ECO231 Study Questions Chapter 1 What is the definition of e

ECO231 Study Questions Chapter 1 What is the definition of economics? What is the difference between macroeconomics and microeconomics? List and explain the three elements of the economic perspective. Define the word utility Define positive economics. Define normative economics. What are the two basic issues that make up the economizing problem? Does the concept of insatiable wants apply to the short-run or long-run? What\'s the difference between economic resources and free resources? List and define the four resource categories. Associate each resource category with its resource payment. One person\'s income is another person\'s List the assumptions associated with the production possibilities table? What does the production possibilities curve represent? What does it mean to be on the curve? What does it mean to be inside the production possibilities curve? What can shrink or grow the economy and what does that do to the production possibilities curve? Is it possible for a society to consume outside its production possibilities curve? Wha isa graph? What is the difference betwen a diret relationshp und an invene relationship? Chapter 2 Differentiate between capitalism, socialism, and communism. Which one tends to be the most efficient in practice? List and briefly discuss the characteristics that are specific to capitalism (market system). List and briefly discuss the three characteristics that all economic systems tend to share or agree on.

Solution

1) Economics is a branch of social science. It concerned with production, distribution, and consumption of goods and services. It shows how individuals, government, and nations make decisions by allocating the resources to satisfy their wants and needs. the study of economics tries to determine how these groups should organize and coordinate efforts to achieve maximum output. Economics can generally has two parts- macroeconomics and microeconomics.

Difference between Microeconomics and Macroeconomics-

Microeconomics	Macroeconomics
it deals with single economic variables such as demand, price, consumer etc.	It deals with aggregate and average of the entire economy. E.g. National income, aggregate output etc.
It is also known as price theory	It is also known as income theory
It deals with the flow of various factors of production from a single firm to a single household.	It deals with the circular flow of income and expenditure between different parts of the economy.
it is narrow in scope and interpret the small part of the entire economy	It is wide in scope and interprets the economy of a nation as a whole.