2.2 The Role of Markets in Allocating Resources

Question 1

Define Resource allocation

Answer 1

The way in which economies decide what/how/whom to produce goods and services (for)

Question 2

What are the 3 basic economic questions?

Answer 2

• What to produce?
• How to produce?
• Whom to produce for

Question 3

Define a market

Answer 3

Any set of arrangement that brings together all the producers and consumers of a good or service, so they may engage in exchange

Question 4

When are goods and services bought and sold at an equilibrium price?

Answer 4

When demand and supply are equal