SANTERNA FRITZ PECTO

BSBA -FM 2 ONLINE REGULAR

BASIC MICROECONOMICS MIDTERM EXAM

TEST 1 ESSAY

1what are resources ? Explain how resources are classified?

Land – Land is a natural resource that may be needed for production activities like Farming,
gardening etc.
Labor- for me it is a manual work labor is always required in production activities . Let us take
an example of farming, In farming for sowing seeds or harvesting the crops middle or large scale
farmers hire farm laborers on daily wage basis or two-time meal basis.
Capital - Capital is the cash in hand for buying the raw materials, for buying the inputs , for
paying salary to the workers etc. is in the sort of investments like buying tools, machines,
buildings that may long for years.
Entrepreneurship - is a person who starts a new business and usually risks his own money to
start the venture.
2. What are the principal roles of entrepreneur ?
- for me an entrepreneur should have different kind of thinking beyond every common
people .Because your innovative thinking can attract people so that you can market your
product which would establish a great name of your company in the market. And also Be a
problem solver and before jumping into entrepreneurship, look back on your history and assess
how you overcame challenges and persevered through tough decision making.
3. Illustrate and explain the circular flow of the supply and demand chain in the economic
activity ?
- For me circular flow model demonstrates how money moves from producers to households
and back again in an endless loop. In an economy, money moves from producers to workers as
wages and then back from workers to producers as workers spend money on production.

4. What are the two fundamental facts of economic? How do these fundamental facts lay
ground for the foundation of economics?
- Scarcity - for me there isn’t enough there to satisfy everyone’s needs, wants and desires. Not
enough to produce everything one could wish for, not enough know-how and labor to invent
and produce it all, and not enough time to consume and enjoy it.
Human wants- Every human being wants to be connected to his or her world. We hate being
alone. We hate feeling alienated. We hate the feeling of being stretched in all different
directions.
5. Compare and contrast microeconomics and macroeconomics?
-Economics is broadly divided into two different categories namely microeconomics and
macroeconomics.  Microeconomics is the study of specific segments and markets of an
economy. It looks at the issues like consumer behavior, individual labor market, and theory of
firms. On the other hand, macroeconomics is the study of the whole economy. It looks at the
aggregate variables such as aggregate demand, national output, and inflation.
6 what are fundamental (basic) problems of economic ? And how these problems solve under
the alternative economic system ?
-If there is a central economic problem that is present across all countries, without any
exception, then it is the problem of scarcity. This problem arises because the resources of all
types are limited and have alternative uses. If the resources were unlimited or if a resource only
had one single use, then the economic problem would probably not arise.

7. What do you understand the opportunity cost ?

- For me as a student Opportunity cost is one of the most fascinating concepts that manifests
across every aspect of our lives. As a top-billing headhunter for roles ranging from Chief
Executive to Analyst, I’ve seen thousands of people take or reject job prospects which
resulted in life-altering results. Maybe that’s why as a species, we’ve always been so
fascinated by time travel and the idea of fate/destiny. The thought that, had we done
something else, our world would be entirely different. This is the BASIC concept of
Opportunity Cost.
8. Explain the difference between the product market and resources market?
- The difference between resource markets and product markets is that the resource market
deals in the transfer of labor, capital, land and entrepreneurship from households to firms while
the product market deals in the transfer of goods and services from the firms to households.
9. What are payments for labor, land ,capital and entrepreneurial skills ?
-The factor payment to land is made in the form of rents per acre of land. The factor payment to
labor is made in the form of wages and salaries to the laborers. Finally, the factor payment to
capital is made in the form of interest paid on the capital.
Wages are paid for the services of labor, interest is the payment for the services of capital, rent
is the services for land, and profit is the factor payment
10. .how do you understand the trade offs?
- A trade-off is a decision that involves diminishing or losing one quality, quantity, or property of
a set or design in return for gains in other aspects. In other words, a tradeoff is where one thing
increases, and another must decrease. In spatial conservation planning it is rare that all
objectives can be maximized simultaneously, and therefore trade-offs often exist between
them.