice

Answer 16

Opportunity cost

Question 17

Additional cost of the next unit produced

Answer 17

Marginal cost

Question 18

Difference between total costs and revenues

Answer 18

Profit

Question 19

Traditional Economic System

Answer 19

> based on goods, services, and work
very little division of labor or specialization
lacks potential to generate surplus
ex. barter and trade

Question 20

Market Economic System

Answer 20

> based on free markets
very little government interference — control over resources only
ex. Laissez faire

Question 21

Command Economic System

Answer 21

> dominant centralized authority - usually the government controls a significant portion of the economic structure

Question 22

Mixed System

Answer 22

aka Dual System

Question 23

AKA perfect competition, defined by a large number of small firms

Answer 23

Pure competition

Question 24

Large number of small firms selling similar but high differential products

Answer 24

Monopolistic competition

Question 25

Domination of few firms = limited competion

Answer 25

Oligopoly

Question 26

Single firm controls the entire market

Answer 26

Pure monopoly

Question 27

Economy of every human being in all economic system resulting from all economic activities

Answer 27

World Economy

Question 28

Groupings may be formed from political alliances, intergovernmental organizations, business market areas, and mere colloquialism (ex. ASEAN, APEC, etc.)

Answer 28

Country Groups

Question 29

Examples of Indicators of World Economy

Answer 29

finance, employment, industries, energy, cross-border gift, economy, communications, transport, military, science, research, and technology, resources and environment