Economics - Introduction to micro

What is the basic economic problem?

• The imperfect interaction between demand and supply

• Market forces determine the equilibrium price level

• The existence of inequalities

• Scarcity: finite resources available to satisfy all human needs and wants

Which of the following are needs rather than wants? Choose three.

• iPhone

• Trousers

• Five Guys burger

• Water

• Bread

Economic theory assumes that consumers and producers both seek to maximise. What is it that they each seek to maximise?

(Answer in this format: XXXX and YYYY)

What is opportunity cost?

• The cost of taking the first option available

• The opportunity presented of saving a cost

• The cost of any choice in terms of the next best alternative foregone

• The cost of any choice in terms of the time spent undertaking it

Who are the main economic agents?

• Households, consumers, companies and tax payers

• Consumers, companies and exporters

• Government, firms and importers

• Households, firms and government

• Households, tax payers and consumers

Which of the following are factors of production?

• Animals

• Land

• Labour

• Enterprise

• Capital

The rewards to labour are called wages. What are the rewards to land called?

The reward to capital is called interest. What is the reward to enterprise called?

Paul Samuelson said that economics sets out to investigate three key questions. What are they?

• What to produce, where to produce it and for whom it should be produced

• What to produce, how to produce it and for whom it should be produced

• What to produce, how to produce it and who should produce it

• When to produce, how to produce it and for whom it should be produced

In a market economy, who or what decides on the allocation of scarce resources?

• Government

• Households

• Firms

• Market forces

• Banks