Introduction to Economics Concepts

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Questions and Answers

What does entrepreneurship involve?

Having an idea

Taking a risk

Producing something people need or want

All of the above (correct)

What is scarcity?

Human needs/wants are always greater than resources will allow.

What does the term 'land' refer to in economics?

Any natural resource.

What does labor mean in the context of economics?

The mental and physical capacity of people to do work. Signup and view all the answers

What is capital in economic terms?

Man-made things that help us produce other things. Signup and view all the answers

What is the study of economics focused on?

Scarcity and choice. Signup and view all the answers

What is opportunity cost?

The best alternative sacrificed for a chosen alternative. Signup and view all the answers

What does a production possibility curve depict?

All the maximum output possibilities for two goods. Signup and view all the answers

What is economic growth?

The ability of an economy to produce more. Signup and view all the answers

What does investment mean in economics?

Invest in resources today so you can grow tomorrow. Signup and view all the answers

What is the relationship between price and quantity demanded?

Inverse relationship. Signup and view all the answers

What is the relationship between price and quantity supplied?

Direct relationship. Signup and view all the answers

What are markets in economic terms?

Any place where buyers and sellers come together. Signup and view all the answers

Who is an entrepreneur?

A person who organizes and manages an enterprise, usually with considerable initiative and risk. Signup and view all the answers

What are resources?

Anything that is used to produce goods or services. Signup and view all the answers

The three fundamental questions of economics are: ______

What to produce? How to produce that product? For whom to produce that product? Signup and view all the answers

What does microeconomics study?

Economic issues that address the behavior and decision making of small units, such as businesses and individuals. Signup and view all the answers

What is macroeconomics?

The study of an economy as a whole. Signup and view all the answers

What is cost-benefit analysis?

An economic model that compares the marginal costs and marginal benefits of a decision. Signup and view all the answers

What are the non-price determinants of demand?

Income, preferences, prices of related goods, and demographic changes. Signup and view all the answers

What is a shortage?

A situation in which quantity demanded is greater than quantity supplied. Signup and view all the answers

What is equilibrium in economics?

Balance between supply and demand. Signup and view all the answers

What does a graph of an indirect relationship depict?

A negative slope (demand). Signup and view all the answers

What does a graph of a direct relationship depict?

A positive slope (supply). Signup and view all the answers

What are the non-price determinants of supply?

Number of sellers, technology, resource prices, taxes and subsidies, expectations of producers, prices of other goods a firm could produce. Signup and view all the answers

What is a surplus?

A situation in which quantity supplied is greater than quantity demanded. Signup and view all the answers

Study Notes

Entrepreneurship

Defined as having an idea, taking risks, and producing goods or services that fulfill people's needs or wants.

Scarcity

Human needs and wants consistently exceed available resources, leading to economic challenges.

Land

Refers to natural resources like wood and lead that are utilized in production.

Labor

Represents the mental and physical capabilities of individuals engaged in work or production.

Capital

Comprised of man-made tools and infrastructure, such as hammers, buildings, and delivery trucks, essential for production.

Economics

The study of how scarcity affects choices; divided into microeconomics (individual and business decisions) and macroeconomics (overall economy).

Opportunity Cost

Refers to the next best alternative that is forgone when a choice is made.

Production Possibility Curve

A graphical representation that showcases maximum output possibilities for two goods, illustrating trade-offs and opportunity costs.

Economic Growth

The capacity of an economy to increase production over time, indicating improved efficiency or resource utilization.

Investment

Engaging in resource allocation today to ensure future growth and benefits.

Demand

Describes the inverse relationship between the price of a good and the amount buyers are willing to purchase, represented by a negative curve.

Supply

Indicates a direct relationship between the price of a good and the quantity sellers are willing to offer, depicted by a positive curve.

Markets

Any venue or platform where buyers and sellers engage in transactions.

Entrepreneur

An individual who organizes, manages, and takes on the risks of a business venture.

Resources

Any inputs utilized in the production of goods or services, encompassing land, labor, and capital.

3 Fundamental Questions

Essential inquiries of economics: What to produce? How to produce it? For whom should it be produced?

Micro-Economics

Focuses on the economic behavior and decision-making processes of individuals and small entities, like businesses.

Macro-Economics

Examines the economy as a complete system, including national and global economic issues.

Cost Benefit Analysis

An economic model used to compare the marginal costs and benefits associated with a decision.

Non-Price Determinants of Demand

Variables that can affect demand, including income levels, consumer preferences, related goods' prices, and demographic shifts.

Shortage

Occurs when the quantity demanded of a good exceeds the quantity supplied, resulting in unmet consumer needs.

Equilibrium

Represents a state where supply and demand are balanced, leading to stable prices.

Graph of an Indirect Relationship

Refers to demand, illustrated by a curve with a negative slope.

Graph of a Direct Relationship

Pertains to supply, represented by a curve with a positive slope.

Non-Price Determinants of Supply

Factors influencing supply include the number of sellers, production technology, resource costs, taxation and subsidies, producer expectations, and potential alternative goods.

Surplus

The situation where the quantity supplied surpasses the quantity demanded, often leading to excess inventory.

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Description

This quiz covers fundamental economics concepts including entrepreneurship, scarcity, and resource allocation. It also explores the production possibility curve and opportunity cost, providing a comprehensive overview of how economic principles affect decision-making. Perfect for students studying basic economics.