Microeconomics Quiz

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1. The science of economics might be defined in a number of ways. The core essence of it is hidden in its prime objective – satisfaction of the needs of the society. Since it studies the way goods and services are produced, distributed and later purchased and consumed, it gets directly in touch with people, or society. The society constitutes of the people, who choose certain goods and services. Economics studies their choices and produces conclusions how to behave further.

Economics looks forward to understanding the principles of cooperation between the people, which later lead to making specific economic decisions. The economic activities of the individuals together become an economical process. Total involvement of society in the production and consumption of the products makes economics a social science. Using different approaches and methods, we study economics. Using methodology makes a process of study of economics systematic and balanced.

Economics analyzes the behavior of the society as a whole and conducts various kinds of research, which makes it a science. The research results are used to develop the science and improve it.

2. When we talk about the certain limit of any kind of natural resource, we have to mention the scarce resources. Any system functions, creating the results by means of resources. Scarce resources make the producer of goods, dependent on the overall quantity of the resource. E.g., the petroleum refinery needs oil as a main source of all the products it produces. Whenever the limit of oil is over, it will not be able to continue its work. As it is shown in the example above, economy is dependent on the resources and might suffer severely once some of them are over. New technologies are introduced with an aim to prevent such occasion; alternatives are found to replace the scarce resources etc.

The economics keeps providing consumers with more and more goods and services, thus increasing their supply. As the society grows and develops, it consumes the offered propositions; also, it requires something new, innovational, creating the demand for something that is still not available. Business and science produce new types of goods and services, meeting the consumer’s requests, while the insatiable demand brings on some new queries.

Need is something essential, obligatory for people to be used or consumed. Unlike it, want is something we wish to have, though it is not necessary. Need and want are related, but needs are a part of life, while wants might be avoided or postponed.

3. Market is the system used by the people to exchange the results of producing goods and services in order to get the profit. Market helps individuals and companies to interact in terms of the rules, used for the specific market. The behavior of the market players mainly depends on its structure.

Market supply is presented by the producers of goods and services. They use the resources and skills of the employees to produce goods and services and deliver them to the ultimate consumer. Consumers are motivated by the demand to get the required good or service. They evaluate the supply and pick the best of it, making the market mechanism work. Goods and services are provided to consumers in exchange for the compensation.

Supply and demand almost never find the equilibrium. In case of overproduction the market suffers from the over abundant supply, but when there is a lack of some good or service, demand is not fully satisfied. The consumers request the satisfaction of their wants and needs, which leads to the excessive demand and deficit at the market. Whenever the supply fully meets the demand, the market reaches its equilibrium and the price of the goods remains stable until the change of the balance between the supply and demand.

 

 

 

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