ECON 2150 QUESTIONS AND CORRECT ANSWERS
price elasticity of demand - Answers - The ratio of the percentage change in quantity
demanded of a product or resource to the percentage change in its price; a measure of
the responsiveness of buyers to a change in the price of a product or resource.
unit elasticity - Answers - The ratio of the percentage change in quantity demanded of a
product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource. (=1)
perfect inelasticity - Answers - price change results in no change whatsoever to demand
total revenue - Answers - The ratio of the percentage change in quantity demanded of a
product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource. (P x Q)
total revenue test - Answers - The ratio of the percentage change in quantity demanded
of a product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource.
determinants of price elasticity of demand - Answers - substitutability, proportion of
income, luxuries vs. necessities, time.
Market period - Answers - A period in which producers of a product are unable to
change the quantity produced in response to a change in its price and in which there is
a perfectly inelastic supply.
Income elasticity of demand - Answers - The ratio of the percentage change in the
quantity demanded of a good to a percentage change in consumer income; measures
the responsiveness of consumer purchases to income changes.
inferior goods - Answers - As income increases, people buy less of these products
normal goods - Answers - Also superior goods, as income increases, demand for these
items increases.
cross elasticity of demand - Answers - The ratio of the percentage change in the
quantity demanded of a good to a percentage change in consumer income; measures
the responsiveness of consumer purchases to income changes.
formula that measures the degree of elasticity of demand - Answers - Ed = percentage
change in quantity demanded of X /percentage change in price of X
, differences in economic systems exist because of: - Answers - who owns the factors of
production, what method is used to motivate, coordinate, direct economic activities
U.S. has ____ ____ economy - Answers - mostly free
utility - Answers - pleasure, happiness, or satisfaction
marginal analysis - Answers - comparisons of marginal (additional) benefits and
marginal costs
scientific method - Answers - economics relies on the ____ ____ to make principles
Generalizations - Answers - principles are based on ______ of human behavior
other-things-equal assumption - Answers - all variables except those under immediate
consideration are held constant for a particular analysis (ceteris paribus)
graphical - Answers - A principle of economics is often represented in a ____
expression
aggregate - Answers - collection of specific economic units treated as if they were one
unit
budget line - Answers - a line that shows various combinations of two products a
consumer can purchase with a specific money income, given the products' prices
constant opportunity cost - Answers - an opportunity cost that remains the same as
consumers shift purchases from one product to another along a straight line budget line
the budget line illustrates these concepts - Answers - attainable/unattainable
combinations, trade-offs and opportunity costs, choice, income changes.
economic resources - Answers - land, labor, capital, and entrepreneurial ability used in
the production of goods and services
investment - Answers - spending that pays for capital resources
roles of entrepreneur - Answers - takes initiative to combine resources, makes strategic
business decisions, innovates/commercializes, bears risk
factors of production - Answers - economic resources: land, labor, capital, and
entrepreneurial ability
production possibilities model assumes - Answers - full employment, fixed resources,
fixed technology, two goods
price elasticity of demand - Answers - The ratio of the percentage change in quantity
demanded of a product or resource to the percentage change in its price; a measure of
the responsiveness of buyers to a change in the price of a product or resource.
unit elasticity - Answers - The ratio of the percentage change in quantity demanded of a
product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource. (=1)
perfect inelasticity - Answers - price change results in no change whatsoever to demand
total revenue - Answers - The ratio of the percentage change in quantity demanded of a
product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource. (P x Q)
total revenue test - Answers - The ratio of the percentage change in quantity demanded
of a product or resource to the percentage change in its price; a measure of the
responsiveness of buyers to a change in the price of a product or resource.
determinants of price elasticity of demand - Answers - substitutability, proportion of
income, luxuries vs. necessities, time.
Market period - Answers - A period in which producers of a product are unable to
change the quantity produced in response to a change in its price and in which there is
a perfectly inelastic supply.
Income elasticity of demand - Answers - The ratio of the percentage change in the
quantity demanded of a good to a percentage change in consumer income; measures
the responsiveness of consumer purchases to income changes.
inferior goods - Answers - As income increases, people buy less of these products
normal goods - Answers - Also superior goods, as income increases, demand for these
items increases.
cross elasticity of demand - Answers - The ratio of the percentage change in the
quantity demanded of a good to a percentage change in consumer income; measures
the responsiveness of consumer purchases to income changes.
formula that measures the degree of elasticity of demand - Answers - Ed = percentage
change in quantity demanded of X /percentage change in price of X
, differences in economic systems exist because of: - Answers - who owns the factors of
production, what method is used to motivate, coordinate, direct economic activities
U.S. has ____ ____ economy - Answers - mostly free
utility - Answers - pleasure, happiness, or satisfaction
marginal analysis - Answers - comparisons of marginal (additional) benefits and
marginal costs
scientific method - Answers - economics relies on the ____ ____ to make principles
Generalizations - Answers - principles are based on ______ of human behavior
other-things-equal assumption - Answers - all variables except those under immediate
consideration are held constant for a particular analysis (ceteris paribus)
graphical - Answers - A principle of economics is often represented in a ____
expression
aggregate - Answers - collection of specific economic units treated as if they were one
unit
budget line - Answers - a line that shows various combinations of two products a
consumer can purchase with a specific money income, given the products' prices
constant opportunity cost - Answers - an opportunity cost that remains the same as
consumers shift purchases from one product to another along a straight line budget line
the budget line illustrates these concepts - Answers - attainable/unattainable
combinations, trade-offs and opportunity costs, choice, income changes.
economic resources - Answers - land, labor, capital, and entrepreneurial ability used in
the production of goods and services
investment - Answers - spending that pays for capital resources
roles of entrepreneur - Answers - takes initiative to combine resources, makes strategic
business decisions, innovates/commercializes, bears risk
factors of production - Answers - economic resources: land, labor, capital, and
entrepreneurial ability
production possibilities model assumes - Answers - full employment, fixed resources,
fixed technology, two goods
