Quiz 1 Flashcards
What are opportunity costs?
Opportunity costs are defined as ‘the cost of an alternative that must be forgone in order to pursue a certain action’. For example, instead of doing this quiz, I could be working and earning 50 Euros. So, the opportunity costs for doing this quiz are 50 Euros.
What may cause a supply curve to SHIFT (to be clear, not a slope change but a shift)?
The supply curve can shift due to various reasons. For example an increase in costs for raw materials/productions costs, technological progress, market competition and taxes.
What determines the slope of a supply curve?
The slope of the supply curve refers to the rate of change of the price on the x-axis and the amount on the y-axis. In most cases, the supply curve has a positive slope, as when the price increases, the quantity supplied also increases, provided all other factors remain the same.
What may cause a demand curve to SHIFT (to be clear, not a slope change but a shift)?
Several reasons may affect the demand curve. For example, a change in income, in preference or in price of a product.
What determines the slope of the demand curve?
The slope reflects the price elasticity of demand and the higher the price elasticity of demand, the flatter the demand curve.
