TEST BANK For Microeconomics, 9th Edition by Jeffrey
M. Perloff
Scarcity - ANSWER:the condition that results from limited resources combined with
unlimited wants
Opportunity Cost - ANSWER:Cost of the next best alternative use of money, time, or
resources when one choice is made rather than another
Factors of Production - ANSWER:resources of land, labor, capital, and
entrepreneurship used to produce goods and services
Land - ANSWER:the physical location where production occurs. Includes bodies of
water as well as resources extracted from the earth.
Labor - ANSWER:the work done by humans that is used in the production of goods
and services.
Capital - ANSWER:previously manufactured goods used to make other goods and
services
Entrepreneurship - ANSWER:the process of starting, organizing, managing, and
assuming the responsibility for a business
Primary Commodity - ANSWER:Any product that is produced in the primary sector,
which includes agriculture, forestry, fishing, and the extractive industries.
Manufactured Good - ANSWER:A product that has been produced by machines
and/or human labor.
Market - ANSWER:a group of buyers and sellers of a good or service and the
institution or arrangement by which they come together to trade
Law of Demand - ANSWER:the claim that, ceteris paribus, the quantity demanded of
a good falls when the price of the good rises
Demand - ANSWER:The quantity of a good or service that consumers are willing and
able to purchase at a given price in a given period of time.
Consumer Demand v. Market Demand - ANSWER:Consumer demand is the demand
of an individual. Market demand is the combination of all consumer demand in the
market.
, Demand Curve * - ANSWER:a graph of the relationship between the price of a good
and the quantity demanded.The Law of Demand implies that this curve is negatively
sloped.
Determinants of Demand - ANSWER:Anything other than price of the current item
that influences consumer buying decisions, including income, tastes and preferences,
price of related items (substitutes and complements), number of consumers in the
market, and expected future price.
Supply - ANSWER:The quantity of a product that producers are willing and able to
produce at a given price in a given period of time.
Market Supply - ANSWER:the total of all individual suppliers; products in a market at
a particular time
Law of Supply - ANSWER:the rule that, ceteris paribus, increases in price cause
increases in the quantity supplied, and decreases in price cause decreases in the
quantity supplied
Determinants of Supply - ANSWER:Anything other than price of the current item that
influences production decisions, including cost of raw materials, cost of labor, level
of technology used to produce, number of producers in the market, price of related
products, and expected future price.
Supply Curve * - ANSWER:a graph of the relationship between the price of a good
and the quantity supplied. It has a positive slope.
Equilibrium * - ANSWER:a situation in which the market price has reached the level
at which quantity supplied equals quantity demanded
Scarcity * - ANSWER:when a price is below equilibrium causing quantity demanded
to be greater than quantity supplied
Surplus * - ANSWER:when a price is above equilibrium causing quantity demanded
to be less than quantity supplied
The Invisible Hand - ANSWER:Adam Smith's term for the natural self-regulation of a
market economy driven by self-interest and efficiency.
Market Forces - ANSWER:forces, such as supply and demand, that drive the terms of
transaction in capitalism
Price Mechanism * - ANSWER:price signals which determines allocation of resources
through interaction of supply and demand, This describes the means in which the
decisions taken by consumers and businesses interact to determine the allocation of
scarce resources between competing uses. Through the forces of demand and supply
markets move to equilibrium.
M. Perloff
Scarcity - ANSWER:the condition that results from limited resources combined with
unlimited wants
Opportunity Cost - ANSWER:Cost of the next best alternative use of money, time, or
resources when one choice is made rather than another
Factors of Production - ANSWER:resources of land, labor, capital, and
entrepreneurship used to produce goods and services
Land - ANSWER:the physical location where production occurs. Includes bodies of
water as well as resources extracted from the earth.
Labor - ANSWER:the work done by humans that is used in the production of goods
and services.
Capital - ANSWER:previously manufactured goods used to make other goods and
services
Entrepreneurship - ANSWER:the process of starting, organizing, managing, and
assuming the responsibility for a business
Primary Commodity - ANSWER:Any product that is produced in the primary sector,
which includes agriculture, forestry, fishing, and the extractive industries.
Manufactured Good - ANSWER:A product that has been produced by machines
and/or human labor.
Market - ANSWER:a group of buyers and sellers of a good or service and the
institution or arrangement by which they come together to trade
Law of Demand - ANSWER:the claim that, ceteris paribus, the quantity demanded of
a good falls when the price of the good rises
Demand - ANSWER:The quantity of a good or service that consumers are willing and
able to purchase at a given price in a given period of time.
Consumer Demand v. Market Demand - ANSWER:Consumer demand is the demand
of an individual. Market demand is the combination of all consumer demand in the
market.
, Demand Curve * - ANSWER:a graph of the relationship between the price of a good
and the quantity demanded.The Law of Demand implies that this curve is negatively
sloped.
Determinants of Demand - ANSWER:Anything other than price of the current item
that influences consumer buying decisions, including income, tastes and preferences,
price of related items (substitutes and complements), number of consumers in the
market, and expected future price.
Supply - ANSWER:The quantity of a product that producers are willing and able to
produce at a given price in a given period of time.
Market Supply - ANSWER:the total of all individual suppliers; products in a market at
a particular time
Law of Supply - ANSWER:the rule that, ceteris paribus, increases in price cause
increases in the quantity supplied, and decreases in price cause decreases in the
quantity supplied
Determinants of Supply - ANSWER:Anything other than price of the current item that
influences production decisions, including cost of raw materials, cost of labor, level
of technology used to produce, number of producers in the market, price of related
products, and expected future price.
Supply Curve * - ANSWER:a graph of the relationship between the price of a good
and the quantity supplied. It has a positive slope.
Equilibrium * - ANSWER:a situation in which the market price has reached the level
at which quantity supplied equals quantity demanded
Scarcity * - ANSWER:when a price is below equilibrium causing quantity demanded
to be greater than quantity supplied
Surplus * - ANSWER:when a price is above equilibrium causing quantity demanded
to be less than quantity supplied
The Invisible Hand - ANSWER:Adam Smith's term for the natural self-regulation of a
market economy driven by self-interest and efficiency.
Market Forces - ANSWER:forces, such as supply and demand, that drive the terms of
transaction in capitalism
Price Mechanism * - ANSWER:price signals which determines allocation of resources
through interaction of supply and demand, This describes the means in which the
decisions taken by consumers and businesses interact to determine the allocation of
scarce resources between competing uses. Through the forces of demand and supply
markets move to equilibrium.
