Chapter 1-7

Question 1

List Factors of Production

Answer 1

Land
Labour
Entrepreneurship
Capital

Question 2

Demand

Answer 2

Quantity of a good or service consumers are willing and able to purchase at different price levels in a given period of time

Question 3

Supply

Answer 3

The quantity of a good or service that producers are willing and able to supply at different prices in a given time period

Question 4

Definition of PED

Answer 4

A measure of how much the demand for a product changes when there is a change in the price of the product

Question 5

Definition of PES

Answer 5

A measure of how much the supply of a product changes when there is a change in the price of a product

Question 6

Definition of YED

Answer 6

A measure of how much the demand for a product changes when there is a change in the consumer’s income

Question 7

Equation for PED

Answer 7

% ± in quantity demanded of the product / % ± in price of the product

Question 8

Equation for PES

Answer 8

% ± in quantity supplied of the product / % ± in price of the product

Question 9

Equation for YED

Answer 9

% ± in quantity demanded of the product / % ± in the income of the consumer

Question 10

Utility

Answer 10

The satisfaction or usefulness that a product provides for a consumer

Question 11

Surplus

Answer 11

When there is an abundance of a good

Question 12

Shortage

Answer 12

When there is not enough supply to meet demand

Question 13

Inferior Goods

Answer 13

Considered a cheap product or a knock off from a high quality brand

Question 14

Necessity Goods

Answer 14

Products that have low income elasticity. The demand for them will change very little if income increases

Question 15

Superior Goods

Answer 15

Goods that have high income elasticity. The demand for them changes significantly as income rises

Question 16

Normal Goods

Answer 16

A type of a good which experiences an increase in demand due to an increase in income

Question 17

Prime Commodities

Answer 17

The term for raw materials such as cotton and coffee, that have a relatively inelastic demand

Question 18

Consumer Surplus

Answer 18

An economic measurement of consumer benefits resulting from market competition

Question 19

Producer Surplus

Answer 19

The total amount that a producer benefits from producing and selling a quantity of a good at the market price

Question 20

Market Equilibrium

Answer 20

A state of rest, self perpetuating in the absence of any outside disturbance

Question 21

Short Run

Answer 21

The time it takes to increase one FOP

Question 22

Long Run

Answer 22

The time it takes to resolve all FOP

Question 23

Definition of PPC

Answer 23

The Production Probability Curve (PPC) is the opportunity cost between two goods

Question 24

Opportunity Cost

Answer 24

when you give something up in order to have something else (“trade-off”)

Question 25

Positive Economics

Answer 25

Economics based on facts and previous examples / The objective analysis in the study of economics

Question 26

Normative Economics

Answer 26

How things should be done

Question 27

Goods

Answer 27

Items of physical substance that add some kind of benefit to the lives of the people who consume them

Question 28

Service

Answer 28

An act or use for which a consumer, firm, or government is willing to pay

Question 29

Fake good

Answer 29

Are Goods without scarcity (is this right?)

Question 30

Economic Goods

Answer 30

Are goods with scarcity and opportunity cost

Question 31

Primary Sector

Answer 31

Industries that extract raw materials - Primary products are created from this sector

Question 32

Secondary Sector

Answer 32

Industries that take primary products and use them to make producer goods

Question 33

Tertiary Sector

Answer 33

Industries that provide services or intangible products

Question 34

Subsidy

Answer 34

a sum of money granted by the government to help an industry keep the price of a commodity or service low.

Question 35

Indirect Tax

Answer 35

a tax on consumer products that provide revenue for governments

Question 36

Indirect tax: specific tax

Answer 36

a fixed tax that is imposed upon a product

Question 37

merit good

Answer 37

a merit good is a good which when consumed provides external benefits, these may not always be recognised, meaning the good is under-consumed.