Economics Etymology & Resource Classification
48 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

Which of the following scenarios would cause a movement along a country's Production Possibilities Curve (PPC)?

  • A decrease in the availability of natural resources due to environmental regulations.
  • A technological advancement that increases the efficiency of producing both goods.
  • An increase in the labor force due to immigration.
  • A shift in consumer preferences leading to a decision to produce more of one good and less of another, assuming full employment. (correct)

In a command economic system, how are resource allocation and production determined?

  • Through a combination of government planning and market forces.
  • By the interaction of supply and demand in free markets.
  • Primarily by customs and traditions passed down through generations.
  • By a central planning authority or the government. (correct)

What is a primary characteristic of a traditional economic system?

  • Emphasis on technological innovation and rapid economic growth.
  • Free markets and competition driving resource allocation.
  • Decisions are based on customs, traditions, and intergenerational knowledge. (correct)
  • Centralized planning and government control of resources.

Which of the following is a common method of distribution under a command economic system?

<p>Rationing (C)</p> Signup and view all the answers

A country's PPC shows the trade-off between producing capital goods and consumer goods. If the country decides to produce more capital goods, what is the likely long-term consequence?

<p>Increased future productive capacity, but lower consumption in the present. (C)</p> Signup and view all the answers

What factor would most likely cause an outward shift of a country's Production Possibilities Curve (PPC)?

<p>A major technological breakthrough that improves productivity. (A)</p> Signup and view all the answers

Which economic system is most associated with the concept of egalitarianism and a classless society?

<p>Command economic system (D)</p> Signup and view all the answers

In a purely traditional economy, which factor primarily determines an individual's economic role?

<p>Inheritance and societal customs. (C)</p> Signup and view all the answers

Which of the following questions does descriptive economics primarily aim to answer?

<p>What, when, where, who, and how do economic events happen? (A)</p> Signup and view all the answers

Theoretical economics utilizes which of the following to understand economic phenomena?

<p>Definitions, assumptions, deductions, and empirical verification. (A)</p> Signup and view all the answers

Applied economics is MOST directly concerned with:

<p>Developing and implementing solutions to economic problems. (B)</p> Signup and view all the answers

Which of the following best describes the central problem that economics seeks to address?

<p>Efficiently allocating limited resources to satisfy unlimited wants. (A)</p> Signup and view all the answers

Which type of economic analysis relies heavily on facts and objective statements?

<p>Positive economics. (D)</p> Signup and view all the answers

Normative economics differs from positive economics due to its inclusion of:

<p>Value judgments and opinions. (A)</p> Signup and view all the answers

How does entrepreneurial ability contribute to the production process, and what is the corresponding return for this contribution?

<p>By organizing production, taking risks, and innovating, earning profit or royalties. (D)</p> Signup and view all the answers

In economics, what distinguishes 'economic resources' from 'non-economic resources'?

<p>Economic resources are scarce, have a price, and require efficient allocation, while non-economic resources are free and abundant. (B)</p> Signup and view all the answers

Which BEST describes the focus of microeconomics?

<p>The behavior of individual consumers and firms. (B)</p> Signup and view all the answers

Macroeconomics is primarily concerned with:

<p>The economy as a whole, including aggregate variables. (C)</p> Signup and view all the answers

If a country discovers a large reserve of crude oil, how would this discovery be classified in economic terms, and what is the corresponding payment for its use?

<p>Land; rent (A)</p> Signup and view all the answers

Differences in which of the following can lead economists to disagree on economic issues?

<p>The validity of alternative positive theories or scientific judgements. (D)</p> Signup and view all the answers

Which scenario illustrates the need for economic decision-making due to scarcity?

<p>A family must choose between buying a new car or funding their children's education. (B)</p> Signup and view all the answers

How has the understanding of 'wealth' evolved in economics since Adam Smith's time?

<p>It has broadened to include capital and entrepreneurial ability as key resources. (C)</p> Signup and view all the answers

What is the relationship between scarcity and the dynamic nature of human wants and needs?

<p>Scarcity is intensified by the unlimited, insatiable, and evolving nature of human wants and needs. (D)</p> Signup and view all the answers

Which of the following activities would NOT fall under the scope of economics as a social science?

<p>A botanist studying the genetic makeup of a new species of plant. (C)</p> Signup and view all the answers

Which of the following best describes 'consumer sovereignty' in a market economic system?

<p>Consumers' preferences and demands influence what goods and services are produced. (B)</p> Signup and view all the answers

In the context of the ten principles of economics, which principle highlights the idea that every decision involves giving up something else?

<p>People face trade-offs. (D)</p> Signup and view all the answers

Which of the following is an example of a trade-off that a society might face?

<p>All of the above. (D)</p> Signup and view all the answers

What does allocative efficiency primarily ensure in an economy?

<p>Consumers pay prices that reflect the marginal cost of production. (D)</p> Signup and view all the answers

Which concept relates to maximizing output from a given amount of input?

<p>Technical efficiency (B)</p> Signup and view all the answers

If a firm reorganizes its production process to minimize the average total cost of producing a certain level of output, which type of efficiency is it primarily trying to achieve?

<p>Productive efficiency (B)</p> Signup and view all the answers

Harvey Leibenstein introduced which concept related to firms maximizing output from a given amount of input?

<p>X-efficiency (C)</p> Signup and view all the answers

How do incentives primarily influence people's decisions, according to the principles of economics?

<p>Incentives alter the costs and benefits of different actions. (D)</p> Signup and view all the answers

Which factor is LEAST likely to contribute directly to a country's standard of living, as measured by the Human Development Index (HDI)?

<p>Decreasing functional literacy rate (C)</p> Signup and view all the answers

If a government excessively prints money, leading to demand-pull inflation, what is the most likely direct consequence in the economy?

<p>A rise in the general level of prices (C)</p> Signup and view all the answers

According to the Phillips Curve, what short-run effect would a government's policy aimed at decreasing inflation likely have on unemployment?

<p>Unemployment would increase (B)</p> Signup and view all the answers

Which of the following scenarios would most likely lead to an increase in a country's labor productivity?

<p>Increased access to advanced technological resources and a well-educated workforce (C)</p> Signup and view all the answers

What is the most likely impact on the business cycle when a central bank raises interest rates to combat inflation?

<p>A contraction or slowing down of economic activity (D)</p> Signup and view all the answers

What is the primary reason why excessive printing of money by a government leads to inflation?

<p>It increases the amount of money chasing the same quantity of goods and services, raising prices. (A)</p> Signup and view all the answers

If a country experiences a significant increase in its functional literacy rate, which of the following economic outcomes is most likely?

<p>An improvement in the country's standard of living (B)</p> Signup and view all the answers

How would an unexpected surge in technological innovation most likely affect the short-run trade-off between inflation and unemployment, as depicted by the Phillips Curve?

<p>It would shift the Phillips Curve to the left, improving the trade-off. (D)</p> Signup and view all the answers

According to the principles of dynamic efficiency, which factor is most crucial for long-term economic growth?

<p>Fostering technological advancements and innovation. (D)</p> Signup and view all the answers

What condition defines social efficiency in the context of economic production?

<p>Accounting for all private, external costs, and benefits in production. (A)</p> Signup and view all the answers

When evaluating the cost of attending a concert, which of the following reflects the concept of opportunity cost?

<p>The time spent at the concert that could have been used for studying or working. (B)</p> Signup and view all the answers

What is the primary characteristic of a 'rational person' in economic decision-making?

<p>Someone who systematically and purposefully strives to achieve their objectives. (A)</p> Signup and view all the answers

How does marginal analysis guide rational decision-making?

<p>Considering if the additional benefits of an action exceed the additional costs. (A)</p> Signup and view all the answers

In the context of the Water-Diamond Paradox, what explains why water, essential for life, is typically cheaper than diamonds, which are not?

<p>The marginal utility of an extra unit of water is lower than that of an extra unit of diamonds. (D)</p> Signup and view all the answers

Which of the following scenarios best illustrates the use of incentives to alter behavior?

<p>A government imposes fines for littering to discourage pollution. (C)</p> Signup and view all the answers

How do incentives primarily function in influencing individual behavior?

<p>By providing reasons for people to change or adjust their actions. (A)</p> Signup and view all the answers

Flashcards

Etymology of Economics

Economics comes from the Greek 'OEIKONOMIA', meaning household management.

Economics as a Science

Economics became a science in 1776, formalized by Adam Smith's 'The Wealth of Nations'.

Wealth in Economics

Wealth refers to a country's resources, initially identified as Land and Labor by Adam Smith.

Types of Resources

Resources are classified into Non-economic (free) and Economic (scarce and priced).

Signup and view all the flashcards

Economic Resources

Known as Factors of Production, they include Human (Labor and Entrepreneurial) and Non-human resources (Land and Capital).

Signup and view all the flashcards

Labor

Labor is mental and physical effort exerted, compensated by salaries or wages.

Signup and view all the flashcards

Scarcity in Economics

Scarcity relates to the limited nature of resources against unlimited human wants and needs.

Signup and view all the flashcards

Factors of Production Pricing

Economic resources have corresponding prices; Labor (salaries), Land (rent), Capital (interest), and Entrepreneurial ability (profit).

Signup and view all the flashcards

Market Economic System

An economy based on free enterprise, driven by demand and supply through the price system.

Signup and view all the flashcards

Consumer Sovereignty

The idea that consumer preferences determine the production of goods and services.

Signup and view all the flashcards

Trade-offs

Making decisions involves sacrificing one option for another due to limited resources.

Signup and view all the flashcards

Marginal Thinking

Rational people think about the additional benefits and costs of an action before deciding.

Signup and view all the flashcards

Efficiency vs. Equality

Efficiency is maximizing output from resources; equality is uniform distribution of benefits.

Signup and view all the flashcards

Allocative Efficiency

Occurs when resources are distributed so that consumers pay prices reflecting their marginal cost.

Signup and view all the flashcards

Productive Efficiency

Achieved when a firm produces at the lowest average total cost using its resources.

Signup and view all the flashcards

X-Efficiency

The maximum output from a given input, minimizing inefficiencies in production.

Signup and view all the flashcards

Production Possibilities Curve (PPC)

Graph illustrating the maximum production capacity of an economy for two goods.

Signup and view all the flashcards

Production Possibilities Frontier (PPF)

The outer boundary of the PPC representing maximum production capabilities.

Signup and view all the flashcards

Traditional Economic System

An economy where customs and traditions guide economic decisions, typically agriculture-based.

Signup and view all the flashcards

Command Economic System

An economy where the government makes all economic decisions and controls resources.

Signup and view all the flashcards

Mixed Economic System

An economy that combines elements of both market and command systems.

Signup and view all the flashcards

Barter System

An exchange system where goods are traded directly for other goods without money.

Signup and view all the flashcards

Rationing

A controlled distribution of scarce resources, goods, or services by government decree.

Signup and view all the flashcards

Dynamic Efficiency

Technological progress and innovation; associated with Schumpeter.

Signup and view all the flashcards

Social Efficiency

Exists when all private and external costs and benefits are accounted for in production.

Signup and view all the flashcards

Opportunitiy Cost

The value of what you give up to obtain something else.

Signup and view all the flashcards

Rational People

Individuals who act purposefully to achieve their goals.

Signup and view all the flashcards

Marginal Change

A small incremental adjustment to a course of action.

Signup and view all the flashcards

Marginal Decision Making

Taking action if marginal benefits exceed marginal costs.

Signup and view all the flashcards

Water-Diamond Paradox

Different willingness to pay due to marginal utility, not total usefulness.

Signup and view all the flashcards

Incentives

Factors that motivate changes in behavior or actions.

Signup and view all the flashcards

Descriptive Economics

Observes the What, When, Where, Who, and How of economic events.

Signup and view all the flashcards

Theoretical Economics

Involves definitions, assumptions, deductions, and why questions in economics.

Signup and view all the flashcards

Applied Economics

Involves formulating and implementing solutions or policies for economic issues.

Signup and view all the flashcards

Positive Economics

Deals with 'What is' using factual statements without judgments.

Signup and view all the flashcards

Normative Economics

Focuses on 'What ought to be' with value judgments including facts.

Signup and view all the flashcards

Microeconomics

Study of individual units in the economy, like consumers or firms.

Signup and view all the flashcards

Macroeconomics

Study of the economy as a whole, including all aggregate units.

Signup and view all the flashcards

Reasons Economists Disagree

Disagreements arise from differing theories and scientific judgments.

Signup and view all the flashcards

Standard of Living

The quality of life based on economic productivity and income levels.

Signup and view all the flashcards

Human Development Index (HDI)

A composite statistic of life expectancy, education, and per capita income indicators.

Signup and view all the flashcards

Productivity

The amount of goods and services produced per unit of labor input.

Signup and view all the flashcards

Inflation

The rate at which the general level of prices for goods and services rises.

Signup and view all the flashcards

Demand-Pull Inflation

Inflation caused by an increase in demand surpassing supply.

Signup and view all the flashcards

Phillips Curve

Shows the inverse relationship between inflation and unemployment.

Signup and view all the flashcards

Short-Run Trade-off

The balance society must navigate between inflation and unemployment.

Signup and view all the flashcards

Labor Productivity

Output per labor hour, affected by education and technology.

Signup and view all the flashcards

Study Notes

Course Information

  • Course Title: Basic Macroeconomics
  • Course Code: COM5029
  • Semester: Second
  • Academic Year: 2024-2025
  • Instructor: Mary Hildence M. Baluyot

Unit 1A: Etymology of Economics

  • Economics originated from the Greek word "ΟΕΙΚΟΝΟMIA", meaning household management related to budgeting.
  • Economics became a science in 1776 with Adam Smith's "The Wealth of Nations".
  • Wealth is linked to country resources.
  • Initial resources identified by Adam Smith were land and labor.
  • Later economists identified capital and entrepreneurial abilities as additional resources.

Unit 1A: Classification of Resources

  • Resources are broadly categorized into economic and non-economic.
  • Non-economic resources are free and abundant, needing no allocation.
  • Economic resources are scarce, limited, and require allocation.
  • Economic resources, also called factors of production, are sub-classified into human and non-human resources.
  • Human resources include labor (physical and mental effort resulting in salaries or wages) and entrepreneurial ability (organizing production; risk-taking; innovation; profit/royalties).
  • Non-human resources include land (all natural resources), and capital (man-made goods used to produce other goods).

Unit 1A: Fundamental Concepts

  • Economics is a social science focusing on efficiently allocating scarce resources to fulfill unlimited human needs and wants.
  • Scarcity highlights a fundamental economic concept where human needs and wants exceed the availability of resources.
  • Needs and wants can be categorized by importance (basic, secondary, luxury), origin (built-in, created), and scope (private, public).

Unit 1A: Needs Satisfaction and Product Types

  • Needs and wants are satisfied through resource utilization and product creation.
  • Resource utilization often involves technology choices that can be labor-intensive or capital-intensive.
  • Products are categorized as goods (tangible/material) or services (intangible/immaterial).
  • Goods can be consumer goods (for end-use), producer/capital goods (for other production), raw materials, or intermediate/semi-finished goods.

Unit 1A: Fundamental Economic Activities

  • Production is the creation of goods and services.
  • Distribution entails making products available to consumers through various channels.
  • Exchange involves trading goods/services for money.
  • Consumption is the utilization of products.
  • Public finance involves the government's sourcing and use of funds.

Unit 1B: Fundamental Economic Questions

  • Fundamental economic questions include what to produce, how to produce, how much to produce, and for whom to produce?
  • These questions are related to Production Possibilities Curve (PPC) or Production Possibilities Frontier (PPF).

Unit 1B: Economic Systems

  • Common economic systems include traditional, command, market and mixed.
  • Traditional economies rely on customs and traditions.
  • Command economies are centrally planned by the government.
  • Market economies rely on price systems, free enterprise, competition and profit motive.

Unit 1B: Traditional Economic System

  • Economic decisions are dictated by customs handed down from generations.
  • These economies are often agricultural-based.
  • Barter is the typical exchange system in traditional economies.

Unit 1B: Command Economic System

  • The central governing body dictates economic decisions.
  • Resources are owned and controlled by the government.
  • Egalitarianism (equal distribution), and rationing are common elements.

Unit 1B: Market Economic System

  • Economic decisions are driven by the price system (demand and supply), reflecting free enterprise and the presence of competition.
  • Profit motive and consumer sovereignty are common concepts.
  • Private property and potential wealth inequality are factors.

Unit 1C: Methodology of Economics

  • Methodology of Economics involves procedures undertaken in exploring, understanding, and interpreting economic phenomena.
  • 5 Steps in Methodology; Observation, Definitions and Assumptions, Deductions, Empirical Verification, Policy Formulation and Application.
  • Descriptive Economics deals with the observation and description of economic phenomenon
  • Theoretical Economics explains why something happens through analysis, assumptions, logical conclusions.
  • Applied economics attempts to generate solutions or action plans to economic issues

Unit 1C: Branches of Economics Analysis

  • Positive Economics focuses on what is using objective facts.
  • Normative Economics deals with what should be using subjective judgments, values, traditions and beliefs

Unit 1C: Approaches to Study Economics

  • Microeconomics focuses on individual units (consumers, firms) in the economy.
  • Macroeconomics examines the entire economy as a whole

Unit 1C: Why Economists Disagree

  • Differences in scientific judgments on how the world works can lead to disagreements.
  • Differing values and normative views on desired policy outcomes can cause disagreements.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

UNIT-1-INTRODUCTION (1) PDF

Description

Explore the origins of economics from the Greek 'Oikonomia' to its development as a science with Adam Smith's 'Wealth of Nations'. Understand the classification of resources into economic and non-economic types. Learn about human and non-human factors of production.

More Like This

Use Quizgecko on...
Browser
Open
Browser
Browser