Mod 1

Question 0

Market economy

Answer 0

The forces of supply and demand determine how economic questions will be answered

Question 1

Command Economy

Answer 1

An economy in which the government makes all economic decisions about how the factors of production are used

Question 2

Traditional economy

Answer 2

An economy in which economic decisions are made based on tradition

Question 3

Factors of production

Answer 3

Land labor capital entrepreneurial ability (resources)

Question 4

Resources

Answer 4

Land labor capital entrepreneurial

ability (factors of production)

Question 5

Scarcity

Answer 5

When there are not enough resources to satisfy our unlimited needs and wants

Question 6

Opportunity cost

Answer 6

The value of the next best alternative

Question 7

Production possibilities curve/frontier

Answer 7

A graphic representation of the production relationship between two goods

Question 8

Capital and consumer goods

Answer 8

Capital goods are those used in production process while consumer goods are those used by people in their day-to-day lives

Question 9

Absolute advantage

Answer 9

Able to produce a good or service more efficiently or using fewer resources

Question 10

Comparative advantage

Answer 10

Able to produce a good or service at a lower opportunity cost than another nation

Question 11

Demand

Answer 11

How much of a good or service consumers are willing and able to purchase at every price level

Question 12

Quantity demanded

Answer 12

How much of a good or service consumers are willing and able to purchase at one price level

Question 13

Law of demand

Answer 13

There is an inverse relationship between price and quantity demanded

Question 14

Income effect

Answer 14

The price of a good affects the amount of a good or service a consumer is willing and able to purchase

Question 15

Substitution effect

Answer 15

A consumer will substitute a cheaper product for a more expensive one

Question 16

Supply

Answer 16

How much of a good or service producers are willing and able to Sopot at every price

Question 17

Quantity supplied

Answer 17

How much of a good or service producers are willing and able to supply at one price level

Question 18

Law of supply

Answer 18

There is a direct relationship between price and quantity supplied

Question 19

Equilibrium

Answer 19

The intersection of two economic line such a supply and demand where quantity supplied and demanded are equal at a specific price

Question 20

Shortage

Answer 20

When quantity demanded is greater than quantity supplied

Question 21

Surplus

Answer 21

When quantity supplied is greater than quantity demand

Question 22

Price ceiling

Answer 22

When government sets a price below equilibrium (Shortage)

Question 23

Price floor

Answer 23

When government sets a price above equilibrium (Surplus)