Test #1 Part 2

Question 1

Public goods vs. private goods

Answer 1

Public - planned, benefit group

Private - market, benefit individual

Question 2

Whats PPC

Answer 2

Production possibility curve

Question 3

Disadvantages of planned:

Answer 3

Poor planning
Lack of price mechanism (shortages, no options)
Lack of extrinsic incentives (no incentive to work)
Gov. Control/corruption

Question 4

Disadvantages of market:

Answer 4

Demerit goods abundant (heroine)
Merit goods limited (public education)
Resource depletion (cutting down forests for benefit)
Lack of social welfare
Lack of market competition (motivation for good service goes down)

Question 5

Determinants of demand

Answer 5

Income 
Price of other goods (substitute/complimentary goods)
Tastes/preferences
Size of population 
Demographic composition (age gap)
Income distribution 
Gov. policy/taxation
Seasonal changes

Question 6

Determinants of supply

Answer 6

Cost of production 
Price of other goods
State of tech 
Expectations 
Gov. policy/intervention

Question 7

Demand definition

Answer 7

Willingness and ability of consumers to purchase a good/service at a given price at given time

Question 8

Law of demand definition

Answer 8

As price falls, quantity demanded rises

Question 9

Law of supply definition

Answer 9

As price rises, quantity supplied increases

Question 10

Factors of production

Answer 10

Land
Labor
Capital
Management