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Questions and Answers
Which of the following is the best definition of economics?
Which of the following is the best definition of economics?
- The study of how businesses set prices
- The study of how individuals make decisions about the allocation of scarce resources (correct)
- The study of how the government controls the economy
- The study of how people spend their money
What is the main focus of microeconomics?
What is the main focus of microeconomics?
- The government's role in the economy
- The behavior of individual consumers and firms (correct)
- International trade and finance
- The overall performance of the economy
What is the opportunity cost of a decision?
What is the opportunity cost of a decision?
- The total cost of all available alternatives
- The value of the next best alternative that is forgone (correct)
- The benefit of the decision
- The monetary cost of the decision
Which of the following is not a factor of production?
Which of the following is not a factor of production?
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What is the term used to describe the total value of all final goods and services produced within a country in a given period of time?
What is the term used to describe the total value of all final goods and services produced within a country in a given period of time?
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What is the economic concept that refers to the idea that individuals and firms make decisions based on maximizing their own self-interest?
What is the economic concept that refers to the idea that individuals and firms make decisions based on maximizing their own self-interest?
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Study Notes
Economics Fundamentals
- Economics is the study of how individuals, businesses, governments, and societies make decisions about how to allocate limited resources to meet their unlimited wants and needs.
Microeconomics
- Microeconomics focuses on the behavior and decision-making processes of individual economic units, such as households, firms, and markets.
Opportunity Cost
- Opportunity cost is the value of the next best alternative that is given up when a choice is made, representing the trade-off between different options.
Factors of Production
- The four factors of production are: labor, capital, natural resources, and entrepreneurship.
- A factor of production is not "money", as money is merely a medium of exchange and a unit of account.
Gross Domestic Product (GDP)
- GDP measures the total value of all final goods and services produced within a country's borders over a specific time period, typically a year.
Economic Concepts
- The concept of self-interest refers to the idea that individuals and firms make decisions based on maximizing their own self-interest, driving economic activity and decision-making.
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