What is Economics? Practice

Why do people study Economics?

• To solve the diamond / water paradox

• To understand the basic economic problem

• To distinguish between micro and macro economics

• To learn about the factors of production

The basic economic problem is that there are:

• too many people and not enough trees

• infinite resources and finite wants / needs

• finite resources and infinite wants / needs

• too much supply and not enough demand

What is the main focus of microeconomics?

• Studying the total effect on a nation's people

• Exploring historical economic revolutions

• Analyzing global economic trends

• Studying individual behaviors within an economy

Which of the following is an example of an economic good?

• Air

• Happiness

• Computers

• Sunshine

A "free" good is one that is desired and....

What is the "opportunity cost" in economics?

• The value of the second best option given up

• The total cost of everything made by a choice

• the thing that you do and do not give up

• The market price of a good

A "next best" example of the "opportunity cost" of you taking Economics in the IB is:

• The money you could have earnt in a job

• Taking another subject in the IB, eg Psychology

• Talking to a teacher

• Going to a party

What is the main concern of macroeconomics?

• Consumer preferences

• Whole country economic goals

• Individual market behaviors

• Resource allocation

What is the basic economic problem faced by all societies?

• Maximizing individual profits

• Eliminating all forms of scarcity

• Achieving perfect market equilibrium

• Allocation of scarce resources among competing wants