Introduction to Scarcity and Economics

Questions and Answers

Which of the following best captures the idea of the fundamental economic problem?

Limited resources and unlimited wants (correct)

Scarcity does not exist

All resources are infinite

Wants can be easily satisfied

Which of the following would best be described as a positive statement?

The government should regulate prices

Countries normally experience higher unemployment during recessions (correct)

Economies must grow

Everyone should go to college

Which of the following best describes what we mean by resources in economics?

Money

Government regulations

The factors used to produce goods and services (correct)

Consumer preferences

Which of the following best describes the difference between microeconomics and macroeconomics?

Microeconomics is about individuals, households, and firms; Macroeconomics is about economies as a whole Signup and view all the answers

What does it mean to say a resource is scarce?

There is not enough of this resource to satisfy all the wants and needs of a society. Signup and view all the answers

What is the best definition of an economic system?

A mechanism that decides what to make, how to make it, and who gets it. Signup and view all the answers

Which of the following is NOT a scarce economic resource?

Money Signup and view all the answers

Which of the following is an example of a macroeconomic question?

What would be the likely impact of an increase in business taxes on the overall level of inflation in the country? Signup and view all the answers

Which of the following are characteristics of a scarce resource?

There is a demand for that resource with limited supply. Signup and view all the answers

What does the statement 'Unemployment fell by 1.2% last year' represent?

Positive statement. Signup and view all the answers

What type of statement is 'Business profits should be redistributed through taxes to benefit more of society'?

Normative statement. Signup and view all the answers

What are the four scarce resources that any economic system must allocate between society's competing wants and needs?

Land resources, labor, capital goods, and entrepreneurship. Signup and view all the answers

Which of the following describes a normative statement?

Subjective and value based. Signup and view all the answers

What is the best definition of economics?

The study of how society's scarce resources are allocated. Signup and view all the answers

Study Notes

Scarcity and Economic Fundamentals

Scarcity arises from limited resources coupled with unlimited human wants, leading to fundamental economic problems that all systems must address.
A resource is considered scarce when it cannot meet society's wants and needs, resulting in competition for these limited resources.

Positive and Normative Statements

Positive statements describe objective facts and situations, exemplified by unemployment trends during recessions.
An example of a positive statement: "Unemployment fell by 1.2% last year," as it provides a measurable fact.
Normative statements are opinion-based and subjective, such as suggesting business profits should be redistributed through taxes.

Definitions and Key Economic Concepts

Economic systems allocate resources by determining what to produce, how to produce it, and who benefits from it.
Microeconomics examines individual and firm-level economic activities, while macroeconomics focuses on larger economic phenomena affecting the entire economy.
Characteristics of scarce resources include high demand and limited availability.

Resources in Economics

The four essential economic resources are land, labor, capital, and entrepreneurship, which are necessary for producing goods and services.
Money is not considered a scarce economic resource as it does not directly contribute to production, despite it being limited in supply.

Inquiry in Economics

Macroeconomic questions address broad impacts on the economy, such as how business taxes affect overall inflation rates.
The fundamental definition of economics centers on the allocation of society's scarce resources and how these resources address the problem of scarcity.

Description

Test your knowledge on the key concepts of scarcity and the economic way of thinking with these flashcards. Understand how limited resources lead to fundamental economic problems and explore positive statements in economics.