Introduction to Economics: Tutorial 1
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Questions and Answers

What is the main opportunity cost of purchasing battery electric buses?

  • Financial investment in renewable energy
  • Cost of maintaining diesel buses
  • Increased air pollution
  • Funds that could have supported other public transport initiatives (correct)

Marginal analysis involves decision-making based on additional costs and benefits.

True (A)

What could firms potentially do to improve environmental outcomes?

Adopt greener practices or technologies

Opportunity cost refers to the next best __________ of a choice.

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

Match the economic concepts with their definitions:

<p>Incentives = Financial motivations created by governments for firms. Marginal Analysis = Approach for comparing additional benefits and costs of a decision. Opportunity Cost = Value of the next best alternative that is forfeited. Green Policies = Government strategies to promote environmental sustainability.</p> Signup and view all the answers

What is one reason for the increase in interest rates by the Banque du Cairo?

<p>To control inflation (B)</p> Signup and view all the answers

Salaries have grown 5 percent more than inflation over the year.

<p>False (B)</p> Signup and view all the answers

What economic sector is the company Tornado considering exporting to Poland?

<p>Electric blenders</p> Signup and view all the answers

The volume of exports in 2022 is still below pre-pandemic __________.

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

Match the following economic concepts with their definitions:

<p>Macroeconomics = The study of economies on a large scale, focusing on total and aggregate factors. Microeconomics = The study of individual and business decisions, typically focused on supply and demand. Pollution rights = A market-based approach to control environmental pollution through tradable permits. Inflation = The rate at which the general level of prices for goods and services rises.</p> Signup and view all the answers

What is the main focus of economics?

<p>How society manages its scarce resources (D)</p> Signup and view all the answers

Opportunity cost refers to the benefits of the next best alternative that is forgone when making a decision.

<p>True (A)</p> Signup and view all the answers

Name the two main branches of economics.

<p>Microeconomics and Macroeconomics</p> Signup and view all the answers

People respond to ________, which can induce them to change their behavior.

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

Match the principle of economics with its description:

<p>People face trade-offs = Making decisions requires giving up one goal for another. Rational people think at the margin = Considering additional benefits and costs. Market organization = A means for buyers and sellers to exchange goods. Government intervention = To correct market failures and allocate resources efficiently.</p> Signup and view all the answers

What happens when the government prints new money?

<p>Inflation occurs (B)</p> Signup and view all the answers

Markets are always efficient and do not require government intervention.

<p>False (B)</p> Signup and view all the answers

What is the trade-off between unemployment and inflation?

<p>As the money supply increases, spending rises, leading to higher prices (inflation) and potentially lower unemployment.</p> Signup and view all the answers

Flashcards

Microeconomics

Branch of economics dealing with the behavior of individual economic units, such as households and firms, and their interactions in specific markets.

Macroeconomics

Branch of economics that studies the overall economy, including national income, inflation, unemployment, and economic growth.

Pollution Cap

A government-imposed limit on the amount of pollution a company is allowed to produce.

Pollution Trading

The ability to sell unused pollution allowances to other companies.

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Cap-and-Trade System

A system that aims to reduce pollution by incentivizing companies to reduce emissions through market mechanisms.

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Opportunity Cost

The cost of the next best alternative that is forgone when a choice is made.

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Government Policy

Government actions designed to influence economic behavior and achieve public policy goals.

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Marginal Benefit

The additional benefit gained from producing or consuming one more unit of a good or service.

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Marginal Cost

The additional cost incurred from producing or consuming one more unit of a good or service.

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Government Incentives

Financial incentives designed to encourage specific behaviors, such as green practices, by making them more appealing or less costly.

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What is the core concept of economics?

Economics is the study of how societies make decisions about allocating scarce resources to satisfy unlimited wants.

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What is the difference between Microeconomics and Macroeconomics?

Microeconomics focuses on individual decisions, like how a household chooses to spend its income or how a firm sets prices.

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What is the difference between Microeconomics and Macroeconomics?

Macroeconomics focuses on the economy as a whole, looking at issues like inflation, unemployment, and economic growth.

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Explain the concept of trade-offs in economics.

A trade-off means that choosing one option means giving up another. You can't have everything.

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What is opportunity cost?

Opportunity cost is the value of the best alternative that you forgo when making a choice. It's what you lose by choosing one option over another.

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Define marginal thinking in economics.

Rational people make decisions by comparing the marginal costs and benefits.

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What is an incentive in economics?

An incentive is anything that motivates a person to act or change their behavior. It can be a reward or a punishment.

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Explain the role of markets in economics.

Markets are where buyers and sellers interact to exchange goods and services at specific prices and quantities. They provide a natural mechanism for allocating resources.

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Study Notes

Introduction to Economics: Tutorial 1

  • Economics is the study of how society manages its scarce resources.
  • Economics is divided into microeconomics and macroeconomics.
  • Key principles of economics include:
    • People face trade-offs.
    • The cost of something is what you give up to get it (opportunity cost).
    • Rational people think at the margin (comparing marginal benefits and marginal costs).
    • People respond to incentives.
    • Markets are a good way to organize economic activity.
    • Governments can sometimes improve market outcomes.
    • Prices rise when governments print more money.
    • Trade-offs exist between unemployment and inflation.

Course TAs

Student Assessment Methods

  • Assignment (group activity) - 10%
  • First Milestone - 5%
  • Second Milestone - 5%
  • In-tutorial flipped classroom activity - 10%
    • First presentation - 5%
    • Second presentation - 5%
  • Midterm Exam - 20%
  • Quizzes - 20%
  • Final Exam - 40%

Tutorial Agenda

  • Review of lecture material (summary of lecture and key words).
  • Tutorial sheet (likely to contain practice questions).

Question 1. Micro versus Macroeconomics

  • Examples of issues related to microeconomics: the price of a specific product, a specific company's business decisions, individual salary changes.
  • Examples of issues related to macroeconomics: interest rate changes by the central bank, overall inflation, trade volume.

Question 2. True or False

  • Multiple true/false questions relating to different economic concepts.

Question 3. Principles of Economics

  • Governments use incentives to create a financial incentive for firms to be more environmentally friendly. (e.g by introducing a 'cap and trade' scheme. Opportunity cost, marginal analysis.)
  • Firms will choose a product based on the additional benefits of their choices, and the additional costs involved. Opportunity cost is the value of the next best alternative.

Question 6. Opportunity Cost

  • The Ministry of Environment is purchasing e-buses.
  • Opportunity cost is the next best alternative for the money spent.
  • An analysis of what else could have been purchased with the money and what benefit would have been generated from spending it on an alternative use.

Question 8. Discussion prompt

  • Discussion of whether economics is the most suitable approach to determining effective policy.
  • Kate Raworth's view that economic models frequently lack consideration of environmental impact & unpaid labor.

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Description

This quiz covers the fundamental principles of economics, including the distinction between microeconomics and macroeconomics. It highlights key concepts like trade-offs, opportunity costs, and the impact of government on markets. Prepare to test your understanding of how economic activity is organized in society.

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