2. Key terms
• You are required to understand the meaning
of the key terms listed on page 23 of your
textbook.
3. Conceptual questions
• Read the first chapter of your text book (welcome to economics!) and
answer the following questions:
– Which economic concept was introduced by Adam Smith in the first chapter of
his book Wealth of Nations?
– What is the meaning of core competency?
– Describe the meaning of economies of scale?
– Explain in you own words the difference between Micro- and Macro-
economics.
– What is the difference between theory and model in the economics context?
– Briefly explain the differences between traditional economy, command
economy and market economy.
– Discuss the rule of regulations in market- and command-oriented economies.
– Explain how regulations can bread underground economies (or black markets)
– Which factors have stimulated the globalisation of international markets?
4. Multiple choice questions
• Which of the following statements best
describes the term Economics
– Economics is primarily about money or finance.
– Economics is about the decision process in the
face of scarcity.
– Economics is a way of doing business
– Economics is the application of mathematical
models describe real situations.
5. Multiple choice questions (cont.)
• John Maynard Keynes was the first economist
to introduce the concept of division of Labour
in his book Wealth of Nations.
– True
– False
6. Multiple choice questions (cont.)
• Macroeconomics and Microeconomics are
completely separate subjects. The former
focuses on the actions of individual entities
within the economy, whilst the later looks at
the economy as a whole.
– True
– False
7. Multiple choice questions (cont.)
• Which of the following economic systems are
most heavily regulated
– Traditional economy
– Market economy
– Commaned economy
8. Filling the gaps
• Use the following words to complete the paragraph below:
– Famous, models, view, assist, may, require, employ
• Economists carry a set of theories in their heads like a carpenter
carries around a toolkit. When they ……. an economic issue or
problem, they go through the theories they know to see if they can
find one that fits. Then they …… the theory to derive insights about
the issue or problem. Economists express theories as diagrams,
graphs, or even as mathematical …….. Economists do not figure out
the answer to the problem first and then draw the graph to illustrate.
Rather, they use the graph of the theory to …….. them figure out the
answer. Although at the introductory level, you can sometimes figure
out the right answer without applying a model, if you keep studying
economics, before too long you will run into issues and problems that
you will ……… to graph to solve. We explain both micro and
macroeconomics in terms of theories and models. The most ………
theories are probably those of supply and demand, but you will learn
………. others.
9. Ordering sentences
• Put the sentences below in the right order to form a meaningful paragraph about
scarcity
– A hotshot executive, on the other hand, may be financially capable of retiring on a whim, yet
be forced to eat ten minute lunches and sleep four hours a night.
– Money and time are quintessentially scarce resources.
– In a hypothetical world in which every resource—water, hand soap, expert translations of
Hittite inscriptions, enriched uranium, organic bok choy, time—was abundant, economists
would have nothing to study.
– A third category has little time or money. People with abundant money and abundant time are
seldom observed in the wild.
– There would be no need to make decisions about how to allocate resources, and no tradeoffs
to explore and quantify.
– Most people have too little of one, the other, or both. An unemployed person may have an
abundance of time, but find it hard to pay rent.
– In the real world, on the other hand, everything costs something; in other words, every
resource is to some degree scarce.
