Micro 1

Question 1

The Fundamental/Basic Economic Problem

Answer 1

> The fact that individuals within an economy have infinite wants while there are scarce resources available to meet these wants.
As a consequence of the fundamental economic problem, decision-makers have to decide how to use the scarce resources to meet the wants and needs of individuals in society.

Question 2

Scarcity

Answer 2

> The state of being in short-supply, especially relative to how much something is demanded.

Question 3

Economic Activity

Answer 3

> Any time people provide a good or service in order to satisfy the needs or wants of themselves or others.

Question 4

Opportunity Cost

Answer 4

> The value of the next best option which is forgone when an economic decision is made.
Whenever an economic decision is made, a sacrifice is made.
To meet one person’s need or want, another need or want has to be neglected.

Question 5

What is economics?

Answer 5

> A social science.

Question 6

Social Science

Answer 6

> Scientific study (systematic study to gain knowledge and understanding of the world) of human interaction and social relationships.

Question 7

Normative Statement

Answer 7

> A subjective statement based upon opinion which cannot be proven or disproven.

Question 8

Positive Statement

Answer 8

> An objective, fact-based statement which could in principle be shown to be true or false.

Question 9

Value Judgement

Answer 9

> A judgement about what is good or bad, important or valuable, based upon subjective opinion, which informs economic and political decision making.