Assignment 1 ECS1601 2021
PREVIEW OF QUESTION 1
1. 2 Reference: Prescribed book PG 4
Economics is concerned with scarcity. The basic fact of economic life is that there are simply not
enough goods and services to satisfy everyone’s wants. Wants are unlimited but the means with
which the wants can be satisfied are limited. All individuals and societies are confronted by the
problem of unlimited wants and limited means. They therefore have to make choices.
1. 2 Reference: Prescribed book PG 4
Economics is concerned with scarcity. The basic fact of economic life is that there are simply not
enough goods and services to satisfy everyone’s wants. Wants are unlimited but the means with
which the wants can be satisfied are limited. All individuals and societies are confronted by the
problem of unlimited wants and limited means. They therefore have to make choices.
2. 1 Reference: Prescribed book PG 12
Macroeconomics is concerned with the economy as a whole. The prefix “macro” comes from the
Greek word makros meaning large. In macroeconomics we focus on the “big picture.” We develop
an overall view of the economic system and we study total or aggregate economic behaviour. The
emphasis is on topics such as total production, income and expenditure, economic growth,
aggregate unemployment, the general price level, inflation and the balance of payments.
Macroeconomics is therefore the world of totals.
4. 4 Reference: Prescribed book PG 90
The disadvantage is that it will lead to lower supply. If firms get a lower price, there may be less
incentive to supply the good, and the number of properties on the market declines. A maximum
price will also lead to a shortage – where demand will exceed supply; this leads to waiting lists
, 5. 3 Reference: Prescribed book PG 42
The factors of production are resources that are the building blocks of the economy; they are what
people use to produce goods and services. Economists divide the factors of production into four
categories: land, labor, capital, and entrepreneurship.
6. 2 Reference: Prescribed book PG 45
Broadly speaking there are four types of income, each associated with a different factor of
production. The remuneration of natural resources (or land) is called rent. Wages and salaries are
the remuneration of labour, while the remuneration of capital is called interest. Finally, profit is the
remuneration of entrepreneurship. The total income in the economy thus consists of rent, wages
and salaries, interest and profit and the value of total income is identically equal to the value of total
production.
7. 1 Reference: Prescribed book PG 46 The basic flow is between households and firms. This
represents consumption expenditure (C). Saving (S), taxes (T) and imports (Z) are all leakages from
the circular flow. Investment spending (I), government spending (G) and exports (X) are all injections
into the circular flow.
8.4
PREVIEW OF QUESTION 1
1. 2 Reference: Prescribed book PG 4
Economics is concerned with scarcity. The basic fact of economic life is that there are simply not
enough goods and services to satisfy everyone’s wants. Wants are unlimited but the means with
which the wants can be satisfied are limited. All individuals and societies are confronted by the
problem of unlimited wants and limited means. They therefore have to make choices.
1. 2 Reference: Prescribed book PG 4
Economics is concerned with scarcity. The basic fact of economic life is that there are simply not
enough goods and services to satisfy everyone’s wants. Wants are unlimited but the means with
which the wants can be satisfied are limited. All individuals and societies are confronted by the
problem of unlimited wants and limited means. They therefore have to make choices.
2. 1 Reference: Prescribed book PG 12
Macroeconomics is concerned with the economy as a whole. The prefix “macro” comes from the
Greek word makros meaning large. In macroeconomics we focus on the “big picture.” We develop
an overall view of the economic system and we study total or aggregate economic behaviour. The
emphasis is on topics such as total production, income and expenditure, economic growth,
aggregate unemployment, the general price level, inflation and the balance of payments.
Macroeconomics is therefore the world of totals.
4. 4 Reference: Prescribed book PG 90
The disadvantage is that it will lead to lower supply. If firms get a lower price, there may be less
incentive to supply the good, and the number of properties on the market declines. A maximum
price will also lead to a shortage – where demand will exceed supply; this leads to waiting lists
, 5. 3 Reference: Prescribed book PG 42
The factors of production are resources that are the building blocks of the economy; they are what
people use to produce goods and services. Economists divide the factors of production into four
categories: land, labor, capital, and entrepreneurship.
6. 2 Reference: Prescribed book PG 45
Broadly speaking there are four types of income, each associated with a different factor of
production. The remuneration of natural resources (or land) is called rent. Wages and salaries are
the remuneration of labour, while the remuneration of capital is called interest. Finally, profit is the
remuneration of entrepreneurship. The total income in the economy thus consists of rent, wages
and salaries, interest and profit and the value of total income is identically equal to the value of total
production.
7. 1 Reference: Prescribed book PG 46 The basic flow is between households and firms. This
represents consumption expenditure (C). Saving (S), taxes (T) and imports (Z) are all leakages from
the circular flow. Investment spending (I), government spending (G) and exports (X) are all injections
into the circular flow.
8.4
