Fundamentals of Economic Concepts

Miss Benson explains basic economic concepts, emphasizing that economics is about people's choices, not money. She distinguishes between microeconomics, focusing on individual decisions, and macroeconomics, which looks at national economic issues. Economists analyze data to provide advice, using positive and normative statements. Marginal analysis helps in decision-making by weighing extra benefits against costs. Opportunity cost is the next best alternative foregone. Economic models are simplified using ceteris paribus to focus on specific variables.

What is the primary focus of economics according to the introduction?

• Business profits

• People's choices and behaviors

• Money and finance

• Government policies

Which branch of economics studies individual choices and decisions?

• Macroeconomics

• Microeconomics

• International economics

• Behavioral economics

What does macroeconomics focus on?

• Business management

• Local market trends

• National and global economic issues

• Individual consumer behavior

What type of statements do economists use to describe how things actually are?

• Positive statements

• Normative statements

• Theoretical statements

• Hypothetical statements

What is the purpose of normative statements in economics?

• To predict future trends

• To analyze past data

• To suggest improvements or actions

• To describe current economic conditions

What does marginal analysis involve?

• Calculating total costs

• Weighing additional benefits and costs

• Analyzing historical data

• Predicting future profits

In economics, what does the term 'marginal' refer to?

• Total

• Average

• Extra or additional

• Minimal

What is opportunity cost?

• The time spent on a decision

• The total cost of a decision

• The financial cost of an action

• The next best alternative given up

What does 'ceteris paribus' mean in economic models?

• All factors are considered

• Other things constant

• Variables are ignored

• All variables are changing

Why are economic models often simplified?

• To ignore real-world data

• To focus on key relationships

• To make them more complex

• To include all variables