Marketing Economics Semester Study Guide

Question 1

opportunity cost

Answer 1

the cost or trade-offs of the next best alternative.

Question 2

four factors of production

Answer 2

1. land: natural resources
2. labor: workers
3. capital: building, equipment, money
4. entrepreneur: intellectual skills to overcome a risk to start a business

Question 3

scarcity of resources

Answer 3

unlimited wants and needs chasing limited resources. All resources are scarce.

Question 4

market economy

Answer 4

economic system where buyers and sellers interact to answer the basic economic questions. Individuals and businesses decide how to best allocate scarce resources. Market economy is also known as Free Market System or Capitalism. It offers a variety of goods and services.

Question 5

five economic questions

Answer 5

1. WHAT goods and services will be produced?
2. HOW will those goods and services be produced?
3. FOR WHOM will they be produced?
4. WHEN will they be produced
5. WHERE will they be sold?

Question 6

money

Answer 6

generally accepted as payment in exchange for goods and services. Three main functions include:

1. medium of exchange
2. store of value
3. unit of account

Question 7

function of an economic system

Answer 7

to provide an environment to produce goods and services for the population

Question 8

centrally planned or command economic system

Answer 8

all economic questions are answered by the government

Question 9

economic demand

Answer 9

the amount of supply that people are able to buy at each price exhibited by a demand line on a graph

Question 10

elasticity of demand

Answer 10

sensitivity of a quantity to a price or other determinant. Elasticity based on whether product/service is a need or want, or a luxury or a necessity.