The Allocation of Resources

Question 1

Complimentary goods

Answer 1

goods that are purchased to support the consumption of another good

Question 2

Contraction in demand

Answer 2

Movement along the demand towards the left that shows an increase in price but a decrease in the quantity of goods demanded

Question 3

Contraction in supply

Answer 3

movement along the supply curve towards the left that indicates a fall in the price of a product and a fall in the quantity the producers are willing to supply

Question 4

Demand

Answer 4

The quantity of goods that the consumers are willing and able to buy in a particular period of time at a particular price

Question 5

Diminishing marginal utility

Answer 5

Consumption of additional units of a product that reduces the satisfaction each time the product is consumed

Question 6

Elasticity

Answer 6

the responsiveness of quantity supplied or demanded to a change in the price of the good

Question 7

Equilibrium

Answer 7

A point where the demand curve intersects with the supply curve

Question 8

Excess demand

Answer 8

Quantity demanded in more than the quantity supplied

Question 9

Excess supply

Answer 9

Quantity supplied is more than the quantity demanded

Question 10

Extension in demand

Answer 10

a movement along the demand curve where the price decreases and the quantity demanded increases

Question 11

External costs

Answer 11

cost of production that have to paid by someone other than the firm or the individual responsible for the harm

Question 12

External beneifts

Answer 12

benefit due to the production of a good or service that benefit someone other than the firm or the indidual

Question 13

Individual demand

Answer 13

the quantity of a good an individual would be willing and able to buy at a particular price during a period of time

Question 14

Inferior goods

Answer 14

These goods whose demand decreases as the income of the consumer increases

Question 15

Marginal utility

Answer 15

the additional satisfaction gained from the consumption of an extra unit of a product.

Question 16

Market demand

Answer 16

the summation of all individual demand that gives the market demand for a product

Question 17

Price Elastic Demand

Answer 17

a % change in price results in greater % change in quantity demanded.

Question 18

Price inelastic demand:

Answer 18

a % change in price results in smaller % change in quantity demanded.

Question 19

Price elastic supply:

Answer 19

a % change in price results in greater % change in quantity supplied.

Question 20

Price inelastic supply:

Answer 20

a % change in price results in smaller % change in quantity supplied.

Question 21

Private costs

Answer 21

the costs that a company or individual has to pay for production

Question 22

Private benefit

Answer 22

the benefit experienced by an individual or a company after production normally the profits earned

Question 23

Social costs

Answer 23

private costs + external costs

Question 24

Social benefits

Answer 24

Private benefits + external benefits

Question 25

Substitute good

Answer 25

good that can be used as an alternative for another good

Question 26

Supply

Answer 26

the quantity of goods a producer is willing and able to supply at a particular price during a period of time

Question 27

Unitary elasticity

Answer 27

% change in price results equal % change in quantity demanded or supplied.

Question 28

Utility

Answer 28

the satisfaction gained by consuming a product