Section 1

Question 1

Economics

Answer 1

Can’t have all your wants but can have some

- $ lead to jobs and jobs lead to $

Question 2

examples of resources

Answer 2

time, skills, and education

Question 3

scarcity

Answer 3

dont have enough resources to get our wants

- scarcity=choices

Question 4

land

Answer 4

natural resources

Question 5

labor

Answer 5

human

Question 6

capital

Answer 6

anything produced that aids in the production of something else

Question 7

entrepreneurial ability

Answer 7

management

Question 8

resource market

Answer 8

how much we get since we provide our resources

- households sell business buys

Question 9

product market

Answer 9

business sells, households buy

Question 10

law of demand

Answer 10

when there is a inverse relationship between price and quantity demanded

Question 11

determinant of quantity demanded

Answer 11

• price (law of demand)
• increase in prices decreases the quantity demanded
• decrease in price increases the quantity demanded

Question 12

non-price determinants of demand

Answer 12

TASTES

• increase in the taste or preference for a good or service increases the demand for the good or service (shift right)
• decreases in the taste or preference for a good or service decreases the demand for the good or service (shift left)

Question 13

non-price determinants of demand

Answer 13

Income of normal goods

• normal goods increase income leads to a increase in demand
• decrease in income leads to a decrease in demand
• inferior goods increase income leads to a decrease in demand
• inferior goods decrease in income leads to a increase in demand

Question 14

price of related good or compliments

Answer 14

complements

• increase in the price of a complement good decreases the demand for the good or service
• decrease in price of a complement good leads to a increase in the demand of the good or service

Question 15

price of related goods or substitutes

Answer 15

• increase of the price of a substitute leads to a increase in demand of a good or service
• decrease of the price leads to a decrease in the demand of the good or service

Question 16

of buyers

Answer 16

• increase of the number of buyers for a good or service leads to a increase in demand
• decrease in the number of buyers for a good or service leads to a decrease in demand

Question 17

determinant of quantity supplied

Answer 17

price (law of supply)

• increase in the price increases the quantity supplied
• decrease in price decreases the quantity supplied

Question 18

non-price determinant of supply

Answer 18

• resource costs
• technology
• number of sellers
• taxes and subsidies

Question 19

resource costs

Answer 19

increase in the resource costs used in the production of a good or service decreases the supply of the good or service
decrease in resource costs used in the production of a good or service increase the supply of the good or service

Question 20

technology

Answer 20

technological advances in the production process increases the supply of the good or service

Question 21

number of sellers

Answer 21

increases in the number of sellers of a good or service increases the supply of the good or service
decreases in the number of sellers of a good or service decreases the supply of the good or service

Question 22

Taxes and Subsidies

Answer 22

• increases the taxes decreases the supply of the good or service
• decreases in the taxes increases the supply of the good or service
• increases in the subsidies increases the supply of the good or service
• decrease in the subsidies decreases the supply of the good or service

Question 23

elasticity

Answer 23

measure of response

Question 24

price elasticity of demand

Answer 24

Qn-Qo-Qn+Qo/2 / Pn-Po-Po+Pn/2
- sign means ordinary good
Ed<1= inelastic, insensitive
Ed>1= elastic, sensitive

Question 25

income elasticity of demand

Answer 25

+ sign normal good - sign inferior good Ei<1 inelastic insensitive Ei>1 elastic sensitive

Question 26

Cross price elasticity

Answer 26

+ sign subsitutes - sign complements Exy<1 inelastic insensitive Exy>1 elastic sensitive