Applied Economics

Economic resources - correct answer also known as production, are the resources used to produce goods and services. Land, Labor, Capital are the income of resource owner Land - correct answer soil and natural resources that are found in nature and not man made. Owners of land receive a payment known as rent. Labor - correct answer physical and human effort exerted in production. Capital - correct answer man made resources used in the production of goods and services, which include machineries and equipment. Interest - correct answer the owner of capital earns an income 2 branches of economics - correct answer Macroeconomics Microeconomics Macroeconomics - correct answer is a division of economics that is concerned with the overall performance of the entire company Microeconomics - correct answer is concerned with the behavior of individual intities such as the consumer, the producer, and the resource owner. Basic economic problem of society - correct answer 1. what to produce and how much 2. how to produce 3. for whom to produce what to produce and how much - correct answer society must decide what goods and services should be produced in the economy. how to produce - correct answer is a question on the production method that will be used to produce the goods and services. This refers to the resource mix and technology that will be applied in productions. for whom to produce - correct answer is about the market for the goods. For whom will the goods and services be produced? The young or old, the male or female market, the low income or the higher income groups? Type of economic system - correct answer 1. traditional economy 2. command economy 3. market economy Traditional economy - correct answer decisions are based on the traditions and practices upheld over the years and passed on from generation to generation. Methods are stagnant and therefore not progressive. Traditional societies exists in primitive and backward civilizations. Command economy - correct answer the authoritative system wherein decision making is centralized in the government or a planning commitee. Decisions are imposed on the people who do not have to say in what goods are to be produced. This economy holds true in dictatorial, socialist and communist nations. Market economy - correct answer the most democratic form of economic system. Based on the working of demand and supply, decisions are made on what goods and services to produce. People's preferences are reflected in the prices they are willing to pay in the market and are therefore the basis of the producers decisions of what goods to produced. Characteristic of free market - correct answer 1 free to set prices 2 free to buy, own, use, and sell private property 3 free to compete 4 free to earn profits 5 free to create capital formation 6 free to be an entrepreneur 7 free to be an investor 8 free to choose your work 9 free to cooperative and peaceful process Market economics - correct answer "Individual are free to exchange their labor for wages or start a business." why economics is important? - correct answer economics will help the students to understand why there is a need for everybody, including the government, to budget and properly allocate the use of whatever resources are available. Positive economics - correct answer deals with what things are actually happening such as the current inflation rate, the number of employed labor, and the level of GNP. Normative economics - correct answer refers to what should be that which embodies the ideal such as the ideal rate of population growth or the most effective tax system. Measuring the economy - correct answer GDP GNP GDP - correct answer total value of goods and services provided in a country during one year.