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Questions and Answers
What is economics is all about?
What is economics is all about?
Economics is about making choices among alternative uses of scarce resources. Choices are made by individuals, businesses, and government units. Economics examines how these choices add up to an economic system, and how this system operates.
What is scarcity in relation to economics?
What is scarcity in relation to economics?
Scarcity is central to economic theory. Economic analysis is fundamentally about the maximization of something (wealth, happiness, etc.) subject to constraints. These constraints, or scarcity, inevitably define a trade-off.
What is the welfare definition of economics?
What is the welfare definition of economics?
According to Alfred Marshall, economics not only analyzes how to acquire wealth, but also how to utilize that wealth in order to obtain material gains that improve the quality of life. Wealth has no meaning unless it is used to purchase things that are required for subsistence and comfort.
What did Lionel Robbins argue about the definition of economics?
What did Lionel Robbins argue about the definition of economics?
Economics graduates tend to have high earning potential, with plenty of opportunities for promotions.
Economics graduates tend to have high earning potential, with plenty of opportunities for promotions.
Which of these professions can an economics graduate work in? (Select all that apply)
Which of these professions can an economics graduate work in? (Select all that apply)
Microeconomics deals with the economy as a whole.
Microeconomics deals with the economy as a whole.
Which of the following areas are studied in microeconomics?
Which of the following areas are studied in microeconomics?
Microeconomics is helpful in understanding the functioning of a free-enterprise economy.
Microeconomics is helpful in understanding the functioning of a free-enterprise economy.
What does 'demand' mean in economics?
What does 'demand' mean in economics?
What is market demand?
What is market demand?
The market demand curve slopes upwards, meaning that quantity demanded increases with price.
The market demand curve slopes upwards, meaning that quantity demanded increases with price.
What factors affect the demand for a product?
What factors affect the demand for a product?
Substitute goods are used together, such as bread and butter.
Substitute goods are used together, such as bread and butter.
What is a demand function?
What is a demand function?
What does 'elasticity of demand' mean?
What does 'elasticity of demand' mean?
When demand is perfectly inelastic, the quantity demanded does not change at all in response to a change in price.
When demand is perfectly inelastic, the quantity demanded does not change at all in response to a change in price.
What is the major distinction between the short-run生產函数 and the long-run生產函数?
What is the major distinction between the short-run生產函数 and the long-run生產函数?
In economics, production is generally defined as the transformation of inputs into outputs.
In economics, production is generally defined as the transformation of inputs into outputs.
What are the three basic types of utility?
What are the three basic types of utility?
What is a production function?
What is a production function?
The law of diminishing marginal returns applies to the long-run生產函数.
The law of diminishing marginal returns applies to the long-run生產函数.
The law of variable proportions explains the relationship between the quantities of factors employed and the amount of product obtained.
The law of variable proportions explains the relationship between the quantities of factors employed and the amount of product obtained.
The marginal product of a factor is the same as the average product of a factor.
The marginal product of a factor is the same as the average product of a factor.
When the marginal product of a factor becomes zero, the total product reaches its maximum.
When the marginal product of a factor becomes zero, the total product reaches its maximum.
Internal economies are benefits that businesses can share with other firms.
Internal economies are benefits that businesses can share with other firms.
What are two categories of economies of scale?
What are two categories of economies of scale?
The study of returns to scale is the subject matter of output maximization.
The study of returns to scale is the subject matter of output maximization.
What is an isoquant curve?
What is an isoquant curve?
The strict Cobb-Douglas production function exhibits increasing returns to scale.
The strict Cobb-Douglas production function exhibits increasing returns to scale.
The isoquant curve is typically convex to the origin.
The isoquant curve is typically convex to the origin.
The law of diminishing returns explains the three phases of returns to scale.
The law of diminishing returns explains the three phases of returns to scale.
What is the difference between fixed costs and variable costs?
What is the difference between fixed costs and variable costs?
Total cost is the sum of total fixed cost and total variable cost.
Total cost is the sum of total fixed cost and total variable cost.
What does the average fixed cost (AFC) curve look like?
What does the average fixed cost (AFC) curve look like?
Marginal cost is the change in total cost resulting from producing one more unit of output.
Marginal cost is the change in total cost resulting from producing one more unit of output.
When average cost is falling, marginal cost is greater than average cost.
When average cost is falling, marginal cost is greater than average cost.
Total revenue is the total amount of money a firm receives from the sale of its products.
Total revenue is the total amount of money a firm receives from the sale of its products.
Average revenue is the same as price per unit of output.
Average revenue is the same as price per unit of output.
Marginal revenue is the change in total revenue from selling one more unit of output.
Marginal revenue is the change in total revenue from selling one more unit of output.
In a perfectly competitive market, marginal revenue is always less than average revenue.
In a perfectly competitive market, marginal revenue is always less than average revenue.
The profit-maximizing level of output for a perfectly competitive firm is where marginal revenue equals marginal cost.
The profit-maximizing level of output for a perfectly competitive firm is where marginal revenue equals marginal cost.
In a perfectly competitive market, a firm can make a profit, a loss, or zero profit.
In a perfectly competitive market, a firm can make a profit, a loss, or zero profit.
Market structure refers to the characteristics of different markets, taking into account factors such as the number of producers, ease of entry and exit, market share, number of buyers, and the relationship between sellers.
Market structure refers to the characteristics of different markets, taking into account factors such as the number of producers, ease of entry and exit, market share, number of buyers, and the relationship between sellers.
What are the four types of market structures?
What are the four types of market structures?
Flashcards
Economics
Economics
Study of choices among scarce resources affecting wealth and utility.
Scarcity
Scarcity
Limited availability of resources relative to wants, leading to choices and trade-offs.
Microeconomics
Microeconomics
Branch of economics studying individual agents like households and businesses.
Macroeconomics
Macroeconomics
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Wealth Definition of Economics
Wealth Definition of Economics
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Welfare Definition of Economics
Welfare Definition of Economics
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Robbins Definition of Economics
Robbins Definition of Economics
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Market Demand
Market Demand
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Demand Schedule
Demand Schedule
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Demand Curve
Demand Curve
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Law of Demand
Law of Demand
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Substitution Effect
Substitution Effect
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Income Effect
Income Effect
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Giffen Goods
Giffen Goods
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Elasticity of Demand
Elasticity of Demand
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Perfectly Inelastic Demand
Perfectly Inelastic Demand
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Unit Elastic Demand
Unit Elastic Demand
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Price Elasticity of Demand
Price Elasticity of Demand
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Total Outlay Method
Total Outlay Method
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Demand Function
Demand Function
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Linear Demand Function
Linear Demand Function
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Determinants of Demand
Determinants of Demand
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Market Equilibrium
Market Equilibrium
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Complements
Complements
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Substitutes
Substitutes
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Demand Shift
Demand Shift
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Exceptions to Law of Demand
Exceptions to Law of Demand
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Demand Elasticity Coefficient
Demand Elasticity Coefficient
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Economic Models
Economic Models
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Study Notes
- Economics is the study of choices among alternative uses of scarce resources.
- Scarcity is central to economic theory.
- Economic analysis maximizes something—leisure time, wealth, health, happiness, etc.—subject to constraints.
- Macroeconomics and microeconomics are two classes of economics.
- Economics is a social science that focuses on the production, consumption, and transfer of wealth.
- The early economists defined economics as the science of wealth.
- Adam Smith defined economics as a science concerned with the nature and causes of the wealth of nations.
- J.S. Mill defined economics as a practical science dealing with production and distribution of wealth.
- Marshall defined economics as not only analyzing the acquisition of wealth but also how to utilize wealth for obtaining material gains of human life.
- Robbins defined economics as the study of human behavior concerning the relationship between ends (wants) and scarce means (resources) with alternative uses.
- Economics studies material requisites of well-being, ignoring non-material aspects of human life.
- Economics is a social science focusing on individuals, firms, and societies, aiming to solve social problems.
- Market demand is the sum of all individual demands for a product in a market.
- Demand is directly related to price (a decrease in price leads to an increase in demand: vice versa).
- Demand is affected by factors such as price of related goods (substitutes and complements), consumer income, consumer tastes & preferences, number of consumers or buyers, etc.
- There are various types of price elasticity of demand, such as perfectly inelastic, inelastic, unitary elastic, elastic, perfectly elastic.
- Elasticity measures the responsiveness of demand to changes in price.
- Total outlay/expenditure method measures elasticity by comparing the total money spent by the consumer on the goods before and after changes in price.
- Elasticity is the ratio of percentage change in quantity demanded to the percentage change in price.
- There are certain exceptions to the law of demand, like Giffen goods or paradox, demonstration effect (Veblen goods), and speculation of future high price.
- Production is the creation of utility (the ability of a good or service to satisfy needs or wants).
- There are different types of utility, such as form utility, time utility, place utility.
- The production function shows the relationship between inputs and maximum output.
- The production function in the short run assumes constant variables (fixed inputs), while in the long run all inputs are variable.
- Returns to scale describes the changes in output when all inputs are increased proportionally (constant returns, increasing returns, decreasing returns).
- Cost of production is the sum of explicit and implicit costs, which include the cost of inputs, opportunity costs, and normal profit.
- Explicit costs are the actual payments made to the factors of production, while implicit costs are the implicit costs or opportunity costs.
- Total revenue (TR) refers to the total amount earned during the sales of the product and its calculation is done by multiplying price per unit by the total quantity sold.
- Average revenue (AR) represents total revenue divided by the total quantity sold
- Marginal revenue (MR) refers to change in the total revenue generated from an extra unit of output.
- Profit maximization occurs under perfect competition when marginal revenue (MR) equals marginal costs (MC).
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Description
Explore the fundamental concepts of economics, including scarcity, the distinction between macroeconomics and microeconomics, and key definitions from influential economists like Adam Smith and J.S. Mill. This quiz will help you understand how economic analysis applies to decision-making and resource allocation.
