Economics Test 2 Review

Question 0

What is the law of demand

Answer 0

When the price is lower, consumers will buy more

Question 1

Define demand

Answer 1

Desire to own something and the ability to pay for it

Question 2

What is the substitution effect

Answer 2

As prices rise, alternatives are found

Question 3

What is the demand curve

Answer 3

Graph that shows demand based on price

Question 4

What are the 4 factors leading to a change in demand

Answer 4

Population, income, consumer expectations, advertising

Question 5

Elastic demand

Answer 5

Demand is very sensitive to a change in price

Question 6

Inelastic demand

Answer 6

Demand not very sensitive to a change in price

Question 7

Market share

Answer 7

Percent of the market you have

Question 8

Supply

Answer 8

The amount of goods available

Question 9

Law of supply

Answer 9

The higher the price, the more is produced

Question 10

Supply curve

Answer 10

A graph that shows supply based on price

Question 11

Fixed cost

Answer 11

Cost that doesn’t change no matter how much is produced

Question 12

Variable cost

Answer 12

Cost that rises or falls based on the quantity produced

Question 13

Total cost

Answer 13

Fixed and variable costs together

Question 14

Marginal cost

Answer 14

The additional cost of producing one more unit

Question 15

Subsidy

Answer 15

Government payment that supports a business or market

Question 16

Excise tax

Answer 16

Tax on a production or sale of a good

Question 17

Is demand for gasoline elastic or Inelastic?

Answer 17

Inelastic

Question 18

Elasticity of price increases with?

Answer 18

Change in price

Question 19

Price ceiling

Answer 19

The maximum price a good can be

Question 20

Price floor

Answer 20

The minimum price a good can be

Question 21

Surplus

Answer 21

Quantity produced is more than que tofu demanded

Question 22

Shortage

Answer 22

Quantity produced is less than quantity demanded

Question 23

Supply shock

Answer 23

Sudden shortage of a good

Question 24

Rationing

Answer 24

Allocating scarce goods and services without prices

Question 25

Black market

Answer 25

Business without regard for government control

Question 26

Adam smith

Answer 26

Author of the Wealth Of Nations

Question 27

Spillover costs

Answer 27

Costs of production that affects people not involved. Ex) pollution

Question 28

What are the 4 market structures

Answer 28

Monopoly, oligopoly, perfect competition, and monopolistic competition

Question 29

Perfect competition

Answer 29

Large number of firms produce the same product

Question 30

Commodity

Answer 30

Product that is the same no matter who produces it

Question 31

Monopoly

Answer 31

Market dominated by a single seller

Question 32

Natural monopoly

Answer 32

Market that runs better with one firm supplying the output

Question 33

Patent

Answer 33

License that gives the inventor the exclusive right to sell it got a certain period of time

Question 34

Franchise

Answer 34

Right to sell a good or service

Question 35

License

Answer 35

Government issued right to sell a good or service

Question 36

.Market power

Answer 36

Ability of a company to change prices and output

Question 37

Equilibrium price/ equilibrium quantity

Answer 37

Where the two lines on a graph cross

Question 38

Monopolistic competition

Answer 38

Many companies sell products that are similar

Question 39

Differentiation

Answer 39

Making a product different than other similar products

Question 40

Oligopoly

Answer 40

A few large firms dominate a market

Question 41

Price fixing

Answer 41

Firms agree to charge one price for the same product

Question 42

Cartel

Answer 42

Organization of producers that agree to a coordinate prices and production

Question 43

Merger

Answer 43

The combination of 2 or more companies

Question 44

Deregulation

Answer 44

Removal of same government controls of a market

Question 45

Sole proprietorship

Answer 45

Business owned and operated by one person

Question 46

What are three advantages of a sole proprietorship

Answer 46

Organization, profits, taxes

Question 47

What are three disadvantages of a sole proprietorship?

Answer 47

Can get sued, limited funds, fragile business existence

Question 48

Business license

Answer 48

License by the local/state government to own or operate a business

Question 49

Zoning law

Answer 49

City law that separates areas for a business or a residency

Question 50

Liability

Answer 50

Legally bound obligation to pay debts

Question 51

Fringe benefit

Answer 51

Payment other than wages or salaries

Question 52

Assets

Answer 52

Money or valuables belonging to a business

Question 53

FDIC

Answer 53

Federal Deposit Insurance Corporation

Question 54

Who are the owners of a corporation?

Answer 54

Stock holders

Question 55

Who is elected by stockholders to make decisions?

Answer 55

Board of directors