1. What do you mean by “Economics”
Economics is the study of how humans make choices and limited resources and conditions of scarcity. These decisions can be made by individuals’ families and businesses of societies. It is a social science related to the production, distribution and consumption of goods and services. It helps study how individuals, businesses, governments and nations make choices on allocating resources to satisfy their wants and needs, trying to determine how these groups should organise and coordinate efforts to achieve maximum output. As an example, when we are evaluating the interest rate on our credit cards or trying to decide whether to buy or lease a house or purchase something, these are all decisions we make using economic thinking. We live in a world of limited resources and economics helps us decide how to use these limited inputs to satisfy our wants and needs.
2. Economics is considered Social science? Do you agree? Explain?
Mainly the science we can group into two broad categories that especially difference each other
· Pure Science
· Social Science
Pure science is a science that derives theories and assumptions. Pure science can also be known as Natural science or fundamental science. It deals with the study of natural phenomena through observation, experimentation, and the use of the scientific method.
Social science is a branch of science devoted to the study of societies and the relationship among individuals within those societies. Study of the behaviour of people such as individuals, groups of peoples, firms, societies, or economics, and there are individuals or collective behaviour.
Economics studies human behaviour, collecting facts, scientifically analysing them and formulating a theoretical base to explain human behaviour. Therefore, it is a social science. So, yes. I agree with “economics is considered as a Social science”
3. Briefly discuss why do you study Economics
Economics helps to make decisions to satisfy limited resources and conditions for scarcity. We can explain the importance of studying Economics in two different paths.
1. individual point of view
In day to day life, we face numerous problems to be solved individually. As an example, how can we spend money, how can a business firm decide maximum output, how can we get maximum profit, and how can we minimise business uncertainty. So if you know Economics, it may help to make good decisions for the greatest satisfaction.
2. The social point of view
The more policymakers know about economics, the better they can decide solutions to minimise the economic problems and maximise the living conditions of the nation.
4. Distinguish between micro and macroeconomics
Microeconomics relates to the study of the behaviour of individual economic units such as individual consumers, business firms, commodities, etc. Microeconomics gives us a microscope view of the economy.
Macroeconomics studies the behaviour of not a particular company, or Industries but the whole economy. It includes understanding how unemployment, price levels, and growth rates affect the economic aspect such as the gross national product (GNP). Macroeconomics gives us a bird’s-eye view of the economy.
5. What do you mean by opportunity cost? Explain this using examples.
Opportunity cost is the value of the next best alternative which is a foregone Choice that leads to the sacrifice of one need for another need. This arises due to scarcity of resources.
In the case of a consumer, she/he has to scarify the consumption of another commodity, in order to increase the consumption of the one commodity.
Example: – A passenger takes public transport to work instead of driving. It takes 2 hours on public transport, while driving takes 1 hour and 40 minutes. The opportunity cost is 40 minutes spent elsewhere each day.
6. Explain the following as factors of production.
Labour means any type of physical or mental effort. In Economics terms, labour is the effect exerted to produce any goods or services. It includes all types of human efforts-physical exertion and mental exercise, use of intellect, etc. done in exchange for an economic reward.
Capital is an important factor in production. It consists of those goods which are produced by the economic system and are used as input in the production of further goods and services. Capital comprises one of the four major factors of production.
7. What is the production possibility curve?
The production possibility curve is a curve that illustrates the variation in the amounts that can be produced for two products if both depend upon the same finite resource for their manufacturer. It measures the maximum output of two goods using a fixed amount of input.