ECON

• What is the basic economic problem in microeconomics?

  Allocating scarce resources given unlimited wants
• What are the four factors of production in economics?

  Capital, enterprise, land, and labor
• What does "capital" refer to in economics?

  Man-made aids to production
• What is an example of capital in economics?

  Machinery
• What is the role of enterprise in economics?

  Risk-takers who innovate and produce goods
• What does "land" refer to in economics?

  Natural resources like farmland and rainforests
• What does "labor" refer to in economics?

  Human resources or workers
• What are the three fundamental choices in a market economy?

  What to produce, how to produce, and for whom to produce
• How is the question "what to produce" answered in a market economy?

  Businesses decide based on consumer demand
• How is the question "how to produce" answered in a market economy?

  Businesses decide based on cost-effectiveness and productivity
• How is the question "for whom to produce" answered in a market economy?

  Those with enough income to afford goods
• What is the concept of opportunity cost in economics?

  The cost of the next best alternative foregone
• If the value of the current choice is greater than the opportunity cost, what does this indicate?

  A good decision was made
• If the value of the opportunity cost is greater than the current choice, what does this indicate?

  A bad decision was made
• Why is opportunity cost important in economics?

  It measures whether choices are good or bad
• What are the four factors of production and their definitions?

  • Capital: Man-made aids to production (e.g., machinery, factories)
  • Enterprise: Risk-takers who innovate and produce goods (e.g., entrepreneurs)
  • Land: Natural resources (e.g., farmland, rainforests)
  • Labor: Human resources or workers
• What are the three fundamental choices in a market economy and how are they answered?

  1. What to produce: Businesses decide based on consumer demand
  2. How to produce: Businesses decide based on cost-effectiveness and productivity
  3. For whom to produce: Those with enough income to afford goods
• What is opportunity cost and how is it used in economics?

  • Definition: The cost of the next best alternative foregone
  • Use: Measures whether choices are good or bad by comparing the value of the current choice to the opportunity cost
• What is the basic economic problem in microeconomics?

  Allocating scarce resources given unlimited wants
• What are the four factors of production in economics?

  Capital, enterprise, land, and labor
• Why is the term "basic" misleading in the context of the economic problem?

  Because the problem is very severe
• What does "capital" refer to in economics?

  Man-made aids to production
• What is the definition of microeconomics?

  The study of how to best solve the basic economic problem
• What is the role of enterprise in the factors of production?

  Entrepreneurs innovate and produce goods and services
• Why is the basic economic problem considered severe?

  Because of unlimited wants and scarce resources
• What does "land" refer to in the factors of production?

  Natural resources like farmland and rainforests
• What is another name for resources in economics?

  Factors of production
• What does "labor" refer to in the factors of production?

  Human resources or workers
• What is the mnemonic for the four factors of production?

  CELL (Capital, Enterprise, Land, Labor)
• Why are resources considered scarce in economics?

  Because they are limited compared to unlimited wants
• What are examples of capital in economics?

  Machinery, tractors, vehicles, factories
• What are the three fundamental choices in allocating scarce resources?

  What to produce, how to produce, and for whom to produce
• What is the role of entrepreneurs in economics?

  Innovate and produce goods and services to make profits
• What are examples of land in economics?

  Farmland, rainforests
• How is the question "what to produce" answered in a market economy?

  Businesses decide based on consumer demand
• How is the question "how to produce" answered in a market economy?

  Businesses decide based on cost-effectiveness and productivity
• What are examples of labor in economics?

  Human resources or workers
• What is the government's role in a market economy?

  Can step in to help with resource allocation
• How is the question "for whom to produce" answered in a market economy?

  Those with enough income to afford goods and services
• Why is opportunity cost a fundamental concept in economics?

  It measures the quality of economic choices