Rational Decsion Making - T1

Question 1

What is economic welfare

Answer 1

The level of well-being/prosperity/living standard of individual/ group

Question 2

What is Utility

Answer 2

The satisfaction derived from consuming a product

Question 3

What is effective demand

Answer 3

Shows how much of a certain product would be bought at any given price over a given period

Question 4

What is a want

Answer 4

Desire

Often infinite and unaffordable

Question 5

What is demand

Answer 5

Goods and service people want and have the money and desire to purchase

Question 6

What is a normal good

Answer 6

Demand rises when income of population rises

Question 7

What is an inferior good

Answer 7

A good that falls in demand when the income of the population increases

Question 8

What’s is the law of diminishing marginal utility

Answer 8

It explains that the pleasure derived from consuming the first product is the greatest and will always decrease with further consumption

Question 9

Price elasticity of demand

Answer 9

Is the responsiveness of change in quantity demanded to changes in price

Question 10

Demand Inelastic

Answer 10

Quantity demanded changes by smaller % than price 0

Question 11

Unitary elasticity

Answer 11

Quantity demanded changes by the same % as price

Question 12

Demand Elastic

Answer 12

Quantity demanded changes by larger % than price

x>1

Question 13

Inelastic product

Answer 13

If the co-efficient of the demand curve is <1, a rise in market price will lead to and increase in revenue

Question 14

Elastic product

Answer 14

The change in quantity is greater than the change in price

Question 15

Income elasticity of demand

Answer 15

Is the responsiveness of change in quantity demanded changes in income.

Question 16

If the YED is negative what does that mean

Answer 16

Inferior good

Question 17

what is the co-efficient of

Normal, Luxury And inferior goods

Answer 17

Normal - steep positive
Luxury- positive but less steep
Inferior- negative