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Questions and Answers
What does the word "economics" come from?
What does the word "economics" come from?
Greek words "oikos" and "nomos"
What does the word "oikos" mean?
What does the word "oikos" mean?
house or household
What is economics defined as?
What is economics defined as?
The social science concerned with analyzing and explaining human decisions about the allocation of limited resources.
Economics is a social science.
Economics is a social science.
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Economics focuses on studying the unlimited resources that people have.
Economics focuses on studying the unlimited resources that people have.
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What is the definition of economics in a simple sentence?
What is the definition of economics in a simple sentence?
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Opportunity cost refers to the value of the best alternative that has been chosen.
Opportunity cost refers to the value of the best alternative that has been chosen.
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Which of the following is NOT a fundamental question in economics?
Which of the following is NOT a fundamental question in economics?
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What is the most important rule in a market economy?
What is the most important rule in a market economy?
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Using new technology is a common way for businesses to maximise profits.
Using new technology is a common way for businesses to maximise profits.
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Protecting the environment is not a priority in a market economy.
Protecting the environment is not a priority in a market economy.
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Who are the goods produced for in a market economy?
Who are the goods produced for in a market economy?
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Companies create demand for their products.
Companies create demand for their products.
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What are the benefits of studying economics?
What are the benefits of studying economics?
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Which of the following is NOT a benefit of studying economics?
Which of the following is NOT a benefit of studying economics?
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What is the difference between microeconomics and macroeconomics?
What is the difference between microeconomics and macroeconomics?
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Microeconomics studies the unemployment rate.
Microeconomics studies the unemployment rate.
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Macroeconomics studies the production of goods and services at a micro level.
Macroeconomics studies the production of goods and services at a micro level.
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What is the purpose of economic models?
What is the purpose of economic models?
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The Circular Flow Diagram is one example of a basic economic model.
The Circular Flow Diagram is one example of a basic economic model.
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Which of the following is NOT a component of the Circular Flow Diagram?
Which of the following is NOT a component of the Circular Flow Diagram?
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What is the key difference between positive and normative economics?
What is the key difference between positive and normative economics?
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Positive economics is concerned with making value judgments about economic policies.
Positive economics is concerned with making value judgments about economic policies.
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What are economic resources?
What are economic resources?
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Economic resources are unlimited.
Economic resources are unlimited.
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Which of the following is NOT an economic resource?
Which of the following is NOT an economic resource?
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What are the categories of economic resources?
What are the categories of economic resources?
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The term "capital" includes financial capital like money.
The term "capital" includes financial capital like money.
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What is the key characteristic of entrepreneurial abilities?
What is the key characteristic of entrepreneurial abilities?
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Which of the following is the resource payment for land?
Which of the following is the resource payment for land?
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The principle of rationality states that individuals always choose the best and most rational option.
The principle of rationality states that individuals always choose the best and most rational option.
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The principle of rationality is solely applicable to economic decision-making.
The principle of rationality is solely applicable to economic decision-making.
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The principle of rationality suggests that individuals will always make the most perfect and beneficial choice.
The principle of rationality suggests that individuals will always make the most perfect and beneficial choice.
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Study Notes
Introduction to Economics
- Economics comes from the Greek words "oikos" (household) and "nomos" (management)
- Economics is the social science that analyzes human decisions about allocating limited resources.
- In economics, we are concerned with how efficiently we use limited resources to meet unlimited wants.
Opportunity Cost
- Opportunity cost is the value of the next best alternative that is given up when a choice is made.
- It's the value of the sacrificed alternative.
Three Fundamental Questions
- What to produce?
- How to produce?
- For whom to produce?
What to Produce?
- This question focuses on the goods and services people want to buy.
- It examines factors like popular products among different age groups and important factors in purchase decisions.
How to Produce?
- This question looks at how businesses efficiently use resources for production, such as using new technologies and protecting the environment while maximizing profit.
- Profit maximization is crucial in the market economy.
- Fixed revenues and minimum costs are important strategies to keep a business profitable.
- Strong relationships between businesses and customers are essential.
For Whom to Produce?
- This question concentrates on who can afford to buy the products or services.
- This is about providing goods and services to the consumer base.
Microeconomics vs. Macroeconomics
- Microeconomics studies individual economic agents and markets.
- Macroeconomics studies economic aggregates such as unemployment, inflation, interest rates, and economic growth.
Economic Models
- Models simplify reality for better understanding.
- The Circular Flow Diagram is a fundamental economic model.
Positive vs. Normative Analysis
- Positive economics describes the economy's functions.
- Normative economics evaluates and recommends policies.
Economic Resources
- Economically, resources are people, or things used to produce goods or services.
- The basic resources are land, labor, capital, and entrepreneurial abilities.
Economic Resources: LAND
- All natural resources (mineral deposits, plants, animals, water, wind, solar energy, seafood) are part of land resources.
Economic Resources: LABOR
- Productive services, physical effort, skills, intellectual capabilities, and applied knowledge are part of the labor resource.
Economic Resources: CAPITAL
- Goods used to produce other goods and services. These are products of prior human activities.
Economic Resources: ENTREPRENEURIAL ABILITIES
- The ability to organize the other resources to produce.
Resource Payments
- Rent, wages, salary, interest rate, profit are examples of resource payment.
- Nothing is free in the economy and resources always need to be paid for.
Economic Rationality
- Rationality is the fundamental rule in all economic activity.
- Make the best use of scarce resources to maximize possible output.
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Description
This quiz covers the key concepts of economics, including opportunity cost and the fundamental questions that guide production decisions. Explore how resources are allocated to meet human wants and the implications of these choices. Test your understanding of these essential economic principles.
