ECON

Question 1

What is economics?

Answer 1

about everyday life, about the choices
each of us makes, and how these choices affect our
neighbors, our community, our nation, and our world.

Question 2

What is econ about?

Answer 2

Economics is the study of how individuals make choices
about how to allocate scarce resources in order to
satisfy virtually unlimited human wants and about how
individuals interact with one another.

Question 3

What does scarcity imply?

Answer 3

Scarcity implies that every choice we make requires
us to give up something to get something else.

Question 4

“opportunity cost”

Answer 4

The cost of what you choose is what you have to give
up to get it.

Question 5

Postiove economics

Answer 5

Positive
economics uses the tools of economic analysis to
describe and explain economic phenomena and to
make predictions about what will happen under
particular circumstances.

Question 6

Normative econ

Answer 6

Normative economics is the term used to describe the
use of economic analysis to guide decisions about what
should be as opposed to what is the case.

Question 7

what is the central idea of microeconon?

Answer 7

The interaction of supply and demand in markets

Question 8

what is a market?

Answer 8

A market is comprised of all of the buyers and sellers
of a particular good or service.

Question 9

perfectly competitive

Answer 9

good or service being bought and sold is highly
standardized, the number of buyers and sellers is large,

Question 10

What is demand depended on?

Answer 10

The quantity demanded of any good is the amount of
that good buyers are willing and able to purchase.

Question 11

law of demand.

Answer 11

negative relationship between a good’s price and the
quantity demanded

Question 12

What does the law of demand include?

Answer 12

The law of demand is a result of the cost-benefit analysis
that rational decision-makers use when deciding how
to allocate their resources.

Question 13

What is one requriment of demand?

Answer 13

the price of the good

Question 14

What is the second factor of demand?

Answer 14

income

Question 15

inferior goods.

Answer 15

Goods for
which the quantity demanded falls as income rises

Question 16

substitutes.

Answer 16

When a decline
in the price of one good causes a reduction in the
quantity demanded of another,

Question 17

complements.

Answer 17

When a lower price for
one good causes demand for another good to increase,
we call those two goods

Question 18

Changes that you expect to occur in the future may
also affect the quantity demanded.

Question 19

What does the number of buyers do with market demand?

Answer 19

Market demand is derived by adding up the demands
of individual consumers. If there are more consumers,
then demand will increase.

Question 20

Law of Supply

Answer 20

This positive relation between
price and quantity supplied is called the law of supply.

Question 21

what are some factors that determine law of supply?

Answer 21

input price

Question 22

how does technology determine supply?

Answer 22

Changes in technology can affect how businesses
operate and hence the quantity supplied.

Question 23

How does selelrs determine supply?

Answer 23

As more sellers enter the market, the quantity supplied
will increase.

Question 24

equilibrium

Answer 24

It is defined as a point at
which all the forces at work in a system are balanced
by other forces, resulting in a stable and unchanging
situation.

Answer 25

The market equilibrium occurs at the combination
of price and quantity where the market supply and
demand curves intersect.

Answer 26

Competitive markets tend to gravitate toward
the equilibrium quantity and price.

Answer 27

available supply goes to those buyers who value the
good most highly, and that it is provided by those
suppliers who have the lowest costs of supplying the
good.

Answer 28

The important insight
is the height of the market demand curve at each point
reveals the marginal buyer’s willingness to pay.

Answer 29

price elasticity of demand measures how much
the quantity demanded responds to a change in price.

Answer 30

Price elasticity of demand =
(Percentage change in quantity demanded) /
(Percentage change in price)

Answer 31

The price elasticity of demand reflects how responsive
consumers are to changes in the price of a good.

Answer 32

Economists use elasticity because it provides a measure
of the responsiveness of demand to price changes that is
independent of the units of measurement.