Microecon chapter 1

Question 1

Issues of Pressing Concern (7)

Answer 1

• COVID-19 pandemic
• Population aging
• Climate change
• Productivity growth and accelerating technological change
• Rising protectionism
• Growing income inequality
• Government debt and priorities

Question 2

What is economics?

Answer 2

The study of the use of scarce resources to satisfy unlimited human wants

Question 3

Resources (3)

Answer 3

• Land
• Labour
• Capital

Question 4

Resources synonym

Answer 4

Factor of production

Question 5

Goods are…

Answer 5

Tangible

Question 6

Services are…

Answer 6

Intangible

Question 7

Production is…

Answer 7

Act of making goods/services

Question 8

Consumption is…

Answer 8

Act of using goods/services

Question 9

Scarcity/Choice (3)

Answer 9

• Relative to our desire, existing resources are scarce
• Not enough resources to produce the goods/services that we want
• Scarcity implies the need for choice

Question 10

Opportunity cost

Answer 10

The value of the next best alternative that is forgone when one alternative is chosen

Question 11

Points that lie on or inside the budget line are…

Answer 11

Attainable

Question 12

Points that lie outside the budget line are…

Answer 12

Unattainable

Question 13

PPB stands for…

Answer 13

Production Possibilities Boundary

Question 14

PPB illustrates… (3)

Answer 14

• Scarcity
• Choice
• Opportunity cost

Question 15

Points on the PPB are…

Answer 15

Attainable and efficient

Question 16

Points inside the PPB are…

Answer 16

Attainable and inefficient

Question 17

Points outside the PPB are…

Answer 17

Unattainable

Question 18

Four key economic problem

Answer 18

• What is produced and how?
• What is consumed and by whom?
• What are resources sometimes idle?
• Is productive capacity growing?

Question 19

Resource allocation

Answer 19

Determines the quantities of various goods that are produced

Question 20

Idle resources

Answer 20

Resources that are not currently being used

Question 21

Economic growth for the PPB (3)

Answer 21

• Boundary shifts outwards
• Unattainable points become attainable and efficient
• Previous efficient points become inefficient

Question 22

What can affect the outcome of the economic problems?

Answer 22

Government policies

Question 23

GP for production

Answer 23

Correct market failures resulting from misallocation of resources

Question 24

GP for consumption

Answer 24

Address fairness of distribution of consumption across individuals

Question 25

GP for idle ressources

Answer 25

Provide solutions to reduce idleness of nation's resources

Question 26

GP for productive capacity growth

Answer 26

Promote economic growth

Question 27

Self-Organizing market economy

Answer 27

When individual consumers and producers act independently to pursue their own self-interests, the collective outcome is coordinated

Question 28

Efficiency in market economy

Answer 28

Resources are organized so as to produce the various goods and services that people want to purchase and to produce them with the least possible amount of resources

Question 29

Adam Smith message (2)

Answer 29

- Not motivated by benevolence - Act in regard to our own interest

Question 30

Individuals generally pursue...

Answer 30

Their own self-interest

Question 31

Individuals responds to...

Answer 31

Incentives

Question 32

Sellers usually want to sell more when prices are...

Answer 32

High

Question 33

Buyers usually want to buy more when prices are...

Answer 33

Low

Question 34

Decision makers in any economy (3)

Answer 34

- Consumers - Producers - Government

Question 35

Specialization of labour

Answer 35

Specialization of individual workers in the production of particular goods and services

Question 36

Division of labour

Answer 36

The breaking up of a production process into a series of specialized tasks

Question 37

Money (2)

Answer 37

- Eliminate the barter system - Facilitate trade, which facilitate specialization

Question 38

Globalization

Answer 38

Increased importance of international trade

Question 39

Major causes of globalization (2)

Answer 39

- Rapid reduction in transportation costs - Revolution in information technology

Question 40

Globalization challenges (3)

Answer 40

- Human rights - Environmental - Production standards

Question 41

Types of economic systems (4)

Answer 41

- Traditional - Command - Free-market - Mixed economy

Question 42

Governments intervene in economies to... (3)

Answer 42

- Correct market failures - Provide public goods - Offset the effect of externalities

Question 43

Main characteristics of market economies (4)

Answer 43

- Self-Interest - Incentives - Market price and quantities - Institutions