BME 115: Applied Economics Chapter 1

Questions and Answers

What is applied economics?

The application of theories and principles to real world situations with the desired aim of predicting potential outcomes.

Which of the following is a cause of unemployment?

Frictional unemployment (correct)

Overproduction

Excessive savings

Inflation

Economic problems are only concerned with economic issues.

False

What does production efficiency mean?

A situation in which the economy is getting all that it can from its resources without producing less of something else. Signup and view all the answers

Basic economic problems often manifest in forms such as poverty and _____?

unemployment Signup and view all the answers

What is the definition of poverty in this context?

A situation where people face difficulty in satisfying their basic needs on a regular basis. Signup and view all the answers

What are the four causes of unemployment mentioned?

Frictional unemployment, seasonal unemployment, structural unemployment, and cyclical unemployment. Signup and view all the answers

Which of the following describes frictional unemployment?

Happens when job seekers and employers need time to find each other Signup and view all the answers

Study Notes

Introduction to Economics

Economics is a social science that examines how societies allocate scarce resources to satisfy unlimited wants.
Key principles include understanding human behavior and decision-making related to resource use.

Applied Economics

Involves applying economic theories to real-world situations to predict outcomes.
Uses tools like econometrics and case studies to provide clarity without extraneous explanations.
Theories connect observations, helping policymakers address economic issues effectively.

Economic Problems

Arise from the basic conflict between limited resources and unlimited human wants.
Scarcity leads to competition for resources, resulting in various economic challenges globally.

Production Efficiency

Defined as maximizing resource use and output; cannot increase one good's production without decreasing another's.
Requires full employment of available production factors to achieve efficiency.

Socioeconomic Development Challenges

Economic problems include both economic and social issues, creating a system of socioeconomic difficulties.
Addressing basic needs is critical for well-being, including food, clothing, shelter, and education.

Basic Economic Problems

Economic difficulties often manifest significantly in developing economies such as the Philippines and other Southeast Asian nations.
Poverty
- Defined as difficulty in consistently meeting basic needs; often linked to low income thresholds.
- Characterized by a lack of essential resources and material possessions for survival.
Unemployment
- The condition of willing and qualified individuals unable to find appropriate job opportunities.
- Four main causes of unemployment:
  - Frictional Unemployment: Occurs when individuals are in transition between jobs or entering the job market for the first time.
  - Seasonal Unemployment: Results from changes in labor demand based on seasons, prevalent in industries like agriculture and construction.
  - Structural Unemployment: Arises from shifts in market demands due to technology, competition, or policy changes, often leading to skill mismatches in the labor force.

Description

This quiz focuses on the principles and foundations of applied economics as outlined in Chapter 1. It covers the social science aspect of economics, the causes of economic problems, and the operation of productive systems within economies. Additionally, it addresses economic theories relevant to real-world applications.