How markets work

Question 1

what is the definition of supply

Answer 1

Quantity of a good or service that all firms plan to sell

Question 2

how do you define demand?

Answer 2

Measures the extent to which the demand for a good changes in response to a change in price

Question 3

Equilibrium

Answer 3

Where supply and demand meet

Question 4

Factors of Production

Answer 4

Land, Labour, Capital, Enterprise

Question 5

PPF

Answer 5

A curve depicting the various combinations of two products that can be produced when all resources are fully employed

Question 6

Positive statement

Answer 6

Statements that can be proven

Question 7

Normative statement

Answer 7

Statements that are based on value judgement

Question 8

Opportunity cost

Answer 8

The cost of giving up your second option

Question 9

Income elasticity

Answer 9

% change in income

Question 10

Price elasticity of demand

Answer 10

% change in price

Question 11

Cross elasticity of demand

Answer 11

% change in price of product B

Question 12

Elasticity of supply

Answer 12

% change in price

Question 13

Shortage

Answer 13

Below equilibrium, not enough

Question 14

Surplus

Answer 14

Above equilibrium, too much

Question 15

Ceteris Paribus Assumption

Answer 15

When looking at demand for one firm, freezes all factors but one

Question 16

Productive efficiency

Answer 16

Occurs when it is impossible to produce more of one good without producing less of another

Question 17

Allocative efficiency

Answer 17

When the available economic resources are used to produce the combination of goods and services that best matches people’s preferences.

Question 18

Shifting curve to the left

Answer 18

When the demand goes down

Question 19

Shifting curve to the right

Answer 19

When the demand goes up