Fundamentals of Economic Activities

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Questions and Answers

Which statement accurately defines economic activity?

Economic activity refers to the use of limited resources to fulfill unlimited wants. (correct)
Economic activity is any activity that generates income.
Economic activity only includes activities related to production.
Economic activity is concerned only with the distribution of wealth.

Which of the following describes an economic activity that does not generate income?

Exchange of services.
Consumption of resources. (correct)
Investment in capital assets.
Production of goods for sale.

Which of the following is NOT a limitation of microeconomic analysis?

Focus on individual agents and their interactions. (correct)
Overemphasis on quantitative measures.
Inability to account for behavioral factors.
Neglecting macroeconomic factors.

What is an essential category that falls under economic activities?

Consumption. (D) Signup and view all the answers

Which type of economic activity represents a trade-off of using resources?

Production. (C) Signup and view all the answers

Which activity is primarily defined by adding utility to goods and services?

Production (D) Signup and view all the answers

What is the primary purpose of economic activity according to modern economists?

To satisfy unlimited human wants with limited resources (A) Signup and view all the answers

Which of the following is NOT considered an agent of production?

Price Control (D) Signup and view all the answers

In the context of economic activities, which statement is correct regarding consumption?

Consumption satisfies both individual and collective wants (D) Signup and view all the answers

Which of these concepts primarily illustrates the limitations of microeconomic analysis?

High Order Thinking Skills Questions (C) Signup and view all the answers

Flashcards

Economic Activity

Any action involving the use of limited resources to fulfill unlimited human wants. It includes production, consumption, exchange, and investment.

Production

The process of adding value or utility to goods and services. It transforms raw materials into finished products.

Consumption

The process of using goods and services to satisfy individual or collective needs and wants.

Agents of Production

The factors that contribute to the creation of goods and services, including land, labor, capital, and organization.

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Microeconomics

The study of how individual households and firms make decisions and interact in markets.

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Consumption (Economic Activity)

The act of using goods and services to satisfy needs and wants. This does not generate income, but is still considered economic activity.

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Production (Economic Activity)

The process of creating goods and services using resources like land, labor, capital, and organization. It generates income and contributes to economic growth.

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