Introduction to Economics: Basics and Market Concepts
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Questions and Answers

What is the significance of the term 'Economics' origin?

  • It highlights the importance of unlimited wants.
  • It emphasizes the necessity of scarcity in resource allocation.
  • It symbolizes the idea of making choices to maximize satisfaction.
  • It refers to the study of household management. (correct)

    • What role do prices play in a market?

  • Prices dictate the maximum satisfaction of unlimited human wants.
  • Prices determine the allocation of scarce resources.
  • Prices regulate the exchange of goods and services between buyers and sellers.
  • Prices guide decisions on what and how much to buy and sell. (correct)

    • What concept did Adam Smith use to explain how self-interest can benefit society as a whole?

  • Inconspicuous Hand
  • Hidden Directive
  • Invisible Balance (correct)
  • Unseen Force

    • How did Adam Smith describe the role of individuals in promoting societal interests?

    <p>By promoting their own self-interest</p> Signup and view all the answers

    Which of the following is NOT an important component of Economics as mentioned in the text?

    <p>Price Stability</p> Signup and view all the answers

    What is the primary focus of Economics as described in the text?

    <p>To fulfill unlimited human wants with limited resources.</p> Signup and view all the answers

    What does the spillover principle suggest?

    <p>The impacts of decisions extend to those not involved in making them.</p> Signup and view all the answers

    How does the Principle of Diminishing Returns affect output?

    <p>Output increases at a decreasing rate as one input increases.</p> Signup and view all the answers

    What is the significance of the marginal principle in decision-making?

    <p>It helps in perfectly balancing marginal benefit and marginal cost.</p> Signup and view all the answers

    How does the principle of opportunity cost relate to decision-making?

    <p>It highlights the trade-offs involved when making choices.</p> Signup and view all the answers

    What is the difference between nominal value and real value, as per the text?

    <p>Real value measures money's worth in terms of goods it can buy.</p> Signup and view all the answers

    What does the spillover benefit refer to, based on the text?

    <p>Benefits that extend to society members not part of a decision.</p> Signup and view all the answers

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