Key Assessment 2

Question 1

can be tested and verified and is not based on a value judgment

Answer 1

Positive statement

Question 2

Cannot be tested or verified and is based on a value judgment

Answer 2

Normative statement

Question 3

Allow people to freely exchange goods and services according to supply and demand

Answer 3

Market economy

Question 4

Decisions on what, how and for whom to produce are made partly by the private sector and partly by the government

Answer 4

Mixed economy

Question 5

Government controls the production level, pricing, distribution

Answer 5

Command economy

Question 6

The quantity of good or services that consumers are willing and able to buy at a given price at a given time period.

Answer 6

Demand

Question 7

There is a negative relationship between price and quantity demanded. If price goes up, QD decreases and vice versa. Assuming ceteris paribus

Answer 7

Law of demand

Question 8

The quantity of a good or services that producers are willing and able to buy at a given price at a given time period.

Answer 8

Supply

Question 9

There is a positive relationship between the price and quantity supply. If price goes up QS also increases, and vice versa. Assuming ceteris paribus.

Answer 9

Law of supply

Question 10

The responsiveness of quantity demanded to a change in price

Answer 10

Cross elastic demand

Question 11

The responsiveness of quantity supply to a change in price

Answer 11

Price elasticity of supply

Question 12

Substitute goods

Answer 12

Positive

Question 13

Complement goods

Answer 13

Negative

Question 14

XED < 1

Answer 14

Elastic

Question 15

XED > 1

Answer 15

Inelastic

Question 16

XED = 0

Answer 16

Perfectly price elastic

Question 17

P A S I F I C

Answer 17

Population, advertising, substitute prices, income, fashion/taste, interest rate, complement prices

Question 18

P I N T S W C

Answer 18

Population, indirect tax, no. of firms, technology, subsidy, weather, cost of production