Econ

Question 1

Principle 1

Answer 1

people face trade offs

Question 2

principle 2

Answer 2

cost of something is what you give up to get it

Question 3

principle 3

Answer 3

rational people think at the margin

Question 4

principle 4

Answer 4

people respond to incentives

Question 5

principle 5

Answer 5

Trade can make everyone better off

Question 6

principle 6

Answer 6

markets are usually a good way to organize economic activity

Question 7

principle 7

Answer 7

Governments can sometimes improve market outcomes

Question 8

principle 8

Answer 8

a countries standard of living depends on its ability to produce goods and services

Question 9

principle 9

Answer 9

prices rise when the government prints to much money

Question 10

principle 10

Answer 10

society faces a short tradeoff between inflation and un-employment

Question 11

what affects quantity supplied?

Answer 11

Price of good itself changes

Question 12

What affects quantity demand supplied?

Answer 12

Price of the good has changed

Question 13

What affects demand?

Answer 13

price of good, income, prices of relative goods, expectations , number of buyers, tastes

Question 14

what affects Supply?

Answer 14

input prices, tech, number of sellers, expectations, price of related goods

Question 15

what affects price?

Answer 15

Supply and demand in the market

Question 16

what makes the demand curve shift to left

Answer 16

decrease in income, price of related goods, Tastes and preferences, population and demographics, expectations

Question 17

what makes demand curve shift right?

Answer 17

increase in income, price of related goods, Tastes and preferences, population and demographics, expectations

Question 18

what makes supply curve shift right?

Answer 18

increase in tech, price of related goods, state of nature(cold weather-> buy coat), expectations, number of sellers, (decrease input price)

Question 19

what makes supply curve shift left?

Answer 19

decrease in tech, price of related goods, state of nature (EX: covid), expectations, number of sellers, (increase) input prices

Question 20

what is equilibrium price

Answer 20

the price when the supply curve and demand curve intercept

Question 21

what is the EQN of marginal benefit

Answer 21

Total revenue/ Output

Question 22

What is the EQN of marginal cost

Answer 22

Total cost/ output

Question 23

What is a substitute

Answer 23

When the price of a substitute increases, demand shifts up
When the price of a substitute decreases, demand shifts down
EX:coke pepsi

Question 24

what is a compliment item

Answer 24

Complements are two goods for which an increase in the price of one leads to a decrease in the demand for the other;
When the price of a complement increases, demand shifts down
When the price of a complement decreases, demand shifts up
EX:cream and sugar

Question 25

Equilibrium quantity change

Answer 25

The quantity supplied and the quantity demanded at the equilibrium price. I The quantity where the demand curve intersects the supply cur

Question 26

absolute advantage

Answer 26

- the ability of an induvial to produce more of a good or service than competitors, using the same amount of resources The ability to produce the same amount of goods with fewer resources

Question 27

comparative advantage

Answer 27

- The ability of an individual to produce a good or service at a lower opportunity cost than competitive Comparison among producers of a good or service according to their opportunity cost

Question 28

What happens when there is a surplus

Answer 28

A situation in which quantity supplied is greater than quantity demanded. I Surpluses exist at any price above the market clearing price. I Sellers will compete amongst themselves, driving the price dow

Question 29

what happens when there is a shortage

Answer 29

A situation in which quantity demanded is greater than quantity supplied. I Shortages exist at any price below the market clearing pric

Question 30

What makes changes in market equilibrium?

Answer 30

Equilibrium may shift due to changes in the variables that affect supply and demand, Happens in most markets from time to time Supply and demand in equilibrium can occur simultaneously, To analyze changes in equilibrium: Determine whether the events are shifting supply or demand curve(or both), Determine the direction of the shift, Use the diagram to observe how the shift changes equilibrium price and quantity