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Economic Decision Making and Trade Concepts
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Economic Decision Making and Trade Concepts

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Questions and Answers

What is the primary focus of microeconomics?

  • Analysis of tax policies at a national level
  • Overall economic performance of an entire economy
  • Economic behavior of individual units like households and firms (correct)
  • Study of international trade agreements

    • Who is often referred to as the 'Father of Economics'?

  • Adam Smith (correct)
  • John Maynard Keynes
  • Alfred Marshall
  • David Ricardo

    • What does the law of demand and supply primarily describe?

  • The impact of inflation on consumer behavior
  • The effect of interest rates on savings
  • The relationship between price and quantity of goods (correct)
  • The role of government in setting prices

    • What is the main concern of macroeconomics?

    <p>Overall performance of the economy as a whole</p> Signup and view all the answers

    Which of the following best defines 'scarcity' in economic terms?

    <p>The limited nature of society's resources</p> Signup and view all the answers

    What do laissez-faire policies advocate for in an economy?

    <p>Minimal government involvement in economic activities</p> Signup and view all the answers

    What concept did Alfred Marshall introduce to economics?

    <p>Supply and demand curves</p> Signup and view all the answers

    How can needs and wants be differentiated in economics?

    <p>Wants are things we can live without, whereas needs are essential</p> Signup and view all the answers

    What is the opportunity cost associated with a decision?

    <p>The benefit gained from an alternative choice</p> Signup and view all the answers

    How does lowering inflation typically affect unemployment?

    <p>It can increase unemployment</p> Signup and view all the answers

    Which of the following best describes rational behavior in economics?

    <p>People evaluate extra benefits before making decisions</p> Signup and view all the answers

    What is a key characteristic of markets in organizing economic activity?

    <p>Prices guide what to buy and sell</p> Signup and view all the answers

    What role can governments play in improving market outcomes?

    <p>They intervene when markets do not work well</p> Signup and view all the answers

    What does the standard of living in a country depend on?

    <p>The ability to produce goods and services</p> Signup and view all the answers

    What is the primary focus of applied economics?

    <p>Applying scientific knowledge to real-life situations</p> Signup and view all the answers

    How do incentives influence people's behavior in economics?

    <p>They encourage people to change their behavior</p> Signup and view all the answers

    What is a primary goal of servicification?

    <p>To foster inter-sectoral linkages</p> Signup and view all the answers

    Which industries can be targeted for growth through servicification?

    <p>ICT, creatives, tourism, and logistics</p> Signup and view all the answers

    What does external financing refer to?

    <p>Funds sourced from third-party investors</p> Signup and view all the answers

    How can entrepreneurs access external financing?

    <p>By sourcing from third-party investors</p> Signup and view all the answers

    What is the primary function of crowdsourcing?

    <p>To gather viewpoints and creative output from many individuals</p> Signup and view all the answers

    What is a benefit of enhanced connectivity for businesses?

    <p>Access to a broader range of skills and viewpoints</p> Signup and view all the answers

    What kind of support does the government provide for innovation ecosystems?

    <p>Support for the creation and evolution of these ecosystems</p> Signup and view all the answers

    Which of the following is NOT a mechanism for sourcing funds?

    <p>Reinvestment of profits exclusively</p> Signup and view all the answers

    What effect does a decrease in the price of complementary goods have on the demand for the primary good?

    <p>Demand for the primary good increases</p> Signup and view all the answers

    How does income influence consumer demand according to the determinants of demand?

    <p>Additional money drives the desire to purchase more goods</p> Signup and view all the answers

    What is true about substitute goods?

    <p>They fulfill similar needs as another good</p> Signup and view all the answers

    What role does technology play in determining supply?

    <p>It increases efficiency and profitability</p> Signup and view all the answers

    If the price of a substitute good decreases, what happens to the demand for the primary good?

    <p>Demand for the primary good decreases</p> Signup and view all the answers

    What happens when the quantity demanded (Qd) exceeds the quantity supplied (Qs)?

    <p>There is a shortage in the market.</p> Signup and view all the answers

    What occurs when a price floor is implemented above the equilibrium price?

    <p>It results in a surplus.</p> Signup and view all the answers

    Which of the following factors can lead to a movement to the right in the supply curve?

    <p>Advancements in production technology.</p> Signup and view all the answers

    How does consumer expectation of future price changes affect current demand?

    <p>Expecting an increase in price leads to an increase in current buying.</p> Signup and view all the answers

    Which of the following statements is true regarding a price ceiling?

    <p>It is set below the equilibrium price.</p> Signup and view all the answers

    What does the Law of Diminishing Marginal Utility state?

    <p>Satisfaction decreases with increased consumption.</p> Signup and view all the answers

    What is the effect of an increase in consumer income on the demand curve for normal goods?

    <p>The demand curve shifts to the right.</p> Signup and view all the answers

    Which factor causes the supply curve to shift left?

    <p>Increase in government regulations.</p> Signup and view all the answers

    If the equilibrium price (Pe) is calculated as $23.077, what is likely true about the market condition?

    <p>At Pe, Qd equals Qs.</p> Signup and view all the answers

    What impact does an increase in the number of consumers generally have on the demand curve?

    <p>It shifts the demand curve right.</p> Signup and view all the answers

    Study Notes

    Economic Decision Making

    • Lowering inflation may increase unemployment rates as people face trade-offs.
    • Opportunity cost refers to the value of what is sacrificed when choosing one option over another.
    • Rational individuals strive to maximize utility by evaluating benefits before making decisions.
    • Incentives influence behavior; rewards can alter choices.

    Trade and Markets

    • Trade benefits all parties as individuals can obtain necessary goods through exchange.
    • Markets efficiently organize economic activities, with prices guiding buying and selling decisions.
    • Government intervention may be necessary to improve market outcomes when markets fail.

    Economic Standards of Living

    • A country's standard of living is closely tied to its capacity to produce goods and services.

    Social Science vs. Applied Science

    • Social sciences explore the reasons behind economic behavior (e.g., spending vs. saving).
    • Applied sciences leverage economic theories to inform practical decisions and policies (e.g., tax design).

    Branches of Economics

    • Microeconomics focuses on individual units like households and firms, analyzing their economic behavior.
    • Macroeconomics examines the economy as a whole, studying aggregate performance and resource employment.

    Needs vs. Wants

    • Needs are essential for survival, while wants are non-essential desires.

    Scarcity

    • Scarcity creates limitations on resources, leading to the necessity of choice and opportunity cost.

    Applied Economics

    • Applied economics involves real-world applications of economic theories, tackling issues like healthcare resource allocation and minimum wage settings.

    Dynamic Innovation Ecosystem

    • Encourages the transformation of knowledge into products and processes, generating quality jobs.
    • Emphasizes the importance of digital and physical connectivity in linking markets efficiently.

    Government Controls and Equilibrium

    • Market equilibrium occurs where quantity demanded equals quantity supplied, while shortages and surpluses can arise from price controls.
    • Price floors support producers and can create surpluses; price ceilings support consumers and may lead to shortages.

    Demand Determinants

    • Population, consumer income, and tastes affect demand shifts; preferences can enhance or reduce demand for specific goods.
    • Expectations about future prices can lead consumers to alter their purchasing behavior.

    Supply Determinants

    • Technological advancements contribute to increased profitability in firms by enhancing production efficiency.
    • Changes in consumer income can directly affect the demand for goods, influencing supply dynamics.

    Price Relationships

    • Substitutes and complementary goods interact in demand; an increase in the price of one affects the demand for the other.

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    Related Documents

    G12-APPLIED-ECONOMICS-REVIEWER-FIRST-QUARTER.pdf

    Description

    This quiz explores key concepts in economic decision making, trade, and market dynamics. Understand the implications of inflation and unemployment, the significance of opportunity costs, and the role of incentives in shaping consumer behaviors. Additionally, assess how standards of living correlate with production capacity and the distinction between social sciences and applied sciences in economics.

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