Questions and Answers
What is the main focus of economics?
Meeting human needs and wants with limited resources
Which branch of economics studies the behavior of individual consumers and firms and the allocation of scarce resources?
Microeconomics
The word 'economics' is derived from which language?
Greek
Which economic resource represents the ability to perform work and produce goods and services?
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Which type of resource is essential for any production process?
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Which factor of production is associated with the ability to make decisions, take risks, and create new businesses?
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What is the study of economics described as in the text?
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Why are economic resources limited?
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Which economic resource includes money and equipment used in the production of goods and services?
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Which type of resource cannot be replaced or reproduced once it is used?
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Study Notes
Capital and Resources
- Capital includes money, machinery, raw materials, and other physical necessities for production.
- Capital is dependent on the level of savings.
Economic Resources/Factors of Production
- Entrepreneur: combines resources for production or services.
Scarcity and Resources
- Scarcity: wants and needs exceed available resources.
- Resources:
- Natural Resources: already existed.
- Human Resources: labor services.
- Man-made Resources: machines, equipment.
- Reasons for limited resources:
- Overpopulation.
- Illegal issues.
- Conversion of agricultural lands into establishments and buildings.
- Corruption.
- Negligence.
- Others.
Fundamental Economic Concepts
- Opportunity Cost: the highest-valued alternative forgone when a choice is made.
- Marginalism: analyzing additional costs or benefits resulting from a decision.
- Sunk Cost: money spent; irrelevant to further financial decisions.
- Efficient Markets: no free lunch; everything has a cost.
Fundamental Economic Questions
- What to produce?: decide on products to produce in the economy.
- How to produce?: organize production and combine resources.
- How much to produce?: determine the quantity of each good.
- For whom to produce?: satisfy the wants of each consumer.
Economics
- Economics: the study of meeting unlimited needs and wants with scarce resources.
- Economics: the proper allocation of scarce resources.
- Economics is a social science dealing with human behavior.
Branches of Economics
- Microeconomics: study of individual consumers and firms, and market allocation of resources.
- Macroeconomics: study of the economy as a whole, explaining fluctuations and policies.
Divisions of Economics
- (Not specified in the provided text.)
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