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Questions and Answers
What is the term for the economic system where buyer and seller transactions are organized?
Who is credited with the Hierarchy of Needs?
What is the term for the system that is based on the amount of gold and silver?
Under a Mixed Economy, whose decisions influence the creation of products or services?
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Which of the following is NOT a factor that affects consumption?
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What term describes the remuneration received by landlords for using land and resources?
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What does 'fixed input' refer to in production factors?
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What is the spending that directly relates to the owner's income in a business called?
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What is the study of how to meet seemingly endless human needs and wants using limited resources?
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Which term refers to the sacrifices made when choosing one option over another?
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Who authored the doctrine known as 'Laissez-Faire'?
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What do we call resources that can be obtained without payment, such as sunlight and air?
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What is the condition called where resources are limited and cannot satisfy all human wants?
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What method is used to determine the correct distribution of resources to address key economic questions?
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Which of the following is NOT one of the four fundamental economic questions?
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What is the study of the small-scale economy, focusing on households and businesses?
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Study Notes
Economics and Basic Concepts
- Economics studies how to meet unlimited needs and wants of people using limited resources.
- "Oikonomia" is a Greek term meaning management of a household.
- Adam Smith authored the "Laissez-Faire" doctrine, advocating minimal government intervention in the economy.
Key Economic Terms
- Free Goods refer to items that are obtained at no cost, like sunlight and air.
- Trade-off involves choosing or sacrificing something in exchange for another thing.
- Opportunity Cost is the value of the sacrificed item to allow for a more significant use.
- Marginal Thinking considers the additional benefits from choosing goods or services.
Resource Limitations
- Scarcity occurs when resources are limited and cannot meet human needs and wants.
- Shortage arises from temporary supply issues, like natural disasters disrupting rice supply.
Branches of Economics
- Microeconomics analyzes small economic units, particularly household and business decisions.
- Needs are essential items required by people, while wants provide satisfaction but are not necessary for survival.
Economic Questions and Systems
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Four fundamental economic questions:
- Which products and services to produce?
- How to produce these products and services?
- For whom are these products and services produced?
- How much of each product and service should be produced?
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Different Economic Systems:
- Traditional
- Market
- Command
- Feudalism
- Mercantilism
- Capitalism
- Communism
- Socialism
- Mixed Economy
- Fascism
Resource Allocation and Production
- Allocation addresses how resources are distributed to answer economic questions, especially concerning scarcity.
- Economic Systems define the manner of organizing production, ownership, resource development, and economic activity management.
Market Structures
- Market Economy facilitates organized transactions between buyers and sellers.
- Harold Maslow developed the Hierarchy of Needs, explaining human motivation.
Historical Economic Systems
- The Manor System was an agricultural base where farmers cultivated land.
- Mercantilism is an economic system where power is based on the accumulation of gold and silver.
Consumption and Its Influences
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Consumption refers to the buying and use of products and services to fulfill human needs.
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Types of Consumption:
- Productive
- Direct
- Risky
- Wasteful
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Factors Affecting Consumption:
- Advertising
- Values and Preferences
- Imitation
- Income
- Occasion
- Prices
Production Factors
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Factors of Production include:
- Land (raw materials for products)
- Labor (human effort in resource development)
- Capital (financial resources)
- Entrepreneurship (individuals who innovate and manage businesses)
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Rent refers to payments landlords receive for land or natural resources use.
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Fixed Inputs are production factors that cannot change in a short time, like building size.
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Interest rewards capitalists for lending they provide for production.
Production Insights
- The Production Function demonstrates the relationship between input and output in production.
- Mechanization refers to the use of machines in production, substituting labor.
- Implicit Cost indicates expenses related to payments received by business owners.
Characteristics of a Wise Consumer
- Rational decision-making and alternative consideration.
- Adherence to budgeting and avoidance of panic-buying or deception.
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Description
This quiz explores fundamental concepts in economics, including the definition of the discipline, key terms like scarcity, trade-off, and opportunity cost, and the distinction between microeconomics and macroeconomics. Test your understanding of how resources are managed to meet human needs and wants.
