Econ Exam #1

Question 1

“Ceteris Paribus”

Answer 1

in economics, all variables staying the same

Question 2

Protectionist Policies

Answer 2

Gov. measures that limit international trade

Question 3

Price as signals

Answer 3

price of good/service acts as piece of info

Question 4

Law of one price

Answer 4

goods will have same price in different markets

Question 5

Cross price elasticity

Answer 5

measure of how sensitive the Qd of good A is to good B

Question 6

Scarcity

Answer 6

limited resources and unlimited wants

Question 7

What is a model?

Answer 7

a simplified representation of a real situation

Question 8

PPF

Answer 8

diagram that shows the combinations of two goods that are possible for a society to produce at full employment.

Question 9

Surplus

Answer 9

Qs>Qd

Question 10

Market

Answer 10

Coordinate interests worldwide so that there can be mutual gain and cooperation

Question 11

Demand

Answer 11

tells us how consumers behave

Question 12

Law of demand

Answer 12

shows relationship between quantity demanded of a good and the price holding all other factors constant

Question 13

Supply

Answer 13

represents the behaviors of sellers

Question 14

Elasticity

Answer 14

measure of responsiveness

Question 15

Income elasticity

Answer 15

measure of how sensitive the Qd of a good is to changes in income

Question 16

Invisible hand

Answer 16

The way individual pursuit of self-interest can lead to good results for society

Question 17

Normal good

Answer 17

individual’s income rises, they buy more of that good

Question 18

Inferior good

Answer 18

Individual’s income rises they buy less of that good

Question 19

Equilibrium

Answer 19

price that balance quantity supplied and quantity demanded

Question 20

Shortage

Answer 20

Qs<Qd

Question 21

Price elasticity of demand

Answer 21

measure of price responsiveness