Introduction to microeconomics
Q&A
What are economic goods? - answer-Goods that are scarce and therefore bring about
an opportunity cost.
What are free goods? - answer-Goods that do not use up any factor inputs when
supplied and therefore have zero opportunity cost.
What is the basic economic problem? - answer-Scarcity - a situation that arises
because people have unlimited wants in the face of limited resources.
What is the problem of scarcity? - answer-Economic agents are forced to make choices
about what is produced and consumed.
What are positive statements? - answer-Objective statements that can be tested,
amended or rejected by referring to available evidence.
What are normative statements? - answer-Subjective statements that carry value
judgements, based on opinion/belief & not fact, about what ought to be.
Who are the 3 economic agents? - answer-Households, firms, and government
What are the roles of households in the economy? - answer-- As consumers of goods
and services.
- Providers of the workforce for firms/businesses.
What are the roles of firms in the economy? - answer-- Producers of goods and
services.
- Purchasers of good and services used in the production process.
, What are the roles of the government in the economy? - answer-- Makes decisions
regarding expenditure and taxation.
- Establish the framework in which the other economic agents take decisions, through
regulating economic activity.
What is meant by rationality? - answer-The assumption that each economic agent acts
in their own best interests - making logical decisions to maximize their personal utility or
benefit.
What is the objective of households? - answer-To maximise their own satisfaction.
What is the objective of firms? - answer-To maximise their profits.
What is the objective of the government? - answer-To maximise welfare.
What are the four factors of production? - answer-Land, Labour, Capital and Enterprise.
What is land? - answer-The natural resources available for production.
What is the reward for land? - answer-Rent - as landowners are able to rent the land out
for money to producers across the economy.
What is labour? - answer-The human input into the production process.
What is the reward for labour? - answer-Being paid wages.
Q&A
What are economic goods? - answer-Goods that are scarce and therefore bring about
an opportunity cost.
What are free goods? - answer-Goods that do not use up any factor inputs when
supplied and therefore have zero opportunity cost.
What is the basic economic problem? - answer-Scarcity - a situation that arises
because people have unlimited wants in the face of limited resources.
What is the problem of scarcity? - answer-Economic agents are forced to make choices
about what is produced and consumed.
What are positive statements? - answer-Objective statements that can be tested,
amended or rejected by referring to available evidence.
What are normative statements? - answer-Subjective statements that carry value
judgements, based on opinion/belief & not fact, about what ought to be.
Who are the 3 economic agents? - answer-Households, firms, and government
What are the roles of households in the economy? - answer-- As consumers of goods
and services.
- Providers of the workforce for firms/businesses.
What are the roles of firms in the economy? - answer-- Producers of goods and
services.
- Purchasers of good and services used in the production process.
, What are the roles of the government in the economy? - answer-- Makes decisions
regarding expenditure and taxation.
- Establish the framework in which the other economic agents take decisions, through
regulating economic activity.
What is meant by rationality? - answer-The assumption that each economic agent acts
in their own best interests - making logical decisions to maximize their personal utility or
benefit.
What is the objective of households? - answer-To maximise their own satisfaction.
What is the objective of firms? - answer-To maximise their profits.
What is the objective of the government? - answer-To maximise welfare.
What are the four factors of production? - answer-Land, Labour, Capital and Enterprise.
What is land? - answer-The natural resources available for production.
What is the reward for land? - answer-Rent - as landowners are able to rent the land out
for money to producers across the economy.
What is labour? - answer-The human input into the production process.
What is the reward for labour? - answer-Being paid wages.
