Question

1What is the basic issue of economics?

2Hat is meant by the statement” resources are scarce”?

3What is a resource?

4Define: opportunity cost

5Give an example of an economic choice you made and the opportunity costs of that decision.

6Give an example of a “either/or choice”

7Give an example of a “marginal choice

8What is a trade-off? Give an example

9What is marginal analysis

10At the heart of a market economy or a capitalist economy is the idea of building in incentives. Give an example. Why are incentives important?

Answer 1

1. Economics basically deals with the study of wealth of any firm, country or the world as a whole It deals with how wealth is created and circulated. Its influence in production. Economics also deals with the market mechanism and its working.
2. By resources are scarce we mean in this world most of the resources are non renewable i.e it cannot be replenished within a short period of time. But human demand goes on increasing day by day there is no end to it.
3. Resources are those substances which are used in the production process of the economy.
4. Opportunity cost is the cost incurred by the firm, by appointing a factor in a work and loosing the benefit or profit that the firm would earn if it would have used the factor in some other purpose.