Marketing Unit 5 Test Flashcards
What is economics the study of?
The study of people and choices
What is opportunity cost?
The value of the next best alternative (whatever you are giving up)
What is scarcity?
The tension between infinite wants and limited resources
How do government officials use economic theory?
To guide public policy
What are incentives?
A set of external motivations
What is the difference between macroeconomics and microeconomics?
Macroeconomcs studies on a nationwide scale and microeconomics studies how consumers and firms react to certain things in individual markets
What is a market?
A place where buyers and sellers meet to exchange goods and services
What are price signals?
information that markets generate to guide the distribution of resources
What happens when price goes up?
People buy less
What happens when price goes down?
People buy mors
What is equillibrium?
When quantity supplied=quantity demanded
What are the four market behaviors?
Supply can decrease/increase
Demand can decrease/increase
What are the two states of disequillibrium?
Surplus- Quantity supplied is higher than quantity demanded
Shortage-Quantity demanded is higher than quantity supplied
What are the five shifters of demand?
1.Tastes/preferences
2.Number of consumers
3.Price of related goods (complimentary and substitutes)
4.Income
5.Expectations
What is an inferior good?
A good that when income decreases demand increases (ramen)
