test III: businesses, cost and output determination

Question 1

firm

Answer 1

organization that brings together factors of production to produce a product or service that it hopes to sell at a profit

Question 2

production

Answer 2

any activity that results in the conversion of resources into products that can be used in production

Question 3

labour

Answer 3

all those who work for a gain or are available to work

Question 4

capital

Answer 4

money that is available to pay for its day-to-day operations and to fund its future growth

Question 5

profit

Answer 5

difference between the revenue received and the costs of all inputs used, including opportunity costs

Question 6

labour shortage

Answer 6

inefficiency of qualified candidates for employment in an economy

reasons: retirement, immigration, change in careers or leaving unstable sectors and purpose-driven jobs
consequence: wage-push inflation

Question 7

inflation (pandemic)

Answer 7

imbalance in supply and demand

Question 8

shrinkflation

Answer 8

shrinkage in size while maintaining its sticker price

raising the price per given amount is a strategy employed by companies to boost/maintain profit margins

Question 9

perfect competition (ex.: identical products)

Answer 9

perfectly competitive market (works in theory)

Question 10

perfect competition: characteristics

Answer 10

many buyers and sellers
many subs
no transaction costs
perfect info about price
no entry conditions (start-up costs and government regulations)

Question 11

perfect competition: price

Answer 11

decisions of individuals have no effect on price
to small buyers and sellers to influence P
no control on price: price takers (market sets the price)

Question 12

perfect competition: elasticity

Answer 12

elastic demand (must increase Q to sell more): produce more for max profits

Question 13

monopoly (ex.: hydro)

Answer 13

a single supplier of a good or service for which there is no close substitute (dominant position: the company = the industry)

Question 14

monopoly: characteristics

Answer 14

no competition: set initial price (high)

no branding

Question 15

monopoly: creation

Answer 15

by the government: economies of scales, mergers or acquisitions (buys competitors)
pure monopoly
owns scarce resources

Question 16

monopoly: elasticity

Answer 16

all demand curve (must decrease price to sell

Question 17

monopolistic competition (ex.: cable tv, restaurants, hotels, etc.)

Answer 17

large number of firms produce similar but not identical products (most realistic)

Question 18

monopolistic competition: branding

Answer 18

important to differentiate marketing and ads
uniqueness (competition for the same customers)
brand names/trademarks or registered

Question 19

monopolistic competition: price

Answer 19

control over price: price makers

supply and demand model determined all P and Q changes

Question 20

ppc

Answer 20

all possible production combinations of two goods that can be produced
rational decision making

Question 21

comparative advantage

Answer 21

the ability to produce a good at a lower opportunity cost compared to other products

Question 22

specialization

Answer 22

economic actors concentrate their resources on tasks at which they are more skilled at

Question 23

specialization: benefits

Answer 23

increase in efficiency and total welfare
mutual gains
reduce the problem of scarcity
enables countries; ppc to shift outwards (growth)

Question 24

specialization: macroeconomics

Answer 24

countries often specialize in a particular idea to fulfill a global need giving them a comparative advantage over international trade competitors

Question 25

specialization: microeconomics

Answer 25

individual’s specialization within the workforce

- specific tasks that capitalize on their