Micro

Question 1

What Is The Basic Economic Problem

Answer 1

Everyone Has unlimited needs and wants but there are limited resources so not every demand can be reached

Question 2

What Are The 3 Types Of Markets

Answer 2

1) Free Market ( e.g. USA)
2) Mixed Economy (e.g. UK)
3) Planned Economy (e.g. Russia)

Question 3

What Happens If There Is A Change In Price

Answer 3

A change in price of a product causes a movement along the curve.

Question 4

What Causes A Shift In The Demand Graph

Answer 4

1) Change in price of a substitute
2) Change in price of a compliment
3) Seasonality
4) Population
5) Income
6) Interest Rates
7) Advertising

Question 5

What Causes A Shift In The Supply Curve

Answer 5

1) Wages
2) Materials
3) Taxes / Subsidies
4) Food
5) Technology

Question 6

What Is A Supply Curve

Answer 6

The amount that firms are willing to supply at a given price

Question 7

What Does Price Elasticity Of Demand Mean

Answer 7

The responsiveness of demand to changes in price.

Question 8

What is the formula for Elasticity

Answer 8

%Change In Quantity Demanded
PED = ——————————————————–
% Change In Price

Question 9

What Is Ceteris Paribus

Answer 9

Everything is always Equal.

Question 10

What is the meaning of “Time Period”

Answer 10

The longer the time under consideration a more elastic product is likely to be.

Question 11

What does Habit Forming Mean?

Answer 11

Getting addicted to something for example Drugs, Alcohol and Cigarettes.

Question 12

Formula for Elasticity Of Supply

Answer 12

% Change In Price

Question 13

Meaning of Elasticity of supply.

Answer 13

How responsiveness supply is when price is changed.

Question 14

What does Inelastic Supply Mean

Answer 14

If the product is Inelastic then the change in price wouldn’t considerably affect supply

Question 15

What does Elastic Supply Mean

Answer 15

A change in price would lead to a high change in supply

Question 16

Name Some Factors That Effect Elasticity Of Supply

Answer 16

Spare Production Capacity
Stocks of finished products and components
Cost of Factor substitution
Time Period and Production Speed

Question 17

Income Elasticity Of Demand

Answer 17

The Responsiveness of demand to changes in Income

Question 18

Formula For Inelasticity Of Demand

Answer 18

% Change In Income

Question 19

What is a Normal Good

Answer 19

Demand Rises as income rises and vise versa

Question 20

What is a Inferior Good

Answer 20

Demand Falls as income rises and vise versa

Question 21

What does cross elasticity of demand mean?

Answer 21

The Responsiveness Of Demand(A) In A Change In Price(B)

OR The responsiveness of good A when the price goes up For Price B

Question 22

What Does a Normative Statement Mean

Answer 22

Those Which Give Value Based And Involve Options

Question 23

What Does a Positive Statement Mean

Answer 23

A Statement Which Can Be Supported With Evidence and Facts

Question 24

What Does PPF Mean

Answer 24

Production Possibility Frontier - the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite resources

Question 25

What is Specialization

Answer 25

A Method of production whereby an entity focuses on the production of a limited scope of goods