ECON- Section 1

Question 1

6 Factors that influence quantity demanded

Answer 1

price
income of consumers
price or related goods
consumer preferences
expected price in future
number of consumers in market

Question 2

Market Equilibrium

Answer 2

price is at a level which quantity demanded equals quantity supplied

Question 3

Opportunity Cost

Answer 3

what a firm’s owners give up to use resources to produce goods or services

Question 4

Explicit Costs

Answer 4

monetary opportunity costs of using market-supplied resouces

Question 5

Implicit Costs

Answer 5

non monetary opportunity costs of using owner-supplied resources

Question 6

Economic Profit

Answer 6

the difference between total revenue and total economic cost

Question 7

Accounting Profit

Answer 7

difference between total revenue and explicit costs

Question 8

Principal-Agent Problem

Answer 8

the conflict that arises when the goals of management (agent) don’t match the goals of the owner (principal)

Question 9

Market Structure

Answer 9

market characteristics that determine the economic environment in which a firm operates

Question 10

Economic characteristics needed to describe a market

Answer 10

• number and size of the firms operating in the market
• the degree of product differentiation among competing producers
• likelihood of new firms entering a market when incumbent firms are earning economic profits