Unit 2: the allocation of resources

What does economics mean?

• It is the study of the allocation of abundant resources to meet limited human wants

• It is the study of the allocation of scarce resources to meet unlimited human wants

What is microeconomics?

• It is concerned with decision-making by individual agents such as firms and consumers

• It is concerned with decision-making by large corporations

• It is concerned with decision-making by the government

What is macroeconomics?

• It focuses on individual production and consumption in an economy

• It focuses on aggregate production and consumption in an economy

With what kinds of topics does macroeconomics concern itself?

• Economic activities of individual firms, households and other organizations

• Consumer behavior and firms output decisions

• The labor market, wages and hiring decisions

• Aggregate economic phenomena like the rate of unemployment and inflation

What is a market?

• It is a place where you go to buy your groceries

• It is a situation in which buyers and sellers interact with one another

• It is a place where people meet to buy and sell products

What are the questions faced by all economies?

• What to produce, where to produce it and who receives it

• Where to produce, how to produce it and when to receive it

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

• Where to produce, when to produce and how to receive it

What is the fundamental problem of every society?

• labor costs

• economic interdependence

• scarcity

• market fluctuation

What is a mixed economic system?

• All economic decisions are made by buyers and sellers

• Decisions are made by a combination of government decision-making and the market

• The government plays a major role in decision-making

What is a market economic system?

• All economic decisions are made by buyers and sellers

• Decisions are made by a combination of government decision-making and the market

• The government plays a major role in decision-making

What is a command economic system?

• All economic decisions are made by buyers and sellers

• Decisions are made by a combination of government decision-making and the market

• The government plays a major role in decision-making