Exercise 1 (30 points)

Imagine an audience consisting of non-economists who have never taken a single lecture on
economics.

a) (15 points) Use your own words to explain what economics is about.

Economics is the study of how society uses its limited resources. Economics is a social science
that deals with the production, distribution and consumption of goods and services.
Economics places great emphasis on the four factors of production, namely land, labor, capital
and enterprise. These are the four components that make up economic activity in our world
today, and each of them can be studied separately.

Economics is divided into two broad categories of study:

Macroeconomics - the branch of economics that studies the general functioning of the
national economy. It focuses more on the big picture and analyzes things like growth,
inflation, interest rates, unemployment, and taxes. When you hear that the Federal Reserve is
raising interest rates or that the national unemployment rate is 7.5%, you hear about
macroeconomic issues.
Microeconomics - the branch of economics that studies how households and firms arrive at
decisions about buying, saving, price setting, business competition, etc. It focuses on the
individual level, while macroeconomics looks at decisions that affect entire countries and
society as a whole.

b) (15 points) Use your own words to explain what positive and normative approaches are and how
they differ.

Positive and normative are two branches of modern economics. While positive economics deals with
various economic phenomena, normative economics focuses on what economics should be like and its
equity value. In simpler words, positive economics is seen as the "what" branch of economics, while
normative economics is the "should be" or "should be" section of economics. However, before
moving on to the difference between positive and normative economics, you must know their details.

One positive economic example is the phrase "government-funded health care increases public
expenditures." This statement is based on facts and has a great valuable judgment embedded in it.
Therefore, their reliability can or may not be proven by studying government participation in
healthcare.
 An example of a normative economy, "The government must provide basic health care to every
citizen." You can understand that this statement is based on a personal perspective and fulfills the
need for a "must-have" or "must-have".

Ex 2

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Ex 3

I Alpha Coffee to provide hot and cold drinks Competitors

Ii The comfortable sitting, where the coffee offers a wonderful session, characterized by the
simulation of nature of trees and a good atmosphere, as well as an Arabic and Western taste for
special drinks

Iii Java Coffee and Dunkin Donut Starbucks and Dr. Kieev

Iv

1- The comfortable session A session that brings together the countryside of a special nature as well
as the urban area

2- Distinctive taste, special taste of drinks

Alpha Coffee has a high level of comfortable sitting as well as a special taste, which distinguishes it
from other competitors.

Vi

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