Competitive Markets: Demand and Supply

Question 1

Economics

Answer 1

The study of the production of goods and services and the consumption of these goods and services

Question 2

Macroeconomics

Answer 2

The branch of economics that studies the working of the conomy as a whole or large sections

Question 3

Microeconomics

Answer 3

the branch of economics that studies individual units and the way in which they make economic decisions

Question 4

Positive Statement

Answer 4

A statement that can be verified by empirical observation

Question 5

Normative Statement

Answer 5

a value judgement about what should happen

Question 6

Scarcity

Answer 6

A situation where there are unlimited wants but limited resources

Question 7

Resource allocation

Answer 7

The way in which the resources are split between their various uses

Question 8

Factors of production

Answer 8

Land, labour, capital, enterprise

Question 9

Ceteris Paribus

Answer 9

All things being equal - assuming that everything else is held constant

Question 10

Choice

Answer 10

How resources are allocated to deal with economic problems

Question 11

Utility

Answer 11

Benefits gained from consuming goods and services

Question 12

Opportunity Cost

Answer 12

cost measured in terms of the next best alternative

Question 13

Economic good

Answer 13

goods that people want that are scarce

Question 14

Free good

Answer 14

commodities that have no price and no opportunity cost (e.g. air, sunshine)

Question 15

Production possibility curve

Answer 15

A curve that shows all possible combinations of two goods that a country can produce in a specified time with all resources fully and efficiently used

Question 16

Public sector

Answer 16

The part of the economy where goods and services are provided by the government

Question 17

Private sector

Answer 17

The part of the economy that is characterized by private ownership of the means of production by profit seeking individuals

Question 18

Command Economy

Answer 18

economy where all economic decisions are made by a central authority

Question 19

Free Market Economy

Answer 19

An economy where all economic decisions are made by individual households and firms, no government intervention

Question 20

Mixed economy

Answer 20

An economy where economic decisions are made partly by the government and partly through the market

Question 21

Sustainable Development

Answer 21

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Question 22

Economic growth

Answer 22

the increase in a country’s output over time, an increase in national income

Question 23

Economic Development

Answer 23

The standard of living

Question 24

Market

Answer 24

an organization through which goods and services are exchanged, does not have to be physically, and can be local, national or international

Question 25

Price mechanism

Answer 25

the process by which prices rise or fall as a result of changes in demand and supply. Signals and incentives are used to increase or decrease prices

Question 26

Monopolistic competition

Answer 26

A market structure where each firm produces a differentiated product and have some control over the price

Question 27

Oligopolistic competition

Answer 27

Market structure dominated by only a few firms or where a product is supplied by only a afew firms

Question 28

Monopoly

Answer 28

There is only one dominant firm in the industry (e.g. Microsoft)