Introduction to Economics

Question 1

It is the management of scarce resources

Answer 1

Economics

Question 2

[Microeconomics or Macroeconomics] Concerned with decision making by individuals

Answer 2

Microeconomics

Question 3

[Microeconomics or Macroeconomics] Examines the behavior of the economy as a whole

Answer 3

Macroeconomics

Question 4

[Positive or Normative Economics] The study of how the economy works

Answer 4

Positive Economics

Question 5

[Positive or Normative Economics] The study of how the economy should be

Answer 5

Normative Economics

Question 6

What are the fundamental economic questions (there are 3)

Answer 6

• What to produce?
• How to produce?
• For whom to produce?

Question 7

It is defined as the unlimited wants and needs but limited resources

Answer 7

Scarcity

Question 8

These decisions involve picking one thing over all the other possibilities

Answer 8

Trade-off

Question 9

It is the IDEA of taking the opportunity to have something, but in order to get that thing, you have to give up, or sacrifice something else

Answer 9

Trade-off

Question 10

These decisions involve picking the value of the next best choice. The SPECIFIC THING you give up when you make a choice. It’s the value of the next best alternative that you didn’t choose.

Answer 10

Opportunity cost

Question 11

A schedule or 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 of time,

Answer 11

Demand

Question 12

A good where when an individual’s income rises, they buy more of that good

Answer 12

Normal goods (eg. jewelry)

Question 13

A good where when an individual’s income rises, they buy less of that good.

Answer 13

Inferior goods (eg. instant food)

Question 14

A good that serves the same purpose as another good

Answer 14

Substitute good

Question 15

A good that adds value to another good when they are consumed together

Answer 15

Complementary good

Question 16

When people expect the price is something to rise in the future, they tend to buy those products more, increasing demand for those goods

Answer 16

Consumer expectations (eg. rare collectibles like paintings, figurines, etc.)

Question 17

The quantity supplied of any good or service is the amount that sellers are WILLING AND ABLE to sell

Answer 17

Supply

Question 18

This law states that as the price increases, the quantity demanded decreases. THE PRICE IS THE INDEPENDENT VARIABLE. THE QUANTITY DEMANDED IS THE DEPENDENT VARIABLE.

Answer 18

Law of Demand

Question 19

This law states that when the price of a good rises, the quantity supplied of the good also rises. Meanwhile, when the price falls, the quantity supplied falls as well.

Answer 19

Law of Supply

Question 20

“all other things being equal” or “holding other things constant.”

Answer 20

ceteris paribus

Question 21

Refers to an entire demand curve or the general relationship between price and the quantities consumers are willing to buy

Answer 21

Demand

Question 22

Refers to a quantity associated with a particular price

Answer 22

Quantity demanded

Question 23

Occurs at the intersection of the market supply and market demand curves. At this intersection, quantity demanded equals quantity supplied

Answer 23

Market Equilibrium

Question 24

What is the linear demand equation?

Answer 24

Qd=a−bP