I. Answer the questions 1. What is the economy? 2. List and draw the components of the economy. 3. Name economic principles and give examples. 4. What is demand and supply? 5. What makes up the backbone of market economies? 6. What do macroeconomics and microeconomics study? 7. What is business?

1. The economy refers to the system of production, distribution, and consumption of goods and services within a particular geographic area or country. It encompasses the activities and interactions of individuals, businesses, and governments in making choices about how to allocate resources to satisfy their needs and wants.<br />2. The components of the economy include:<br />* Households: Individuals or groups of people who consume goods and services and provide factors of production (such as labor) to businesses.<br />* Firms: Organizations or businesses that produce goods and services for consumers.<br />* Markets: Platforms or mechanisms through which buyers and sellers interact to exchange goods and services.<br />* Government: The institution responsible for making and enforcing laws, regulations, and policies that govern the economy.<br />3. Economic principles are fundamental concepts that guide economic decision-making and analysis. Examples include:<br />* Scarcity: The limited nature of resources, which forces individuals and societies to make choices about how to allocate them.<br />* Supply and demand: The relationship between the quantity of a good or service available and the quantity desired by consumers, which determines its price.<br />* Opportunity cost: The value of the next best alternative given up when making a choice.<br />4. Demand refers to the quantity of a good or service that consumers are willing and able to purchase at a given price, while supply refers to the quantity of a good or service that producers are willing and able to offer for sale at a given price. The interaction between demand and supply determines the market equilibrium price and quantity.<br />5. The backbone of market economies is the price mechanism, which coordinates the activities of buyers and sellers through the exchange of goods and services in markets. Prices serve as signals that guide resource allocation and decision-making.<br />6. Macroeconomics studies the economy as a whole, focusing on aggregate variables such as national income, unemployment, inflation, and economic growth. Microeconomics, on the other hand, studies individual economic units, such as households and firms, and their interactions in specific markets.<br />7. Business refers to the activities involved in the production, distribution, and sale of goods and services with the aim of generating profit. It encompasses a wide range of activities, from small-scale entrepreneurship to large corporations, and can involve various sectors, such as manufacturing, retail, and services.