Economics: Basics

1. 1Wants are [blank_start]unlimited[blank_end] human desires and do not need to be backed up by [blank_start]purchasing power[blank_end].

   1. Aunlimited
   2. Bpurchasing power
2. 2Resources are used to produce [blank_start]goods[blank_end] and [blank_start]services[blank_end]. They are [blank_start]inadequate[blank_end] to satisfy human wants and leads to [blank_start]scarcity[blank_end]. [blank_start]Goods[blank_end] are things we desire and prefer [blank_start]some[blank_end] to [blank_start]none[blank_end]. [blank_start]Bads[blank_end] are things we don't desire and prefer [blank_start]less[blank_end] to [blank_start]some[blank_end].

   1. Agoods
   2. Bservices
   3. Cinadequate
   4. Dscarcity
   5. EGoods
   6. FBads
   7. Gsome
   8. Hnone
   9. Iless
   10. Jsome
3. 3Scarcity is a [blank_start]relative[blank_end] concept and depends on whether [blank_start]quantity[blank_end] of resources is enough to satisfy human wants. It is a [blank_start]universal problem[blank_end] and the source of all [blank_start]economic problems[blank_end]. It results in the need to make [blank_start]choices[blank_end] which leads to [blank_start]opportunity cost[blank_end].

   1. Arelative
   2. Bquantity
   3. Cuniversal problem
   4. Deconomic problems
   5. Echoices
   6. Fopportunity cost
4. 4Opportunity cost is the [blank_start]highest-valued alternative forgone[blank_end] and doesn't exist if there is [blank_start]no choice[blank_end]. A change in the [blank_start]chosen option[blank_end] will not lead to a change in opportunity cost. Cost is [blank_start]implicit[blank_end] and can be incurred even if no one receives [blank_start]payment[blank_end].

   1. Ahighest-valued alternative forgone
   2. Bchosen option
   3. Cimplicit
   4. Dpayment
   5. Eno choice
5. 5Interest is incurred when people borrow because they prefer to consume [blank_start]earlier[blank_end] since they are [blank_start]impatient[blank_end]. To the [blank_start]borrower[blank_end], interest is the cost of [blank_start]early availability[blank_end] of resources and a higher interest rate implies a [blank_start]higher opportunity cost[blank_end] of [blank_start]present consumption[blank_end]. To the [blank_start]lender[blank_end], interest is the [blank_start]compensation[blank_end] for [blank_start]deferring[blank_end] consumption of goods.

   1. Aearlier
   2. Bimpatient
   3. Cborrower
   4. Dearly availability
   5. Ehigher opportunity cost
   6. Fpresent consumption
   7. Glender
   8. Hcompensation
   9. Ideferring
6. 6Full cost involves [blank_start]monetary[blank_end] and [blank_start]non-monetary[blank_end] costs. [blank_start]Monetary[blank_end] cost is the [blank_start]highest-valued alternative use[blank_end] of the money spent. Time cost is the [blank_start]highest value[blank_end] of the resources in their [blank_start]alternative use[blank_end] within the specific period of time, and can be monetary (measured in terms of [blank_start]income forgone[blank_end]) or non-monetary (measured in terms of the [blank_start]value[blank_end] of another activity). [blank_start]Historical[blank_end]/ [blank_start]sunk[blank_end] cost isn't a cost because cost is a [blank_start]forward-looking[blank_end] concept and cost paid in the [blank_start]past[blank_end] is [blank_start]irrelevant[blank_end] to decision-making.

   1. Amonetary
   2. Bnon-monetary
   3. Chighest-valued alternative use
   4. DMonetary
   5. Ehighest value
   6. Falternative use
   7. Gincome forgone
   8. Hvalue
   9. Isunk
   10. JHistorical
   11. Kforward-looking
   12. Lirrelevant
   13. Mpast
7. 7Economic goods are goods with quantity [blank_start]insufficient[blank_end] to satisfy human wants. [blank_start]Scarce[blank_end] resources are required in its production, so [blank_start]opportunity cost[blank_end] is involved in obtaining it. They usually have a [blank_start]market price[blank_end] but can be [blank_start]free of charge[blank_end].

   1. Ainsufficient
   2. BScarce
   3. Copportunity cost
   4. Dmarket price
   5. Efree of charge
8. 8Free goods are goods with quantity [blank_start]sufficient[blank_end] to satisfy human wants so more of it is not preferred. No [blank_start]opportunity cost[blank_end] is involved in obtaining it and it has no [blank_start]price[blank_end].

   1. Asufficient
   2. Bopportunity cost
   3. Cprice
9. 9Firms are units of [blank_start]production[blank_end] and make [blank_start]production decisions[blank_end]. Households consume [blank_start]goods[blank_end] and [blank_start]services[blank_end] produced by firms and provide [blank_start]factor services[blank_end] such as [blank_start]labour[blank_end], [blank_start]capital[blank_end] and [blank_start]entrepreneurship[blank_end].

   1. Aproduction
   2. Bproduction decisions
   3. Cgoods
   4. Dservices
   5. Efactor services
   6. Flabour
   7. Gcapital
   8. Hentrepreneurship
10. 10In a circular flow diagram, the factor market is for the buying and selling of [blank_start]factors of production[blank_end] or [blank_start]factor services[blank_end]. The product market is for the buying and selling of [blank_start]goods[blank_end] and [blank_start]services[blank_end]. The [blank_start]real[blank_end] flow is the flow of [blank_start]goods[blank_end] and [blank_start]services[blank_end] consumed by households in the [blank_start]product[blank_end] market in exchange for [blank_start]factor services[blank_end] employed by firms in the [blank_start]factor[blank_end] market. [blank_start]Money[blank_end] flow is the flow of [blank_start]production cost[blank_end] from firms and the [blank_start]income[blank_end] households earn from firms in the [blank_start]factor[blank_end] market, as well as the [blank_start]expenditure[blank_end] of households and [blank_start]revenue[blank_end] of firms in the [blank_start]product[blank_end] market.

    1. Afactors of production
    2. Bfactor services
    3. Cgoods
    4. Dservices
    5. Ereal
    6. Fgoods
    7. Gservices
    8. Hproduct
    9. Ifactor services
    10. JMoney
    11. Kproduction cost
    12. Lincome
    13. Mfactor
    14. Nfactor
    15. Oexpenditure
    16. Prevenue
    17. Qproduct

11. 11The three economic problems are [blank_start]what[blank_end] to produce, which is related to the [blank_start]type[blank_end] and [blank_start]quantity[blank_end] of goods; [blank_start]for whom[blank_end] to produce, which is related to the [blank_start]price[blank_end] and how the goods are [blank_start]distributed[blank_end]; [blank_start]how[blank_end] to produce, which is related to the [blank_start]production method[blank_end] and [blank_start]cost[blank_end]. The most [blank_start]cost-effective[blank_end] way should be adopted to [blank_start]maximize profit[blank_end] and [blank_start]output[blank_end].

    1. Awhat
    2. Btype
    3. Cquantity
    4. Dfor whom
    5. Eprice
    6. Fdistributed
    7. Ghow
    8. Hproduction method
    9. Icost
    10. Jcost-effective
    11. Kmaximize profit
    12. Loutput
12. 12In a command economy, economic problems are solved by [blank_start]government command[blank_end]. [blank_start]Production decisions[blank_end], [blank_start]prices[blank_end] and [blank_start]wages[blank_end] are made and set by the [blank_start]government[blank_end]. Resources are [blank_start]state-owned[blank_end] and allocated by the government. The disadvantages are the resources will be allocated [blank_start]inefficiently[blank_end] because governments are unable to plan all [blank_start]production decisions[blank_end]. Resources can be [blank_start]misallocated[blank_end] easily because it is difficult to determine what goods to be produced without [blank_start]pricing system[blank_end]. [blank_start]Personal liberty[blank_end] and [blank_start]freedom of choice[blank_end] will be suppressed by [blank_start]governments' dominance[blank_end].

    1. Agovernment command
    2. BProduction decisions
    3. Cprices
    4. Dwages
    5. Egovernment
    6. Fstate-owned
    7. Ginefficiently
    8. Hproduction decisions
    9. Imisallocated
    10. Jpricing system
    11. KPersonal liberty
    12. Lfreedom of choice
    13. Mgovernments' dominance
13. 13In a free market economy, economic problems are solved by [blank_start]market mechanism[blank_end]. Production decisions are made by the [blank_start]private sector[blank_end] and prices and wages are set [blank_start]freely[blank_end] without [blank_start]government intervention[blank_end]. Resources are [blank_start]privately[blank_end] owned and allocated according to [blank_start]market price[blank_end]. The disadvantages are [blank_start]demerit[blank_end] goods will be over-provided and [blank_start]merit[blank_end] goods will be under-provided without [blank_start]government intervention[blank_end]. Resources may be used up easily as firms try to minimize [blank_start]costs[blank_end] and maximize [blank_start]profits[blank_end], and the environment will be [blank_start]polluted[blank_end] by firms. [blank_start]Income[blank_end] may be distributed [blank_start]unevenly[blank_end]. Larger corporations may [blank_start]dominate[blank_end] the market, resulting in [blank_start]higher[blank_end] prices and loss of [blank_start]economic efficiency[blank_end].

    1. Amarket mechanism
    2. Bprivate sector
    3. Cgovernment intervention
    4. Dfreely
    5. Eprivately
    6. Fmarket price
    7. Gdemerit
    8. Hmerit
    9. Igovernment intervention
    10. Jcosts
    11. Kprofits
    12. Lpolluted
    13. Munevenly
    14. NIncome
    15. Odominate
    16. Phigher
    17. Qeconomic efficiency
14. 14Positive statements are statements about [blank_start]facts[blank_end]. They do not involve [blank_start]value judgements[blank_end] or [blank_start]personal preferences[blank_end]. They are [blank_start]objective[blank_end] and no opinions are expressed. They can be proved correct or incorrect by [blank_start]facts[blank_end].

    1. Afacts
    2. Bvalue judgements
    3. Cpersonal preferences
    4. Dobjective
    5. Efacts
15. 15Normative statements are statements about [blank_start]value judgements[blank_end]. They are [blank_start]subjective[blank_end] and open to opinion. They cannot be settled by [blank_start]facts[blank_end].

    1. Avalue judgements
    2. Bsubjective
    3. Cfacts
16. 16A production possibility curve shows the [blank_start]maximum combination[blank_end] of goods and services that can be produced by an economy in a given period of time, given that all resources are [blank_start]fully[blank_end] and [blank_start]efficiently[blank_end] utilized and the [blank_start]state of technology[blank_end] is [blank_start]fixed[blank_end]. Points [blank_start]inside[blank_end] the PPC indicate resources in the economy are not fully utilized and some resources remain [blank_start]idle[blank_end], which makes production [blank_start]inefficient[blank_end]. Points [blank_start]outside[blank_end] the PPC aren't attainable because there aren't enough [blank_start]resources[blank_end] available or the technological level is not [blank_start]advanced[blank_end] enough. The [blank_start]slope[blank_end] of the PPC measures the [blank_start]opportunity cost[blank_end] of producing X. A [blank_start]concave[blank_end] PPC indicates the [blank_start]rising[blank_end] opportunity cost for producing X. A [blank_start]linear[blank_end] PPC indicates the cost of producing X is [blank_start]constant[blank_end].

    1. Amaximum combination
    2. Bfully
    3. Cefficiently
    4. Dfixed
    5. Einside
    6. Fidle
    7. Gstate of technology
    8. Hinefficient
    9. Ioutside
    10. Jresources
    11. Kadvanced
    12. Lslope
    13. Mopportunity cost
    14. Nconcave
    15. Orising
    16. Plinear
    17. Qconstant
17. 17[blank_start]Actual[blank_end] growth is when a point [blank_start]inside[blank_end] the PPC moves [blank_start]closer[blank_end] to the PPC and occurs when unemployed [blank_start]factors of production[blank_end] are now employed. [blank_start]Potential[blank_end] growth is an [blank_start]outward shift[blank_end] of the PPC and occurs when there is an improvement in the [blank_start]quantity[blank_end] or [blank_start]quality[blank_end] of factors in production in the economy which increases the [blank_start]production capacity[blank_end].

    1. AActual
    2. Binside
    3. Ccloser
    4. Dfactors of production
    5. EPotential
    6. Foutward shift
    7. Gquantity
    8. Hquality
    9. Iproduction capacity
18. 18Production aims to satisfy [blank_start]human wants[blank_end] by providing goods and services to [blank_start]households[blank_end]. They are [blank_start]interdependent[blank_end] to each other. They provide [blank_start]employment[blank_end] opportunities for [blank_start]resources[blank_end] and provide goods and services for [blank_start]consumption[blank_end] or [blank_start]further production[blank_end].

    1. Ahuman wants
    2. Bhouseholds
    3. Cinterdependent
    4. Demployment
    5. Eresources
    6. Fconsumption
    7. Gfurther production
19. 19[blank_start]Primary[blank_end] production includes activities which [blank_start]extract[blank_end] or directly use [blank_start]natural[blank_end] resources. [blank_start]Secondary[blank_end] production is the process of turning [blank_start]raw materials[blank_end] into [blank_start]semi-finished[blank_end] goods which are turned into [blank_start]finished[blank_end] goods for [blank_start]direct consumption[blank_end]. [blank_start]Tertiary[blank_end] production is the [blank_start]provision[blank_end] of different kinds of services.

    1. APrimary
    2. Bextract
    3. Cnatural
    4. DSecondary
    5. Eraw materials
    6. Fsemi-finished
    7. Gfinished
    8. Hdirect consumption
    9. ITertiary
    10. Jprovision
20. 20[blank_start]Consumer[blank_end] goods are bought by [blank_start]consumers[blank_end] to satisfy wants [blank_start]directly[blank_end]. [blank_start]Producer[blank_end] goods are bought by [blank_start]producers[blank_end] to help with their [blank_start]production[blank_end]. [blank_start]Private[blank_end] goods are [blank_start]rival[blank_end] (same unit of goods can only serve [blank_start]one[blank_end] person at a time) and [blank_start]excludable[blank_end] (possible to [blank_start]prevent[blank_end] others from enjoying it). [blank_start]Public[blank_end] goods are non-[blank_start]rival[blank_end] (can serve [blank_start]different[blank_end] customers at the same time, increased amount of customers doesn't increase [blank_start]cost[blank_end]) and non-[blank_start]excludable[blank_end] (can't [blank_start]prevent[blank_end] others from using it). [blank_start]Merit[blank_end] goods are goods or services [blank_start]beneficial[blank_end] to the society and provided [blank_start]free[blank_end] because they will be [blank_start]underconsumed[blank_end] if left to the free market. [blank_start]Demerit[blank_end] goods are goods that have [blank_start]negative impacts[blank_end] to society and are [blank_start]over[blank_end]-provided by the free market and [blank_start]overconsumed[blank_end].

    1. AConsumer
    2. Bconsumers
    3. Cdirectly
    4. DProducer
    5. Eproducers
    6. Fproduction
    7. GPrivate
    8. Hrival
    9. Ione
    10. Jexcludable
    11. Kprevent
    12. LPublic
    13. Mrival
    14. Ncost
    15. Odifferent
    16. Pexcludable
    17. Qprevent
    18. RMerit
    19. Sbeneficial
    20. Tfree
    21. Uunderconsumed
    22. VDemerit
    23. Wnegative impacts
    24. Xover
    25. Yoverconsumed

Description

International Baccalaureate Economics Quiz on Economics: Basics, created by Valkyrie S on 15/05/2016.

Author

Valkyrie S

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English

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