ECS1501 ASSIGNMENT 1 SEMESTER 1

PREVIEW OF QUESTION 1 1. 2 Reference: Prescribed book PG 2 Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. 2. 2 Reference: Prescribed book PG 2 According to these definitions, the economic problem, also referred to as the scarcity problem, arises 0because the resources that we have available for the production of goods and services are limited, while our needs and wants for goods and services are unlimited. It is this fundamental problem of scarcity that is the common thread that binds all the topics that are studied in economics 1. 2 Reference: Prescribed book PG 2 Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses. 2. 2 Reference: Prescribed book PG 2 According to these definitions, the economic problem, also referred to as the scarcity problem, arises 0because the resources that we have available for the production of goods and services are limited, while our needs and wants for goods and services are unlimited. It is this fundamental problem of scarcity that is the common thread that binds all the topics that are studied in economics. 3. 1 Reference: Prescribed book PG 6 Three fundamental questions 1. What goods and services to produce 2. How to produce the goods and services 3. For whom to produce 4. 2 Reference: Prescribed book PG 8 In a market system, these scarce resources are mainly the following four factors of production: natural resources, labour, capital and entrepreneurship. Natural resources and labour are sometimes called primary factors of production, while capital and entrepreneurship are referred to as secondary factors of production. 5. 4 Reference: Prescribed book PG 18 Opportunity cost is therefore a broader concept than simply the amount you have to pay, because it also includes the best alternative that you have to give up in order to do what you are doing. 6. 4 Reference: Prescribed book PG 29 Microeconomics is the branch of economics that focuses on the choices made by individual decisionmaking units in the economy—typically consumers and firms—and the impacts those choices have on individual markets. Macroeconomics is the branch of economics that focuses on the impact of choices on the total, or aggregate, level of economic activity. 7. 2 Describes what is rather than what ought to be. 8. 2 Reference: Prescribed book PG 28 Ceteris paribus is a Latin phrase that means “all other things unchanged.” 9. 4 Reference: Prescribed book PG 49 While command economies have a highly centralised structure for economic decision making, market economies have a decentralised structure. Society’s resources are owned and operated by private individuals or groups of private individuals known as businesses. In a pure market economy, economic decisions are made through the free market coordination of individuals who are driven by their own self-interest.