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Questions and Answers
What is the definition of entrepreneurship?
What is the definition of entrepreneurship?
- The allocation of resources based on market demands.
- The act of managing a business with minimal risk.
- The creation or extraction of value, viewed as change. (correct)
- The production of goods for immediate consumption.
Which of the following best describes scarcity?
Which of the following best describes scarcity?
- A situation where production costs are minimized.
- A state where resources are unlimited.
- A condition where human wants exceed available resources. (correct)
- The process of distributing goods efficiently.
Which economic question addresses the selection of goods to prioritize?
Which economic question addresses the selection of goods to prioritize?
- For whom will it be produced?
- How will it be produced?
- What resources are available?
- What will be produced? (correct)
What does the economic question 'For whom will it be produced?' focus on?
What does the economic question 'For whom will it be produced?' focus on?
What role does risk-taking play in entrepreneurship?
What role does risk-taking play in entrepreneurship?
Which of the following is classified as a physiological need?
Which of the following is classified as a physiological need?
What is meant by 'self-actualization' in the hierarchy of needs?
What is meant by 'self-actualization' in the hierarchy of needs?
Which factor is NOT categorized under personal factors affecting wants?
Which factor is NOT categorized under personal factors affecting wants?
Which of the following is NOT a factor of production?
Which of the following is NOT a factor of production?
Which resource is typically classified as land in economics?
Which resource is typically classified as land in economics?
How is 'capital' defined in the context of economic resources?
How is 'capital' defined in the context of economic resources?
Which type of need addresses the desire for love and acceptance?
Which type of need addresses the desire for love and acceptance?
Which of the following best describes labor as a factor of production?
Which of the following best describes labor as a factor of production?
What does the term 'economics' primarily study?
What does the term 'economics' primarily study?
Who is known for the Invisible Hand Theory in economics?
Who is known for the Invisible Hand Theory in economics?
Which of the following best describes scarcity?
Which of the following best describes scarcity?
What are 'needs' in the context of human wants?
What are 'needs' in the context of human wants?
Which of the following is NOT a part of the hierarchy of needs?
Which of the following is NOT a part of the hierarchy of needs?
How does the concept of 'unlimited human wants and needs' affect economic behavior?
How does the concept of 'unlimited human wants and needs' affect economic behavior?
In economics, what does the term 'factors of production' refer to?
In economics, what does the term 'factors of production' refer to?
What is the relationship between scarcity and abundance?
What is the relationship between scarcity and abundance?
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Study Notes
Introduction to Economics
- Economics studies how society allocates scarce resources to satisfy unlimited wants.
- Defined as the scientific study of ownership, use, and exchange of scarce resources.
- Greek origins: "Oikos" (household) and "Nomous" (management), translating to "household management."
Key Concepts
- Scarcity: Limited availability of resources; exists when demand exceeds supply.
- Unlimited Human Wants: Constant human desire for more goods and services; satisfaction is never fully achieved.
Types of Human Needs
- Needs: Essential for survival, including air, water, food, shelter, and sleep.
- Wants: Non-essential desires that vary based on personal, psychological, and social factors.
- Personal factors include demographics like sex, race, and age.
- Psychological factors reflect individual motivations and attitudes.
- Social factors encompass influences from family, social class, and culture.
Hierarchy of Needs
- Physiological: Basic bodily requirements.
- Safety: Protection from threats and deprivation.
- Social: Needs for acceptance, belonging, and relationships.
- Esteem: Confidence, recognition, and respect.
- Self-actualization: Realizing personal potential.
Economic Resources
- Factors of Production:
- Land: Natural resources available in nature.
- Labor: Human input in producing goods, both mental and physical.
- Capital: Man-made goods used for producing other goods.
- Entrepreneurship: Vision and skills required to create and manage businesses.
Role of an Entrepreneur
- An entrepreneur organizes and runs a business, assuming financial risks to create value.
Problem of Scarcity
- Scarcity highlights that human wants exceed available supply of time, goods, and resources.
- Key Economic Questions:
- What will be produced? Focus on prioritizing important goods.
- How will it be produced? Decide on production methods and techniques.
- For whom will it be produced? Allocate goods based on purchasing capacity.
Adam Smith and Economic Theory
- Adam Smith: Scottish economist known for the "Invisible Hand" theory, suggesting that self-interest drives economic behavior, benefiting society indirectly.
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