Introduction to Economics Course Quiz(week 1)
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Questions and Answers

This course is a first glance in the economic way of ______ and working.

thinking

One of the main objectives of the course is to develop an economic way of ______.

thinking

The concepts of demand and ______ are introduced in this course.

supply

Students are expected to apply graphical ______ on economic issues.

<p>analysis</p> Signup and view all the answers

After the course, students should identify how equilibrium price is determined through the interaction of supply and ______.

<p>demand</p> Signup and view all the answers

Scarcity refers to our inability to satisfy all our ______.

<p>wants</p> Signup and view all the answers

The lecture notes and required textbook can help ______ the learning process.

<p>facilitate</p> Signup and view all the answers

The quality of labour depends on human capital, which is the knowledge and skills obtained from ______, on-the-job training, and work experience.

<p>education</p> Signup and view all the answers

The human resource that organizes land, labour, and capital is ______.

<p>entrepreneurship</p> Signup and view all the answers

A ______ is a significant decline in economic activity spread across the economy.

<p>recession</p> Signup and view all the answers

A business cycle describes the fluctuations in an economy over a ______.

<p>period</p> Signup and view all the answers

Ford Motor Company produces cars in several countries and sells them in many more ______.

<p>countries</p> Signup and view all the answers

Who gets the goods and services depends on the ______ that people earn.

<p>incomes</p> Signup and view all the answers

The economic way of thinking places scarcity and its implication, choice, at ______ stage.

<p>centre</p> Signup and view all the answers

Trade-offs arise when people choose how to spend their ______.

<p>incomes</p> Signup and view all the answers

The questions what, how, and for whom become sharper when we think in terms of ______.

<p>trade-offs</p> Signup and view all the answers

Economists observe and measure economic activity, keeping track of quantities of ______.

<p>resources</p> Signup and view all the answers

An economic model is a description of some aspect of the economic world that includes only those features of the world that are needed for the ______ at hand.

<p>purpose</p> Signup and view all the answers

We test models to reject those that don’t fit the ______ and identify the ones that do fit the facts.

<p>facts</p> Signup and view all the answers

The fallacy of composition claims that what is true for the parts is true for the ______.

<p>whole</p> Signup and view all the answers

Economists use the logical device called ______ to isolate the effect of interest.

<p>ceteris paribus</p> Signup and view all the answers

The post hoc fallacy means 'after this, therefore because of ______'.

<p>this</p> Signup and view all the answers

Economists try to isolate cause-and-effect relationships by changing only one ______ at a time.

<p>variable</p> Signup and view all the answers

An economic ______ is a generalization that summarizes what we think we understand about economic choices.

<p>theory</p> Signup and view all the answers

Two common fallacies that economists try to avoid are the fallacy of composition and the ______ fallacy.

<p>post hoc</p> Signup and view all the answers

Economists cannot easily do ______, which makes studying economic behavior challenging.

<p>experiments</p> Signup and view all the answers

The x-coordinate of a point tells us how far from the origin the point is on the ______ axis.

<p>horizontal</p> Signup and view all the answers

The y-coordinate of a point indicates how far from the origin it is on the ______ axis.

<p>vertical</p> Signup and view all the answers

In ordered pair notation, points are represented in the form of (x, ______).

<p>y</p> Signup and view all the answers

A time-series graph measures time along the x-axis and the variable of interest along the ______ axis.

<p>y</p> Signup and view all the answers

When a point lies on an axis, one of its coordinates must be ______.

<p>zero</p> Signup and view all the answers

Scarcity is a situation in which _______.

<p>we are unable to satisfy all our wants</p> Signup and view all the answers

People who sell the services of the factor of production _____ earn an income called ______.

<p>labour; wages</p> Signup and view all the answers

The choices that you make are _______.

<p>choices made in self-interest</p> Signup and view all the answers

When the government increases taxes and spends the extra revenue on airport security, its choice involves______.

<p>a trade-off between other goods and services and airport security</p> Signup and view all the answers

Last month, you played tennis once. This month, you play twice. So, this month, your ____.

<p>marginal benefit from the first game exceeds its marginal cost</p> Signup and view all the answers

Scarcity leads to _______ in resource allocation.

<p>trade-offs</p> Signup and view all the answers

In economics, _______ refers to the next best alternative that is given up when making a choice.

<p>opportunity cost</p> Signup and view all the answers

The factor of production that earns _____ is capital.

<p>profit</p> Signup and view all the answers

Economic decisions can often be analyzed through the lens of _______ costs and benefits.

<p>marginal</p> Signup and view all the answers

A choice made in the _______ interest may not always serve individual needs.

<p>social</p> Signup and view all the answers

Flashcards

Scarcity

The condition of having unlimited wants but limited resources.

Economics

The study of how societies use limited resources to satisfy unlimited wants.

Economic Way of Thinking

A framework for analyzing economic issues, emphasizing scarcity and trade-offs.

Demand and Supply

The forces that determine the price and quantity of goods and services in a market.

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Equilibrium Price

The price at which quantity demanded equals quantity supplied.

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Market Structures

Different types of markets based on the number of firms, barriers to entry, and product differentiation.

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Opportunity Cost

The value of the next best alternative forgone.

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Economic Model

A simplified representation of an economic phenomenon, focusing on key elements for analysis.

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Testing Economic Models

Evaluating models using real-world data to determine if they accurately predict economic outcomes.

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Economic Theory

A generalized explanation of economic behavior based on observed patterns and tested models.

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Ceteris Paribus

Latin for "all other things being equal", used to isolate the effect of a single variable in economic analysis.

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Fallacy of Composition

The erroneous assumption that what's true for an individual part must be true for the whole.

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Post Hoc Fallacy

Mistakenly assuming that because event A happened before event B, A caused B.

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Human Capital

The knowledge, skills, and abilities that people acquire through education, training, and experience.

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Entrepreneurship

The human resource that organizes land, labor, and capital to create businesses and generate profits.

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Measure of Human Capital

A way to quantify the knowledge and skills of a workforce, often measured by years of education or training.

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Recession

A significant decline in economic activity, usually marked by a drop in production, employment, and consumer spending.

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Business Cycle

The natural fluctuations in economic activity over time, characterized by periods of expansion and contraction.

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Trade-off

The act of choosing one option over another, recognizing that you must give up something to gain something else.

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What, How, and For Whom Trade-off

The fundamental economic question of how to allocate scarce resources to satisfy unlimited wants, involving choices about what to produce, how to produce it, and who gets the goods and services.

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Where to Produce

A key economic question involving location choices for production based on factors such as access to resources, labor, and markets.

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For Whom to Produce

A key economic question about how goods and services are distributed among individuals based on their income and purchasing power.

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What is scarcity?

Scarcity is a fundamental economic concept that describes the situation where our wants exceed the available resources to satisfy them. It means we can't have everything we desire because our resources are limited.

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Factors of Production

Factors of production are the resources used to produce goods and services. These include land, labor, capital, and entrepreneurship.

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What do people earn when they sell their labor services?

People who sell their labor services earn an income called wages.

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Self-Interest

Self-interest refers to the choices individuals make based on their own personal benefits and preferences.

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Marginal Cost

Marginal cost is the additional cost incurred when producing one more unit of a good or service.

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Marginal Benefit

Marginal benefit is the additional satisfaction or gain from consuming one more unit of a good or service.

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What does it mean when marginal cost exceeds marginal benefit?

When the marginal cost of an activity is greater than the marginal benefit, it is not worthwhile to continue that activity. The cost outweighs the gain.

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What happens when marginal benefit exceeds marginal cost?

When the marginal benefit of an activity exceeds the marginal cost, it is worthwhile to continue that activity. The benefit outweighs the cost.

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X-coordinate

The horizontal distance of a point from the origin on a graph. It's found by drawing a vertical line from the point to the x-axis.

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Y-coordinate

The vertical distance of a point from the origin on a graph. It's found by drawing a horizontal line from the point to the y-axis.

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Ordered Pair

A way to represent a point on a graph using its x-coordinate and y-coordinate. The format is (x, y) with the x-coordinate first.

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Time Series Graph

A graph that shows how a variable changes over time. Time is plotted on the x-axis, and the variable is plotted on the y-axis.

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Cyclical Pattern

A repeating pattern of ups and downs in a variable over time, seen often in time series graphs.

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Study Notes

Course Information

  • Course Title: Principles of Microeconomics
  • Course Code: ECN-261
  • Lecturer: Dr Afroditi Kero
  • Email: [email protected]
  • Office Hours: At the end of the lecture and by appointment

Course Description

  • The course provides a foundational understanding of economic principles and how the economic system functions.
  • Students will learn key economic concepts and theories.
  • Qualitative and quantitative skills will be developed.

Course Objectives

  • Develop an economic way of thinking.
  • Introduce graphical analysis.
  • Introduce the concepts of demand and supply.
  • Introduce decision-making processes related to optimal output levels.
  • Identify and differentiate various market structures.

Learning Outcomes

  • Apply graphical analysis to economic issues.
  • Identify how equilibrium price is determined in a free market.
  • Demonstrate the concepts of demand and supply analysis relevant to the business environment.
  • Analyze market examples and applications to simulate realistic business experiences.
  • Discuss income distribution and resource allocation dynamics.

Course Content

  • Introduction to Economics
  • Scarcity, Choice, and Opportunity Cost
  • Demand and Supply
  • Elasticity
  • Demand and Supply Applications
  • Consumer Choice
  • Output and Costs
  • Perfect Competition
  • Monopoly
  • Monopolistic Competition and Oligopoly

Assessment Methods

  • Final Examination (40 multiple-choice questions): 50%
  • Midterm Examination (30 multiple-choice questions): 40%
  • Participation: 10%
  • Attendance is mandatory.

Chapter 1: What is Economics?

  • Definition of Economics: The social science studying choices made by individuals, businesses, and governments as they deal with scarcity.
  • Scarcity: The inability to satisfy all wants, due to limited resources.
  • Economic Questions/Concerns: Understanding (1) what, how, and for whom goods and services are produced, and (2) when self-interest aligns with social interest.

Chapter 1: Economic Questions (What, How, When, Where, For Whom?)

  • What: What goods and services are produced? Technological advancements and societal desires influence production.
  • How: How are goods and services produced? This involves utilizing productive resources (factors of production): Land (natural resources), Labour (human effort), Capital (tools, machinery), Entrepreneurship (organizing the other three).
  • When: When are goods and services produced and when are they consumed? The timing of production can impact the economy; economic downturns like recessions represent significant declines and fluctuations in economic activity over time.
  • Where: Where are the goods and services produced? Global production patterns have changed location preferences.
  • For Whom: Who gets the goods and services? People earn income from the sale of the services of the factors of production.

Economic Questions: Further Details

  • Factors of Production: Land, Labor, Capital, Entrepreneurship
  • The analysis can cover discussions about production and recessionary periods.

Chapter 1: The Economic Way of Thinking

  • Choices and Trade-offs: Every choice involves a trade-off—giving up one thing to get something else.
  • Opportunity Cost: The highest-valued alternative sacrificed when making a choice.
  • Rational Behavior: Making decisions by evaluating costs and benefits at the margin (small changes in resource use).
  • Human Nature, Incentives, and Institutions: Economists assume rational self-interest motivation, but institutions can guide choices towards the social interest (e.g., property rights).

Chapter 1: Positive vs. Normative Statements

  • Positive Statements: Describe the world as it is, testable.
  • Normative Statements: Prescribe how the world should be, based on values, not testable.

Chapter 1: Appendix (Understanding Graphs):

  • Graphs are visual representations of relationships between variables.
  • The x-axis (horizontal) represents one variable while the y-axis (vertical) represents the other.
  • The point where the axes intersect is the origin (0,0).
  • The graph’s slope measures the rate at which one variable changes in response to the other. Positive slope indicates that an increase in one variable leads to an increase in the other. A negative slope indicates that an increase in one variable leads to a decrease in the other.
  • The y-axis intercept is the value of the Y-variable when the X-variable is zero.

Additional Information

  • Textbook: Parkin, M., et. al. (2021). Economics. Pearson
  • Additional book sources are accessible online through the university library.
  • Lecture notes are also available

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ECN-261 Principles of Microeconomics Lecture Notes PDF

Description

This quiz assesses your understanding of the fundamental concepts in economics, including demand, supply, scarcity, and the business cycle. You will apply graphical analysis to economic issues and explore the determinants of equilibrium price. Perfect for students looking to solidify their knowledge in introductory economics.

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