Unit 1

Question 1

Factors of production

Answer 1

Land labor capitol and entrepreneurship

Question 2

Capital

Answer 2

Machines, tools, and factories

Question 3

Microeconomics

Answer 3

Choices made by individuals households and etc. that make up the whole economy

Question 4

Macroeconomics

Answer 4

Focuses on the whole economy of a nation
Aggregate
Government is often a key player

Question 5

Positive economics

Answer 5

describes the way economy works

Question 6

Normative economics

Answer 6

Prescription on how the economy should work

Question 7

Scarcity

Answer 7

A short supply or shortage

Question 8

Opportunity cost

Answer 8

Things given up when a choice is made like money, time, etc.

Question 9

Production possibilities

Answer 9

A simplified representation of reality that shows the importance of trade offs in analysis

Question 10

Absolute advantage

Answer 10

Out produce given factors of production

Question 11

Comparative advantage

Answer 11

Opportunity cost of producing the good is lower

Question 12

Specialization

Answer 12

Concentrating on producing a specific good as it is the best economic option

Question 13

Fair terms of trade

Answer 13

Negotiating the price of goods exchange based on the two opportunity costs

Question 14

Law of Demand

Answer 14

The price of a good and the quantity demanded have an inverse relationship

Question 15

Quantity demand

Answer 15

A total amount of a good or service that consumers demand over a period of time

Question 16

Substitutes

Answer 16

A product or service that consumers see as essentially the same or similar enough to the product

Question 17

Complements

Answer 17

Goods that are consumed together

Question 18

Normal goods

Answer 18

Good that experiences an increase in its demand due to a rise in consumers income

Question 19

Inferior goods

Answer 19

A good that demand drops when income rises

Question 20

Law of supply

Answer 20

All other factors being equal, as a good price increases, the quantity will increase

Question 21

Quantity supplied

Answer 21

The number of goods or services that suppliers will produce and sell at a given market price

Question 22

Market Equilibrium

Answer 22

Achieved at the intersection of demand and supply

Question 23

Surplus

Answer 23

An amount of something left over when requirements have been met

Question 24

Shortage

Answer 24

The supply of a good does not meet the demand

Question 25

Price ceiling

Answer 25

An imposed price limit on how high a price is charged for a product

Question 26

Price floor

Answer 26

Imposed price limit for how low a price of a good can be

*must be higher than the equilibrium price to be effective