Unit 1: Introduction to Economics
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Questions and Answers

What is scarcity in economics?

  • The absence of wants and needs
  • The problem of having limited resources with unlimited wants and needs (correct)
  • The equal distribution of resources to satisfy wants and needs
  • The problem of having unlimited resources with limited wants and needs

    • How is 'choice' defined in economics?

  • Unlimited access to resources to satisfy wants and needs
  • Deciding to limit wants and needs to match available resources
  • Equal distribution of resources among wants and needs
  • Deciding how to use limited resources to satisfy wants and needs (correct)

    • What does 'rational self-interest' refer to in economics?

  • Ignoring personal benefit in decision making
  • Making decisions solely for the benefit of others
  • Acting irrationally in self-interest
  • Making sensible choices based on what is best for oneself (correct)

    • What is the study of economics primarily concerned with?

    <p>How people make rational self-interest choices in using limited resources to satisfy wants and needs</p> Signup and view all the answers

    What were some early forms of money?

    <p>Shells, barley, and precious metals</p> Signup and view all the answers

    What is the function of money as a 'store of value'?

    <p>Money is used for saving for future spending</p> Signup and view all the answers

    How does product pricing affect consumer choice and a business?

    <p>If prices are too high, customers will likely go to another store</p> Signup and view all the answers

    What is a market?

    <p>Places where people exchange products</p> Signup and view all the answers

    Who are the two main players in a market?

    <p>Sellers and buyers</p> Signup and view all the answers

    How does competition among sellers affect prices?

    <p>It decreases a product’s price</p> Signup and view all the answers

    What are the three basic market structures?

    <p>Pure competition, oligopoly, and monopoly</p> Signup and view all the answers

    What is an advantage of a pure competition market?

    <p>Pressure on sellers to provide better products and service</p> Signup and view all the answers

    What is the structure of a monopoly market?

    <p>One seller with complete control over the price and supply</p> Signup and view all the answers

    What are the results of barriers to market entry?

    <p>Market barriers reduce competition and generally result in higher product prices</p> Signup and view all the answers

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