First Exam Stuff 15%

Question 1

Specialization of Labor

Answer 1

When an organization divides its labor into several set tasks. An employee will focus on a single portion rather than multiple tasks.

Question 2

Comparative Advantage

Answer 2

The ability of an individual or group to carry out a particular economic activity (such as making a specific product) more efficiently than another activity.

Question 3

Opportunity Cost

Answer 3

The loss of potential gain from other alternatives when one alternative is chosen.

Question 4

Utility

Answer 4

A model of worth or value.

Question 5

Marginal Utility

Answer 5

The benefit gained from consuming one additional unit of a good or service.

Question 6

Diminishing Marginal Utility

Answer 6

The phenomenon that each additional unit of gain leads to an ever-smaller increase in subjective value.

Question 7

Supply

Answer 7

The amount of a resource that firms, producers, labourers, providers of financial assets, or other economic agents are willing and able to provide to the marketplace or to an individual.

Question 8

Factors that affect Supply

Answer 8

(i) Natural Conditions
(ii) Technical Progress
(iii) Change in Factor Prices
(iv) Transport Improvements
(v) Calamities
(vi) Monopolies
(vii) Fiscal Policy.

Question 9

Demand

Answer 9

The quantity of a good that consumers are willing and able to purchase at various prices during a given time. The relationship between price and quantity demand is also called the demand curve.

Question 10

Factors that affect Demand

Answer 10

Price of product.
Tastes and preferences.
Consumer’s income.
Availability of substitutes.
Number of consumers in the market.
Consumer’s expectations.
Elasticity vs. inelasticity.

Question 11

Complement good

Answer 11

A product or service that provides value to another product or service. In other words, they are two things that the customer utilizes in conjunction with one another. Cereal and milk, for example, or a DVD and a DVD player.

Question 12

Substitute goods

Answer 12

Products that could be used for the same purpose by the consumers.

Question 13

Price elasticity of demand formula

Answer 13

Percentage Change in Quantity Demanded ÷ Percentage Change in Price

Question 14

Cross price elasticity of demand

Answer 14

the percentage change in the quantity demanded of one good ÷ by the percentage change in the price of the other good

Question 15

Marginal Cost

Answer 15

The cost added by producing one additional unit of a product or service.

Question 16

Marginal Revenue

Answer 16

a central concept in microeconomics that describes the additional total revenue generated by increasing product sales by 1 unit.

Question 17

Marginal Profit

Answer 17

The increase in profits resulting from the production of one additional unit.

Question 18

Profit Maximization

Answer 18

Increasing profits by the business firms using a proper strategy to equal marginal revenue and marginal cost.