Questions and Answers
What does economics primarily study?
Which term describes the limited availability of a commodity in demand?
What do physiological needs primarily relate to?
What is one of Adam Smith's contributions to economics?
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Which of the following is NOT mentioned as a factor contributing to social needs?
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What are 'needs' in terms of human wants?
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What characterizes esteem needs in the hierarchy of needs?
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What does the concept of 'unlimited human wants' imply?
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Which aspect is included in the definition of wants?
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Which of the following is NOT part of the hierarchy of needs?
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Which of the following is a factor of production?
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Labor in economic terms refers to what?
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What are economic resources often referred to as?
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Which best describes capital in the context of factors of production?
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The Greek word 'Oikos' in economics refers to what?
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Social needs include which of the following aspects?
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What does entrepreneurship primarily involve?
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Which of the following best defines the problem of scarcity?
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Which economic question addresses the allocation of production priorities?
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Which type of business activity involves reselling products to consumers?
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What is the focus of microeconomics?
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Why is understanding consumer behavior essential for businesses?
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What are the skills necessary for an entrepreneur mentioned in the content?
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What is the primary role of manufacturing in business activities?
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What does the concept of sustenance in economic development primarily refer to?
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Which of the following best describes normative economics?
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What are the three core values that define economic development?
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What is one characteristic of a good economic theory?
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Which aspect of economics focuses on what exists and how things work?
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What distinguishes a model from a theory in economics?
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Which of the following values associated with economic development emphasizes personal dignity and recognition?
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What does freedom refer to in the context of economic development?
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What is a key characteristic of a Market Economic System?
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Which of the following best describes a Command Economic System?
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What is the primary consideration in a Mixed Economic System?
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What does Opportunity Cost refer to in economic terms?
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What is the purpose of Economic Development?
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How are goods distributed in a Market Economic System?
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Which of the following is NOT a feature of a Command Economic System?
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What is a Trade-off in economic terms?
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Study Notes
Economic Development
- Economic development is the sustained improvement of societal quality of life, emphasizing sustenance, self-esteem, and freedom.
- Sustenance involves fulfilling basic needs like food, shelter, healthcare, and security.
- Self-esteem relates to individual dignity, pride, and social acknowledgment.
- Freedom encompasses a range of choices and minimizes external restrictions, including political liberties and economic opportunities.
Aspects of Economics Study
- Positive Economics examines factual states and causal relationships in economic behavior, focusing on "what is."
- Normative Economics evaluates outcomes and makes value judgments, internalizing fairness and desired economic policies.
Theories and Models
- A good economic theory should balance simplicity and complexity, providing clear explanations for phenomena.
- Models apply these theories practically, demonstrating relationships between variables through graphs, diagrams, or formulas.
Definitions of Economics
- Economics is the study of resource allocation to satisfy unlimited human wants amidst scarcity, originating from the Greek terms 'Oikos' (household) and 'Nomous' (management).
- It is often referred to as the science of scarcity, aiming to explain economic behaviors related to resource exchange.
Key Concepts
- Scarcity occurs when human wants outweigh available resources, necessitating choices in resource allocation.
- Unlimited human wants drive the economy, making satisfaction a continuous challenge.
Hierarchy of Needs
- Physiological Needs: Basic life necessities (air, water, food).
- Safety Needs: Protection from danger and threats.
- Social Needs: Acceptance, belonging, love, and friendship.
- Esteem Needs: Self-confidence, recognition, and respect.
- Self-actualization: Realizing personal potential and fulfillment.
Factors of Production
- Land: All natural resources without human intervention, including air, forests, and minerals.
- Labor: Human effort, both physical and mental, to produce goods and services.
- Capital: Man-made goods used in production processes.
- Entrepreneurship: The ability to create and exploit business opportunities, involving skills, vision, and risk-taking.
Economic Questions
- What will be produced? Prioritization of crucial goods.
- How will it be produced? Decision on production techniques based on available resources.
- For whom will it be produced? Allocation based on purchasing capacity of the population.
Types of Business Activities
- Manufacturing: Creation of new products from raw materials.
- Merchandising: Buying products to resell to consumers.
- Service Companies: Offering services rather than physical products.
Branches of Economics
- Microeconomics: Focuses on individual or company decision-making.
- Macroeconomics: Examines the economy as a whole, analyzing aggregate outcomes.
Economic Systems
- Market Economy: Private entities own resources and answer economic questions based on profitability and consumer capacity.
- Command Economy: Government owns resources, decides on production to promote public welfare, and employs available labor.
- Mixed Economy: Combines government and private sector decisions for mutual benefit.
Opportunity Cost and Trade-offs
- Opportunity cost is the loss of potential gain from choosing one alternative over another.
- Trade-offs result in either satisfaction of needs or failure to meet them, exemplified by choices in consumer products.
Conclusion on Economic Development
- Economic development enhances community wealth, providing broader benefits such as job creation, economic growth, and improved quality of life for residents.
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Description
Test your knowledge on the fundamental aspects of economic development, including the importance of sustenance, self-esteem, and freedom in societal improvement. Explore the differences between positive and normative economics, and understand the role of theories and models in economic analysis.
