Economics Chapter 1

• What is economics the study of?


  Choice and decision making in a world with limited resources
• What does economics explain?


  The economic behaviour of individuals and groups
• What is the verb related to the noun 'economics'?

  To economise
• What is the economic problem?


  How to allocate scarce resources among competing uses
• What are the learning objectives of the introductory chapter on economic methodology?


  • Understand important aspects of economic methodology
  • Understand the nature and purpose of economic activity
  • Learn how resources are used to produce goods and services
  • Recognize the importance of scarcity, choice, and resource allocation
  • Understand the significance of production possibility diagrams
• What is economics classified as?


  A social science
• What do social sciences study?


  Society and the relationships of individuals within it
• Name two examples of social sciences besides economics.


  Psychology and sociology
• What does demand theory address?


  Consumer behaviour when shopping
• What happens to the demand for strawberries as their price falls?


  People generally buy more strawberries
• What is a market in economics?


  The place where goods are bought and sold
• What is the starting point of scientific methodology in economics?


  Observations of human behaviour
• What is a hypothesis in the context of demand theory?


  A tentative description of observed behaviour
• What is the difference between a hypothesis and a theory?


  A hypothesis is proposed, while a theory is tested and validated
• What does scientific method in economics allow for?


  The possibility of falsification or refutation of a hypothesis
• What happens if a hypothesis fails to survive tests?


  It can be rejected or modified
• What does 'watering down' a hypothesis mean in economics?


  Making it less deterministic to survive tests
• What is a positive statement?


  A statement of fact that can be tested
• What is a normative statement?


  A statement that includes a value judgement
• How do positive statements differ from normative statements?


  Positive statements can be tested, while normative statements cannot
• What is an example of a positive statement?


  The Earth is flat
• What is an example of a normative statement?


  The government should spend more on roads
• What is a value judgement?


  A judgement about whether something is desirable or not
• How do value judgements influence economic decision making?


  They affect the choice of what to study and policy decisions
• What is the moral right claimed by governments in making economic decisions?


  To carry out policies supported by voters
• What is an example of a controversial government policy decision?


  Trump's zero tolerance policy on illegal immigration
• What are the key points from the summary of economic methodology?


  • Economic methodology applies tested theories to real-world behaviour
  • Positive statements can be tested; normative statements cannot
  • Value judgements influence economic policies
  • Government policies create winners and losers
• What is the central purpose of economic activity?


  The production of goods and services to satisfy needs and wants
• What is the difference between a need and a want?


  A need is essential for survival, while a want is not
• How can food be classified in terms of needs and wants?


  Food can be both a need and a want depending on the type
• What does welfare mean in economics?


  Human happiness and anything that improves it
• How can the consumption of material goods affect economic welfare?


  It usually improves welfare but can lead to health problems
• What is a key term for something necessary for human survival?

  Need
• What is a key term for something that is not essential for survival?

  Want
• What do humans need to survive?


  Food
• How can food be classified in terms of needs and wants?


  Protein and vitamins are needs, while chocolate is a want
• What does satisfying people's needs and wants improve?

  Economic welfare
• What does the term 'welfare' refer to in economics?


  Human happiness
• Why must activities like theft be ignored when discussing economic welfare?


  Because they make one person better off at the expense of another
• What can lead to health problems in the long term?

  Consuming more and more food, especially the wrong type