What might money price indicate in terms of opportunity cost?
It might be a good indicator of the opportunity cost in some cases.
Why are historical costs considered irrelevant in decision making?
Because they are unavoidable and do not affect current choices.
Why does the US import clothing from Vietnam instead of producing it domestically?
Because clothing manufacturing in the US has a high opportunity cost compared to producing Hollywood movies.
p.1
Basic Economic Principles
What is the primary focus of Business Economics?
To analyze business decisions using economic principles.
p.38
International Trade and Exchange Rates
What is one effect of exchange rates on foreign investment?
They impact the return on investment for foreign investors.
p.6
Basic Economic Principles
What is a tradeoff example related to leisure activities?
Hiking with your parents vs. a staycation with your friends on New Year.
p.23
Basic Economic Principles
Why is price vital in a market?
It reflects consumer preferences and provides information to producers.
p.18
Macroeconomic Indicators
What does the Hong Kong Vaccination Dashboard track?
The population with the first vaccine dose.
p.35
Macroeconomic Indicators
How is the unemployment rate calculated?
As the percentage of the labor force that is unemployed.
p.35
Macroeconomic Indicators
What does the unemployment rate indicate?
How easy it is to find a job.
p.35
Macroeconomic Indicators
What is the formula for calculating the unemployment rate?
Unemployment rate = (Number of unemployed / Labor force) × 100%.
p.14
Marginal Decision Making
In the context of exam preparation, what decision might a student face?
Whether to spend the next two hours reviewing notes or watching a soccer game.
p.26
Government Intervention in Markets
How can governments improve market outcomes?
By promoting efficiency and addressing market failures such as externalities, public goods, and natural monopolies.
p.23
Market Organization of Economic Activity
What is a key function of markets in organizing economic activity?
Markets are usually a good way to organize economic activity.
p.26
Government Intervention in Markets
What are some reasons for government intervention in markets?
To promote efficiency and equality.
p.17
Incentives and Behavior
How do people typically respond to incentives?
They change their behavior based on the incentives presented.
p.29
Macroeconomic Indicators
What is the most commonly used statistic of national income?
Gross Domestic Product (GDP).
p.22
Market Organization of Economic Activity
What is a common method to organize economic activity?
Markets are usually a good way to organize economic activity.
p.5
Basic Economic Principles
What does Chapter 1 say about the economy?
It discusses the economy as a whole.
p.7
Basic Economic Principles
What do people compare when making decisions involving tradeoffs?
The benefit and the cost (what you need to give up).
Are construction costs of building a new headquarters considered opportunity costs?
Yes, as they are a direct cost associated with the relocation decision.
p.21
Trade and Specialization
What is an example of a situation where a buyer gains from trade?
Dining in Jamie Oliver’s expensive restaurant.
p.26
Scarcity and Resource Allocation
What is a market failure?
A situation where the market does not allocate resources efficiently on its own.
p.4
Scarcity and Resource Allocation
What will the remaining area of the land be reserved for?
Recreational and conservation uses.
p.32
Government Intervention in Markets
How does the government use the inflation rate?
To decide on tax allowance, social welfare payments, etc.
p.21
Trade and Specialization
How does trade benefit buyers and sellers?
Both gain from voluntary market exchange.
p.2
Scarcity and Resource Allocation
Give an example of how human wants can change over time.
You may want a new iPhone now, a new Tesla next year, and later a round-the-world trip.
p.1
Scarcity and Resource Allocation
What is the concept of scarcity in economics?
The limited availability of resources to meet unlimited wants.
p.33
Macroeconomic Indicators
Why do business firms monitor the inflation rate?
To make decisions on product pricing and staff salary.
p.23
Incentives and Behavior
What incentive do prices provide to producers?
Profits for providing better and cheaper goods.
p.26
Scarcity and Resource Allocation
What are examples of market failures?
Externalities, public goods, and natural monopolies.
p.28
Basic Economic Principles
What can increased outputs in an economy lead to?
More enjoyment of goods and services.
p.36
Basic Economic Principles
How might the unemployment rate influence wage levels for a business?
It could lead to paying lower wages in a high unemployment environment or higher wages in a low unemployment environment.
Are all opportunity costs explicit monetary expenses?
No, not all opportunity costs are explicit monetary expenses.
p.27
Macroeconomic Indicators
What factors influence the profit of a business?
The operation of the business and the performance of the whole economy.
p.16
Incentives and Behavior
What significant change was made by Hong Kong's legislature regarding feeding wild animals?
The maximum penalty was raised from HK$10,000 to HK$100,000.
p.5
Basic Economic Principles
What is another aspect of economics covered in Chapter 1?
How people interact with each other.
What is the implicit cost of playing tennis instead of working?
The income you would have earned from teaching piano lessons.
What is opportunity cost?
The value of the next best alternative foregone when making a decision.
What is the true cost of playing tennis instead of studying?
The opportunity cost of not studying, which includes the value of knowledge and skills that could have been gained.
p.1
Incentives and Behavior
How do incentives affect business decisions?
They motivate individuals to act in certain ways based on rewards or penalties.
p.31
Macroeconomic Indicators
What factors affect productivity?
Technology and human capital.
p.16
Incentives and Behavior
What is the principle behind people's behavior in response to incentives?
People's behavior will change when provided with the right incentive through changes in cost or benefit.
p.29
Macroeconomic Indicators
What is used to judge whether the economy is doing well?
National income, which is the total income earned by people from their production.
p.38
International Trade and Exchange Rates
How do changes in exchange rates affect imported goods?
They change the prices of imported goods, impacting costs, revenue, and profits for businesses.
p.14
Basic Economic Principles
What is the basic principle illustrated by the decision-making scenario?
Individual decision-making based on marginal analysis.
Are fees paid to a consultant for a feasibility study considered opportunity costs?
No, because they are sunk costs incurred before the decision to relocate.
p.15
Marginal Decision Making
What principle explains the decision-making process of the airline regarding ticket sales?
People think at the margin.
p.24
Incentives and Behavior
Which type of mask might be preferred by consumers?
It depends on individual preferences between government-provided and market-sold masks.
What alternative activity is presented in the example?
Playing tennis with a friend.
p.39
Marginal Decision Making
What is the third principle of economics?
Rational people think at the margin.
p.39
Trade and Specialization
What is the fifth principle of economics?
Trade can make everyone better off.
p.32
Macroeconomic Indicators
Why is inflation a major concern for the public and government?
Because it affects economic stability and purchasing power.
p.3
Scarcity and Resource Allocation
What types of resources are considered scarce?
Labour, raw materials, managerial skills, etc.
p.34
Macroeconomic Indicators
What is the primary cause of large or persistent inflation?
The increasing amount of money available in society.
p.38
International Trade and Exchange Rates
How do exchange rates influence a country's capital flow?
They affect the capital flow of a country.
p.7
Basic Economic Principles
What is the relationship between tradeoffs and decision-making?
When we face tradeoffs, we must make decisions that involve giving up something valuable.
p.28
Basic Economic Principles
How does the overall economic well-being of people in an economy relate to production?
It depends on the amount of goods and services the economy can produce.
p.33
Macroeconomic Indicators
How does the inflation rate affect businesses?
It affects the interest rate, which is important for investment decisions and financial management.
Is the expected fall in sales income during the relocation period an opportunity cost?
Yes, as it represents lost income due to the decision to relocate.
p.19
Basic Economic Principles
What is the basic principle of how we interact with others in an economy?
We interact through specialization and trade.
p.32
Macroeconomic Indicators
What is inflation?
The general increase in the overall price level of goods and services.
p.5
Basic Economic Principles
What does Chapter 1 of the textbook cover regarding economics?
Several principles that help us understand human decisions under scarcity.
p.2
Scarcity and Resource Allocation
What is the fundamental concept of scarcity in economics?
Human wants are unlimited, but resources are limited.
p.1
Basic Economic Principles
What do basic economic principles help businesses understand?
How to allocate resources efficiently.
p.6
Basic Economic Principles
What is a tradeoff between present and future income?
Working as a salesperson (present income) vs. studying in community college (future income).
What decision is being analyzed in the example?
Choosing between working at a part-time job and playing tennis.
p.2
Scarcity and Resource Allocation
What does living in a world with scarcity imply?
We don’t have everything we want.
p.21
Basic Economic Principles
What basic principle is illustrated by trade interactions?
How we interact with others.
What activity was initially planned for Saturday?
Working at a part-time job teaching piano lessons.
p.36
Basic Economic Principles
How does the unemployment rate affect business decisions?
It influences the ability to find suitable labor, wage levels, labor market flexibility, regulations, employee productivity, and training needs.
p.20
Trade and Specialization
How does trade benefit individuals and countries?
Trade allows specialization in what they do best, leading to increased production.
Should sunk costs be included in opportunity cost calculations?
No, sunk costs are historical costs and not relevant to current decisions.
p.14
Marginal Decision Making
What does it mean to think at the margin?
It involves considering the additional benefits and costs of a decision.
p.17
Incentives and Behavior
What was the effect of the vaccination lucky draw prize announced by Sino Group on 28 May 2021?
The number of COVID-19 vaccine doses administered increased significantly.
p.37
International Trade and Exchange Rates
What does the exchange rate represent?
The price of one currency in terms of another currency.
p.37
International Trade and Exchange Rates
What is one way financial resources are utilized globally?
They are moved around the world to seize investment opportunities.
p.28
Basic Economic Principles
What does the standard of living of an economy depend on?
Its ability to produce goods and services.
p.19
Scarcity and Resource Allocation
Is self-sufficiency a practical approach to resource allocation?
No, it is often more efficient to specialize and trade rather than produce everything ourselves.
p.30
Macroeconomic Indicators
What is the relationship between economic growth and business opportunities?
Economic growth rates help identify potential business opportunities.
p.36
Basic Economic Principles
What can a business determine about labor availability from the unemployment rate?
Whether it can find suitable labor in the economy.
p.20
Basic Economic Principles
What basic principle does trade illustrate?
How we interact with others to improve economic outcomes.
What is the nature of opportunity cost?
It is a forward-looking concept for decision making.
p.17
Incentives and Behavior
What change might occur in class behavior if 'class participation' counts for 50% of the assessment?
Students are likely to participate more actively in class.
p.16
Incentives and Behavior
What effect does a higher fine for feeding wild animals have on people's behavior?
Fewer people will feed wild animals.
What is the definition of opportunity cost?
The highest valued option forgone of our action.
What are opportunity costs in the context of relocating a firm's headquarters?
Costs that represent the potential benefits lost when choosing one option over another.
p.40
Comparative Advantage
What type of opportunity cost leads to goods being produced by certain countries?
Lower opportunity cost (comparative advantages).
p.26
Government Intervention in Markets
What potential issues can arise from government market intervention?
It may generate a lot of problems.
p.4
Scarcity and Resource Allocation
How many public housing flats are planned to be built on the 9.5-hectare site?
12,000 public housing flats.
p.22
Basic Economic Principles
What is the role of market price in economic exchanges?
It guides buyers and sellers in their mutually beneficial exchanges.
p.31
Macroeconomic Indicators
What role does productivity play in economic growth?
Higher productivity leads to increased output and efficiency.
p.27
Basic Economic Principles
Why should a business manager understand macroeconomics?
To comprehend economic growth, inflation, unemployment, balance of payments, exchange rates, and the business cycle.
What is the focus of opportunity costs in decision making?
It focuses on the potential benefits lost when choosing one alternative over another.
p.3
Scarcity and Resource Allocation
What is the goal of allocating scarce resources?
To better satisfy our wants.
p.3
Scarcity and Resource Allocation
What are two possible uses of scarce resources?
Producing more goods or choosing goods that promote well-being.
p.38
International Trade and Exchange Rates
What will be covered in Topic 12 regarding exchange rates?
The different exchange rate regimes.
p.30
Macroeconomic Indicators
What trend has been observed in the GDP data of many economies over the past three hundred years?
Many economies experienced an increase in GDP, indicating economic growth.
p.23
Basic Economic Principles
What do basic principles of economics help us understand?
How we interact with others in the market.
p.33
Macroeconomic Indicators
What is the significance of the Consumer Price Index (CPI) for businesses?
It helps trace changes in general price levels.
p.13
Marginal Decision Making
When does a rational decision maker take an action?
If the action’s marginal benefit exceeds its marginal cost.
p.37
International Trade and Exchange Rates
What is a key feature of globalization in relation to economies?
Different economies trade extensively with each other.
p.27
Macroeconomic Indicators
What are some key components of macroeconomics that a business manager should know?
Economic growth, inflation, unemployment, balance of payments, exchange rates, and business cycle.
p.6
Basic Economic Principles
What is an example of a tradeoff involving money?
$ on textbooks vs. $ on a new iPhone.
p.19
Trade and Specialization
How can trade improve our well-being?
Trade can make us better off by allowing specialization and resource allocation.
p.21
Trade and Specialization
Do buyers gain when purchasing items like a table at IKEA?
Yes, buyers gain from the transaction.
p.19
Scarcity and Resource Allocation
What is a common strategy for allocating resources in the face of scarcity?
Specialization and trade in the market.
p.22
Basic Economic Principles
What do buyers and sellers do in a market?
Engage in mutually beneficial exchange by following the market price.
p.23
Incentives and Behavior
How does price influence farmers' decisions?
It tells them whether to grow apples or avocados based on profitability.
What is opportunity cost in the context of comparative advantage?
The value of the next best alternative that is forgone when making a choice.
p.30
Macroeconomic Indicators
Why do business managers analyze economic growth rates?
To trace the economic performance and identify business opportunities in an economy.
p.13
Marginal Decision Making
What is marginal benefit?
The added benefit from an additional unit of action.
p.39
Market Organization of Economic Activity
What does the sixth principle of economics state?
Markets are usually a good way to organize economic activity.
p.39
Macroeconomic Indicators
What is the ninth principle of economics?
Prices rise when the government prints too much money.
What is an implicit cost?
An implicit cost is the opportunity cost of a decision, representing the value of the next best alternative that is forgone.
p.2
Scarcity and Resource Allocation
What might someone desire after obtaining sufficient food?
A decent apartment and better education for their children.
p.4
Scarcity and Resource Allocation
What is the proposed land use for the Hong Kong Golf Club at Fanling?
To return the 32-hectare land to the government for public housing and recreational uses.
p.34
Macroeconomic Indicators
What is the expected outcome when more money is available in society?
We are expected to pay more money to buy the same goods.
p.4
Scarcity and Resource Allocation
How many people are expected to be accommodated by the new public housing flats?
About 33,600 people by 2029.
p.13
Marginal Decision Making
How do people make decisions according to marginal thinking?
By comparing marginal benefits and marginal costs.
Are expected increases in future legal compliance fees due to differences in legal systems considered opportunity costs?
Yes, as they represent additional costs incurred as a result of the relocation.
p.20
Trade and Specialization
What is the result of specialization through trade?
Society enjoys a greater amount and variety of goods and services.
p.31
Macroeconomic Indicators
What are institutional factors in the context of economic growth?
Rules, regulations, and policies that shape economic activity.
p.41
Trade and Specialization
What is the concept of comparative advantage?
The ability of an individual or group to carry out a particular economic activity more efficiently than another activity.
p.15
Marginal Decision Making
Should the airline sell a ticket to the standby passenger willing to pay $3,000?
Yes, because it can reduce losses by earning $3,000 instead of leaving the seat empty.
p.19
Trade and Specialization
What does specialization allow individuals to do?
Specialization allows individuals to focus on one product, earn income, and buy other goods.
p.28
Basic Economic Principles
What is the relationship between productivity and living standards?
A rise in productivity leads to a rise in living standards.
Why is understanding implicit costs important in economics?
It helps individuals make informed decisions by considering the value of what they are giving up.
p.31
Macroeconomic Indicators
How do natural resources impact economic growth?
They provide essential inputs for production.
p.39
Macroeconomic Indicators
What is the tenth principle of economics?
Society faces a short-run trade-off between inflation and unemployment.
p.41
Trade and Specialization
How does comparative advantage influence trade?
It allows countries to specialize in producing goods where they have a lower opportunity cost, leading to increased overall efficiency and trade benefits.
What does the term 'opportunity cost' refer to?
The true cost of forgoing the next best alternative.
p.41
Scarcity and Resource Allocation
Why is it important to understand comparative advantage?
It helps in making informed decisions about resource allocation and trade, maximizing productivity.
p.31
Macroeconomic Indicators
What contributes to the accumulation of capital in an economy?
Investment in physical and human capital.
p.13
Marginal Decision Making
What is marginal cost?
The added cost from an additional unit of action, including both monetary and implicit costs.
p.13
Marginal Decision Making
What does it mean to think at the margin?
To consider the additional benefits and costs of a decision rather than an all-or-nothing approach.
How does playing tennis affect the planned study time?
It takes away time that could have been spent studying, impacting learning and academic performance.
p.33
Macroeconomic Indicators
What price statistic do businesses track to monitor inflation?
Consumer Price Index (CPI).
What does the second principle of economics state?
The cost of something is what you give up to get it.
p.39
Incentives and Behavior
What does the fourth principle of economics emphasize?
People respond to incentives.
p.36
Basic Economic Principles
What should businesses consider regarding training in relation to the unemployment rate?
What training should be offered to employees.
p.4
Scarcity and Resource Allocation
What does the proposal for the Hong Kong Golf Club illustrate?
An example of scarcity and the choices made in resource allocation.
p.36
Basic Economic Principles
What does a flexible labor market allow businesses to do?
Change their plans regarding manpower.
p.39
Government Intervention in Markets
What is the seventh principle of economics?
Governments can sometimes improve market outcomes.
p.39
Macroeconomic Indicators
What does the eighth principle of economics focus on?
A country's standard of living depends on its ability to produce goods and services.
