Intro to Econ

Question 1

Natural Resources

Answer 1

all of the “gifts of nature” that make production possible

examples: water, timber, oil

Question 2

Labor aka Human Resources

Answer 2

physical and mental efforts that people contribute to the production of goods and services
examples: mental and physical exertion

Question 3

Capital/Capital Goods

Answer 3

tools, machinery, and goods used to make other things

examples: money and equipment

Question 4

Entrepreneurs

Answer 4

individuals who start new businesses, introduce new products, and improve management techniques

Question 5

Factor Market

Answer 5

resources that businesses use to purchase, rent, or hire what they need in order to produce goods or services. Those needs are the factors of production, which include raw materials, land, labor, and capital.

Question 6

Command Economy

Answer 6

a centralized government controls the means of production and determines output levels.
Command economies stand in contrast to free-market economies, those in which the law of supply and demand determines output and prices.

Question 7

Product Market

Answer 7

something that is referred to when pitching a new product to the general public.
Product market definition focuses on a narrow statement: the product type, customer needs (functional needs), customer type, and geographic area.

Question 8

Demand

Answer 8

an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service.

Question 9

Substitutes

Answer 9

a product or service that consumers see as essentially the same or similar-enough to another product.

Question 10

Specialization

Answer 10

the process of an organization concentrating its labor and resources on a certain type of production to be more efficient and create a comparative advantage for an economy.

Question 11

Mixed Economy

Answer 11

consists of both private and government/state-owned entities that share control of owning, making, selling, and exchanging good in the country.

Question 12

definition of economics

Answer 12

branch of knowledge concerned with the production, consumption, and transfer of wealth

Question 13

examples and definition of inelastic goods

Answer 13

Inelastic means that when the price goes up, consumers’ buying habits stay about the same, and when the price goes down, consumers’ buying habits also remain unchanged.
Ex:
goods that need a lot of money to increase production like oil.

Question 14

What occurs when consumers are willing to pay more money for a product?

Answer 14

A consumer surplus occurs when the consumer is willing to pay more for a given product than the current market price. Many producers are influenced by consumer surplus when they set their prices.

Question 15

What are durable goods?

Answer 15

goods not for immediate consumption and able to be kept for a period of time.
automobiles, furniture, household appliances, and mobile homes

Question 16

What are government subsidies? How do they impact supply?

Answer 16

A subsidy is a direct or indirect payment to individuals or firms, usually in the form of a cash payment from the government or a targeted tax cut
increases the overall supply of that good or service

Question 17

What are complementary goods?

Answer 17

a product or service that adds value to another. In other words, they are two goods that the consumer uses together. For example, cereal and milk, or a DVD and a DVD player.

Question 18

Define demand and explain what impacts demand in economics.

Answer 18

As demand increases, the available supply also decreases.

The demand for a good depends on several factors, such as price of the good, perceived quality, advertising, income, confidence of consumers and changes in taste and fashion.

Question 19

Define economic trade offs and provide an example.

Answer 19

the term trade-off is often expressed as opportunity cost. A trade-off involves a sacrifice that must be made to obtain a desired product or experience.

Question 20

Why are price ceilings placed on products?

Answer 20

the mandated maximum amount a seller is allowed to charge for a product or service—be it housing, prescription drugs, or auto insurance. It keeps things affordable and prevents price-gouging or producers/suppliers from taking unfair advantage of them.

Question 21

What type of economic system does the United States currently have?

Answer 21

The U.S. is a mixed economy, exhibiting characteristics of both capitalism and socialism.

Question 22

What is the difference between price ceilings and price floors?

Answer 22

A price ceiling keeps a price from rising above a certain level (the “ceiling”), while a price floor keeps a price from falling below a given level (the “floor”).

Question 23

How is specialization used in economics?

Answer 23

Specialization in business involves focusing on one product or a limited scope of products so as to become more efficient. Specialization can increase productivity and provide a comparative advantage for a firm or economy.

Question 24

What is productivity? How can an employer increase productivity?

Answer 24

how much work is accomplished in a particular work environment, over a particular period of time.
encourage and invest in training and motivation. specialization. when focusing on one thing it makes it easier to focus on j one thing. division of labor

Question 25

Why are price floors placed on products?

Answer 25

Price floors prevent a price from falling below a certain level creating surpluses by fixing the price above the equilibrium price.

to ensure that the market price of a item does not fall below a level that would threaten the financial existence of producers of the item.

Question 26

What is economic utility? How can this idea impact demand?

Answer 26

the ability of a good or service to satisfy a customer’s needs or wants; the five kinds of economic utility are form utility, time utility, place utility, information utility and possession utility(value)

it directly influences the demand, and therefore price, of that good or service

Question 27

Why is scarcity an important part of economic decisions?

Answer 27

Scarcity results in consumers having to make decisions on how best to allocate resources in order to satisfy all basic needs and as many wants as possible.

Question 28

How are capital and labor connected as factors of production?

Answer 28

To produce effectively, labor must be supplied with materials to work upon, and be aided by shelter, tools, machinery, and other productive appliances. All of these require capital, that is, an accumulation of previous earnings.

Question 29

What is price equilibrium? Where is this information found on curves?

Answer 29

The equilibrium price is where the supply of goods matches demand. When a major index experiences a period of consolidation or sideways momentum, it can be said that the forces of supply and demand are relatively equal and the market is in a state of equilibrium.

Question 30

What occurs to the supply of food if a winter freeze or drought impacts the crops?

Answer 30

Consumers may expect to see higher prices for local food as farmers cope with lower yields and higher expenses. Limited water availability for washing produce may lead to sanitation and health issues for consumers.

Question 31

Define opportunity cost and provide an example.

Answer 31

Opportunity cost, refers to money that could be earned (or lost) by choosing a certain option. For example, you purchased $1,000 in new equipment to manufacture backpacks, your number one product. That is a sunk cost.

Question 32

Difference between trade-off and opportunity cost

Answer 32

Trade-off implies the exchange of one thing to get the another. Opportunity cost implies the value of choice foregone, to get something else

Question 33

what are elastic goods?

Answer 33

Producers offer many more goods as prices rise. Ex: goods that require
little investment/money to increase production like candy.

Elastic goods are goods that have a significant change in demand or supply in response to a change in price. Generally, these are goods that are not considered necessities, or goods for which there are substitutes readily available