D089 Study Guide UPDATED Actual
Questions and CORRECT Answers
economics - CORRECT ANSWER✔✔- study of choice under conditions of scarcity
macroeconomics - CORRECT ANSWER✔✔- national/global economies
microeconomics - CORRECT ANSWER✔✔- businesses/individuals
3 basic economic questions - CORRECT ANSWER✔✔- -what to produce
-how it will be produced
-whom will it be produced for
traditional economy - CORRECT ANSWER✔✔- traditions, beliefs, and customs
command economy - CORRECT ANSWER✔✔- government makes all decisions
market economy - CORRECT ANSWER✔✔- decisions based on consumer demand
mixed economy - CORRECT ANSWER✔✔- consumer demand and
regulations/safety/environment
positive economies - CORRECT ANSWER✔✔- -what is and what will happen
-economic issues, action is taken or not taken (facts)
normative economics - CORRECT ANSWER✔✔- -what should or ought to be
-value-based solutions (opinions)
factors of production - CORRECT ANSWER✔✔- -land and natural resources
-labor
, -capital
-entrepreneurship
circular flow model - CORRECT ANSWER✔✔- examines relationship between firms and
households
budget constraint - CORRECT ANSWER✔✔- all combinations of goods/services that a
consumer may purchase given current prices within his/her given income
opportunity cost - CORRECT ANSWER✔✔- the value of what you give up / the value of
what you gain
law of diminishing returns - CORRECT ANSWER✔✔- point where the level of profits or
benefits gained is less than the amount of money or energy invested
equilibrium price - CORRECT ANSWER✔✔- quantity demanded is equal to quantity
supplied
equilibrium quantity - CORRECT ANSWER✔✔- quantity of good/service brought at
equilibrium price, quantity produced and bought where the supply and demand curves
intersect
demand elasticity - CORRECT ANSWER✔✔- how responsive the quantity demanded is to a
change in price in percentage of terms
quantity demanded (Qd) - CORRECT ANSWER✔✔- total number of units purchased of a
specific price
demand schedule - CORRECT ANSWER✔✔- chart that shows the number of goods/services
demanded at specific prices
law of demand - CORRECT ANSWER✔✔- common relationship that a higher price leads to
a lower quantity demanded of a certain good/service and a lower price leads to a higher
quantity demanded while all other variables are held constant
Questions and CORRECT Answers
economics - CORRECT ANSWER✔✔- study of choice under conditions of scarcity
macroeconomics - CORRECT ANSWER✔✔- national/global economies
microeconomics - CORRECT ANSWER✔✔- businesses/individuals
3 basic economic questions - CORRECT ANSWER✔✔- -what to produce
-how it will be produced
-whom will it be produced for
traditional economy - CORRECT ANSWER✔✔- traditions, beliefs, and customs
command economy - CORRECT ANSWER✔✔- government makes all decisions
market economy - CORRECT ANSWER✔✔- decisions based on consumer demand
mixed economy - CORRECT ANSWER✔✔- consumer demand and
regulations/safety/environment
positive economies - CORRECT ANSWER✔✔- -what is and what will happen
-economic issues, action is taken or not taken (facts)
normative economics - CORRECT ANSWER✔✔- -what should or ought to be
-value-based solutions (opinions)
factors of production - CORRECT ANSWER✔✔- -land and natural resources
-labor
, -capital
-entrepreneurship
circular flow model - CORRECT ANSWER✔✔- examines relationship between firms and
households
budget constraint - CORRECT ANSWER✔✔- all combinations of goods/services that a
consumer may purchase given current prices within his/her given income
opportunity cost - CORRECT ANSWER✔✔- the value of what you give up / the value of
what you gain
law of diminishing returns - CORRECT ANSWER✔✔- point where the level of profits or
benefits gained is less than the amount of money or energy invested
equilibrium price - CORRECT ANSWER✔✔- quantity demanded is equal to quantity
supplied
equilibrium quantity - CORRECT ANSWER✔✔- quantity of good/service brought at
equilibrium price, quantity produced and bought where the supply and demand curves
intersect
demand elasticity - CORRECT ANSWER✔✔- how responsive the quantity demanded is to a
change in price in percentage of terms
quantity demanded (Qd) - CORRECT ANSWER✔✔- total number of units purchased of a
specific price
demand schedule - CORRECT ANSWER✔✔- chart that shows the number of goods/services
demanded at specific prices
law of demand - CORRECT ANSWER✔✔- common relationship that a higher price leads to
a lower quantity demanded of a certain good/service and a lower price leads to a higher
quantity demanded while all other variables are held constant
