Random

Question 1

What factors affect the price elasticity of supply

Answer 1

Time
Raw materials need to be found
Availability of stocks
Ease of switching to alternative forms of production
Availability of spare capacity
Number of firms in the market (ease of entry)
Ability to alter production methods

Question 2

What are the determinants of supply

Answer 2

Price of raw materials
Tech improvements
Changes in labour productivity
Regulation and Bureaucracy
Wage rates
Subsidies
Indirect taxes
Expectations about future prices
Objectives of firms
Number of sellers

Question 3

What is the equation for price elasticity of supply equation

Answer 3

%∆ quantity supplied
_____________________
%∆ price

Question 4

Cross PeD equation

Answer 4

%∆QD Good A
_______________
%∆P Good B

Question 5

What is the equation of Income Elasticity of Demand

Answer 5

%∆ QD
________
%∆ Income

Question 6

PeD Equation

Answer 6

%∆QD
________
%∆P

Question 7

Disadvantages of price floors?

Answer 7

Surplus of the good
Inefficient use of scarce resources
Expensive to enforce
Black market
Implies equilibrium is known
Size of change determines effectiveness

Question 8

What ve does a complementary good have?

Answer 8

Negative -ve

Question 9

What ve does a strong or weak substitute have?

Answer 9

Strong substitute= big +ve

Weak substitute= small +ve

Question 10

What is disequilibrium?

Answer 10

The price at which the market supply does not equal demand

There is likely to be a further change or reaction by buyers or sellers

Question 11

What is excess supply?

Answer 11

When quantity supplied at a particular price is greater than quantity demanded

Question 12

What is a commodity

Answer 12

A good that is traded but usually refers to raw materials or semi manufactures goods that are traded in bulk

Often they are unbranded goods (homogeneous) where all firms products are indistinguishable from each other.

Question 13

What is typical of agriculture

Answer 13

Prices are volatile
External effects (drout, flood, pests)

Question 14

What is equilibrium?

Answer 14

The price at which demand is equal to supply and there is no tendency to change

Question 15

What does the term factors of production mean?

Answer 15

inputs into the production process, such as land, labour, capital and enterprise

Question 16

What does the term capital good mean

Answer 16

A good which is used in the production of other goods or services, also known as a producer good

Question 17

What does the term production mean

Answer 17

A process or set of processes, that converts inputs into output of the goods

Question 18

What is economic welfare?

Answer 18

The economic well being of an individual, a group within a society, or an economy

Question 19

What is a positive statement?

Answer 19

A statement of fact that can be scientifically tested to see if it is correct or incorrect

Question 20

What is a normative statement?

Answer 20

A statement that includes a value judgement and cannot be refuted just by looking at the evidence. It cannot be scientifically tested.

Question 21

What is the difference between a need and a want?

Answer 21

A need is something that’s necessary for human survival. A want is something that is desired.

Question 22

what’s the definition of opportunity cost?

Answer 22

the cost of giving up the next best alternative

Question 23

What is the fundamental economic problem?

Answer 23

How best to make decisions about the allocation of scarce resources among competing uses so as to improve and maximise human happiness and welfare

Question 24

What is a ppf and definition

Answer 24

production possibility frontier, a curve depicting the various combinations of two products (of types of products) that can be produced when all the available resources are fully and efficiently employed

Question 25

What is economic growth

Answer 25

the increase in the potential level of real output the economy can produce over a period of time

Question 26

What is full employment?

Answer 26

When all who are able and willing to work are employed

Question 27

Unemployment

Answer 27

When not all of those who are able and willing to work are employed

Question 28

In order from most firms in the market to least give the terms.

Answer 28

Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly

Question 29

What are the factors used to determine market structure?

Answer 29

Number of firms
Product differentiation
Ease of entry/ barriers to entry
Extent to which info/ knowledge is perfect
Influence of individual firms/suppliers on price

Question 30

What are the objectives of firms?

Answer 30

Profit maximisation
Sales maximisation
Growth maximisation
Market share maximisation
Survival
Quality
 Corporate social responsibility

Question 31

What are the features of a perfectly competitive market

Answer 31

Homogeneous good
Many small firms
Large number of buyers
Perfect knowledge
Freedom of entry and exit
All firms are price takers
Factors of production are completely mobile

Question 32

What are problems with monopolies

Answer 32

RESTRICT SUPPLY
Charge higher prices
Poor quality, no incentive to improve
Reduces consumer welfare
Productive and allocatively I inefficient
Loss of consumer welfare(consumer surplus)
Exploit consumers

Question 33

Benefits of Monopolies

Answer 33

Benefit from economies of scale, (could pass savings on)
Have the ability to research and develop, invention and innovation
Internationally competitive

Question 34

Benefits of the competitive market process

Answer 34

Choice
Quality
Lower prices
Better quality
Greater consumer welfare
Invention and innovation (incentive not means)