AG BM 101 Quiz 1 (Ch 1, 2, 3, 4, and 6)
Questions with complete solution
Theory of Utility Max - correct answer ✔When price of a product falls,
consumers buy more
Economic system - correct answer ✔a set of institutional arrangements
Coordinating mechanism - correct answer ✔central planning ( government
owns resources)
market system (private ownership)
Capital - correct answer ✔manufacturing of goods and aid (roads, factories,
processes, etc)
Market system characteristics - correct answer ✔-private property
-freedom of enterprise and choice
-self interest (motivating force, useful if sufficient competition)
-competition
-markets and prices
5 Fundamental questions of market system - correct answer ✔1. what goods
and services will be produced?
2. how will goods and services be produced?
3. who will get the goods and services?
4. how will the system accommodate changes?
5. how will the system promote progress?
, Two main markets - correct answer ✔consumer goods
production resource
Look at circular flow system - correct answer ✔
Law of one price - correct answer ✔each market settles on one price for
equilibrium
Consumer Demand - correct answer ✔- individual demand curve = how
many units of goods you want to buy
- total demand curve = units of goods entire market buys
Law of Demand - correct answer ✔As prive rises, demand falls and as price
falls, demand rises
Changes in Demand - correct answer ✔Change in quantity demanded -
change of price of the good itself
Change in demand - result in change from something other than the price of
the good
Determinants of demand - correct answer ✔- change in consumer taste
- change in number of buyers
-change in income (normal + , Inferior - )
- changes in prices of related goods
-change in consumer expectations
Questions with complete solution
Theory of Utility Max - correct answer ✔When price of a product falls,
consumers buy more
Economic system - correct answer ✔a set of institutional arrangements
Coordinating mechanism - correct answer ✔central planning ( government
owns resources)
market system (private ownership)
Capital - correct answer ✔manufacturing of goods and aid (roads, factories,
processes, etc)
Market system characteristics - correct answer ✔-private property
-freedom of enterprise and choice
-self interest (motivating force, useful if sufficient competition)
-competition
-markets and prices
5 Fundamental questions of market system - correct answer ✔1. what goods
and services will be produced?
2. how will goods and services be produced?
3. who will get the goods and services?
4. how will the system accommodate changes?
5. how will the system promote progress?
, Two main markets - correct answer ✔consumer goods
production resource
Look at circular flow system - correct answer ✔
Law of one price - correct answer ✔each market settles on one price for
equilibrium
Consumer Demand - correct answer ✔- individual demand curve = how
many units of goods you want to buy
- total demand curve = units of goods entire market buys
Law of Demand - correct answer ✔As prive rises, demand falls and as price
falls, demand rises
Changes in Demand - correct answer ✔Change in quantity demanded -
change of price of the good itself
Change in demand - result in change from something other than the price of
the good
Determinants of demand - correct answer ✔- change in consumer taste
- change in number of buyers
-change in income (normal + , Inferior - )
- changes in prices of related goods
-change in consumer expectations
