Chapter 2 Basic Economic Concepts Review

Question 1

Scarcity

Answer 1

Scarcity is when the unlimited nature of human once in these conflicts with the limited nature of resources available

Question 2

PPF Curve

Answer 2

This diagram shows that at some point to produce more of the quantity of Y you must produce less of a quantity of X

Question 3

Trade-offs

Answer 3

This is one of my sacrifice one of something to gain more of another

Question 4

Ceteris Paribus

Answer 4

When studying one aspect, for instance the US economy react in the wheel prices, you ignore all of the nations currency values.

Question 5

Fallacy of composition

Answer 5

This means that one was not assume that what applies to one instance is true for everything

Question 6

Post hoc fallacy

Answer 6

This supposes that if one event thousand other, the former is the cause of a latter.

Question 7

Marginal analysis

Answer 7

This entails the impact of one or more variables upon an economic outcome.

Question 8

The law of diminishing marginal returns

Answer 8

This law states that while initially increases in the factors of production increases output, at some point additional inputs not only create output At a diminishing right, but actually decrease the total output

Question 9

Law of increasing opportunity

cost

Answer 9

This is the principle that states that once all factors of production, land, labor, capital, are at maximum output and efficiency, producing more will cost more than average. As production increases, the opportunity cost does as well.

Question 10

Detriments of supply

Answer 10

This is the prices of raw materials labor, capital, and entrepreneurship

Question 11

Rationing power

Answer 11

Rationing power is when income limits our ability to satisfy our desires

Question 12

Law of demand

Answer 12

The law of demand is the inverse relationship which states that as price rises, the quantity demanded falls. And as price falls, the quality demanded increases

Question 13

Law of diminishing marginal utility

Answer 13

This law states that as the quantity of goods increase the customer value for the product decreases. As the quantity decreases the value increases

Question 14

Determinants of demand

Answer 14

Consumer demand me change it anytime and shift to wanting greater demand of a certain product or less demand which in turn would result in higher or lower prices and quantity

Question 15

Equilibrium price

Answer 15

This is the compromise point at which supply and demand intersect

Question 16

Consumer surplus

Answer 16

Consumer surplus is the portion of the demand curve that represents consumers the value of the goods so highly will be willing to pay a higher price to attain it. A rise in price would reduce customers are plus and a fall in price will increase customer surplus

Question 17

Four resource inputs

Answer 17

The four resource includes are land, capital, labor, entrepreneurship

Question 18

Land

Answer 18

This is the raw material being put into production

Question 19

Capital

Answer 19

The means of production (investment goods) and finance capital (money used to acquire capital goods)

Question 20

Labor

Answer 20

Human resources, including both manual and intellectual skills

Question 21

Entrepreneurship

Answer 21

Business organization and/or innovation

Question 22

Four main economic systems

Answer 22

The four main economic systems are the free market, traditional, command, mixed market

Question 23

Free market system

Answer 23

In this system consumers and producers operate an unregulated environment

Question 24

Traditional market system

Answer 24

In the system society does not change its methods of production or consumption

Question 25

Command market system

Answer 25

In the system government agencies regulate production and consumption

Question 26

Mixed market system

Answer 26

This system blends free market, traditional, and state planning. (These are most prevalent in command systems that have failed, or been modified by adapting more free market features)