Economic Quiz Chapter 1,2,3,4 Questions and Answers Already Passed

Economic Quiz Chapter 1,2,3,4 Questions and Answers Already Passed What is Economics? The study of how peoples need to satisfy their needs and wants by making choices. What are the three factors in every Economic scenario Land, Labor, Capital What is a trade-off? All the alternatives that we give up whenever we choose one course of action over another. What is a production Possibilites curve/What does it show? A graph that shows al alternative ways to use an economy's productive resources. Axes shows different products. example= shoes and watermelon. What are the three economic questions. What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services? Why are the three economic questions important? Because economic resources are limited. What are the tree types of economies. Be able to explain each, advantages and disadvantages, role of government, entrepreneur. Market Economy, Command Economy, Traditional Economy. Market Economy Based on exchange and trade. The people determine what gets made and how and who. Called free market(capitalism). People and firms act in their own best interest to answer the Who, What and How questions. Command Economy Government makes all the economic decisions. No one else really has any controle. North Korea, Russia, Cuba Traditional Economy The allocation of scarce resources, and nearly all other economic activity, stems from ritual, habit or custom. Scarce resources. What is the law of Demand? When a good's price is lower, consumers will buy more of it. When the price is higher, consumers will buy less of it. What affects demand? The willingness to buy something and a want for it. If you can afford to buy it or not. What shifts the demand curve? Customer Preference, Prices of related goods, Income, expectations of price range, income, consumer expectations, consumer tastes and advertising, prices of related goods. What is Elasticity? Dictates how drastically byers will cut back or increase their demand for a good. Factors affecting Elasticity. Availability of Substitutes, Relative Importance, Necessities Verses Luxuries,and Change over Time. How to determine elasticity/ be able to calculate Elasticity. Quantity of Demand/Price. Elastic If it is over 1 Unitary Elastic If it is 1 Inelastic If it is under 1 Land Natural resources that are used to make goods and services. Labor The effort that people devote to a task for which they are paid. Capital Any human made resource that is used to create other goods and services. Scarcity Limited quantities of resources to meet unlimited wants. Shortage A situation in which a good or service is unavailable. Opportunity Cost The most desirable alternative given up as the result of a decision. Thinking on Margin Deciding whether to do or use one additional unit of some resource. Cost To an economist, the alternative that is given up because of a decision. Demand The desire to own something and the ability to pay for it. Demand Schedule A table that lists the quantity of a good a person will buy at each different price.