demanding and supplier

Question 1

Three core economic issues / basic economic problems of a society or a nation: 3

Answer 1

1 WHAT TO PRODUCE 2 HOW TO PRODUCE 3 FOR WHOM TO PRODUCE

Question 2

Economic Systems 3

Answer 2

Traditional, Command, Market

Question 3

Decisions are based on traditions and practices upheld over the years and passed on from generation to generation.

Answer 3

Traditional economy

Question 4

Backward civilizations, stagnant economy, not progressive

Answer 4

Traditional economy

Question 5

Authoritative system wherein decision making is centralized in the government or a planning committee.

Answer 5

Command economy

Question 6

Decisions are imposed on the people on what goods to produce

Answer 6

Command economy

Question 7

Based on the working of demand and supply

Answer 7

Market Economy

Question 8

People preferences are reflected in the price they are willing to pay in the market and are therefore the basis of producers’ decision on what goods to produce or service to provide.

Answer 8

Market Economy

Question 9

Profit motive

Answer 9

the Invisible Hand

Question 10

Prices send signals to producers and consumers

Answer 10

The price mechanism

Question 11

Competition makes the price system work

Answer 11

Pure competition

Question 12

The invisible hand, according to ?, determines what gets produced, how and for whom.

Answer 12

Adam Smith

Question 13

Determines what gets produced, how and for whom

Answer 13

The Invisible Hand

Question 14

It is a characterization of how the markets work.

Answer 14

The Invisible Hand

Question 15

The Invisible Hand Also called the ?

Answer 15

market mechanism

Question 16

It is the use of market prices and sales to signal desired outputs (or resource allocations)

Answer 16

market mechanism

Question 17

A place or situation where an economic exchange occurs, where a buyer and seller interact.

Answer 17

Market

Question 18

2 Basic Market

Answer 18

Factor & Product

Question 19

Any place where factors of production (e.g. land, labor, capital) are bought and sold

Answer 19

Factor market

Question 20

Any place where finished goods and services (products) are bought and sold

Answer 20

Product market

Question 21

Even though individuals are free to make economic decisions, ? INFLUENCE those decisions.

Answer 21

Market Forces

Question 22

The three major market forces are:

Answer 22

1. Supply and Demand 2. Profit 3. Competition

Question 23

Is a schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period.

Answer 23

Demand

Question 24

Shows the quantities of a product that will be purchased at various possible prices, all other things equal (ceteris paribus)

Answer 24

Demand

Question 25

Is an expression of consumer buying intentions, of a willingness to buy, not a statement of actual purchases.

Answer 25

Demand

Question 26

All other related factors or determinants for change are being held constant in order to focus on the relationship of two certain factors (e.g. price and quantity), without being confused by changes of other variables.

Answer 26

Ceteris paribus

Question 27

All else is equal, as price falls, the quantity demanded rises, and as price rises, the quantity demanded falls.

Answer 27

Law of Demand

Question 28

Determinants of Demand (Six variables that influence Qd)

Answer 28

Price of good or service (P), Incomes of consumers (M), Prices of related goods & services (PR), Taste Patterns of Consumers (T), Price Expectations (Pe), Number of consumers in market (N)

Question 29

How much consumers are willing to pay as a function of quantity or for every change in quantity

Answer 29

Inverse Demand Function

Question 30

Indicates that a lower price increases the purchasing power of a buyer's money income.

Answer 30

Income Effect

Question 31

Enables the buyer to purchase more of the product than he can buy before.

Answer 31

Income Effect

Question 32

Suggests that at a lower price, buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive

Answer 32

Substitution effect

Question 33

Is a shift of the demand curve to the right (an increase in demand) or to the left (a decrease in demand).

Answer 33

Change in demand

Question 34

Occurs when one of the other variables, or determinants of demand, changes

Answer 34

Change in demand

Question 35

Is a movement from one point to another point on a fixed demand curve.

Answer 35

Change in quantity demanded

Question 36

Occurs when price changes

Answer 36

Change in quantity demanded

Question 37

As ? increases, demand for goods increases

Answer 37

Income

Question 38

Products whose demand varies directly with money income.

Answer 38

Normal goods

Question 39

Normal goods Also known as ?

Answer 39

superior goods

Question 40

A good for which an increase (decrease) in income leads to an increase (decrease) in the demand for that good.

Answer 40

Normal goods

Question 41

Goods whose demand varies inversely with money income

Answer 41

Inferior goods

Question 42

A good for which an increase (decrease) in income leads to a decrease (increase) in the demand for that good.

Answer 42

Inferior goods

Question 43

Change in the price of related goods may either increase or decrease the demand for a product, depending on whether the related good is a substitute or complimentary good

Answer 43

Price of related goods

Question 44

Is one that can be used in place of another good

Answer 44

Substitute

Question 45

Is one that is used together with another good

Answer 45

Complimentary good

Question 46

A favorable change in consumer taste for a product means demand for the product increases at constant price

Answer 46

Taste Patterns of Consumers

Question 47

Changes in expectations may shift demand

Answer 47

Consumer Expectations

Question 48

Expected price increase, increases demand for it may cause consumers to buy now to beat the anticipated price rise

Answer 48

Consumer Expectations

Question 49

Expectation on product availability (shortage) may cause increase in demand.

Answer 49

Consumer Expectations

Question 50

Expectation concerning future income results in direct change in demand.

Answer 50

Consumer Expectations

Question 51

Expected lower income may prompt buyer to cut spending, thus lowering demand for a product.

Answer 51

Consumer Expectations

Question 52

An increase in the number of buyers in a market increases demand.

Answer 52

Population

Question 53

A decrease in the number of buyers decreases demand.

Answer 53

Population