Microeconomy

Economics may best be defined as:

• the interaction between macro and micro considerations.

• the study of the behaviour of people and institutions in the production, distribution, and consumption of scarce goods.

• the empirical testing of value judgements through the use of induction and deduction.

• : the use of policy to refute facts and hypotheses.

The study of economics is primarily concerned with:

• : keeping private businesses from losing money

• demonstrating that capitalistic economies are superior to socialistic economies.

• choices that are made in seeking to use scarce resources efficiently.

• determining the most equitable distribution of society's output.

The term ‘ceteris paribus’ means:

• if event A precedes event B, A has caused B.

• economics deals with facts, not values.

• other things being equal.

• : prosperity inevitably follows recession.

The concept of economic efficiency is primarily concerned with:

• the limited wants and unlimited resources dilemma.

• considerations of equity in the distribution of wealth.

• obtaining the maximum output from available resources.

• : the conservation of irreplaceable natural resources.

The fundamental problem of economics is:

• to establish an equitable system of personal and business taxation.

• to establish a democratic political framework for the provision of social goods and services.

• the establishment of prices that accurately reflect the relative scarcities of products and resources.

• the scarcity of productive resources relative to material wants.

The scarcity problem:

• persists only because countries have failed to achieve continuous full employment

• persists because material wants exceed available productive resources.

• has been solved in all industrialised nations.

• has been eliminated in affluent societies such as Australia.

The idea of ‘allocative efficiency’ refers to:

• : the use of the least-cost method of production.

• the production of the product-mix most wanted by society.

• the full employment of all available resources.

• production, at some point, inside of the production possibilities curve.

‘Productive efficiency’ refers to:

• : the use of the least-cost method of production.

• the production of the product-mix most wanted by society.

• the full employment of all available resources.

• production, at some point, inside of the production possibilities curve.

Which of the following is not one of the three basic economics issues?

• Which products should be in short supply and which in excess supply?

• For whom should the total output be produced?

• How should production be organised?

• What goods and services should be produced?

A market:

• : reflects upsloping demand and downsloping supply curves

• entails the exchange of goods, but not services.

• is an institution that brings together buyers and sellers.

• : always entails face-to-face contact between buyer and seller.