CSET Social Science Subtest
3: Economics fully solved &
updated(graded A+)
Microeconomics - answer The study of the economic behavior and
decision making of small units, such as individuals, families, and
businesses
Demand - answer Consumer willingness and ability to buy products.
Law of Demand - answer As price increases, quantity demanded
decreases.
Real Income - answer Income adjusted for inflation.
real income effect - answer Economic rule stating that individuals
cannot keep buying the same quantity of a product if its price rises
while their income stays the same.
Substitution Effect - answer An effect caused by a rise in price that
induces a consumer (whose income has remained the same) to buy
more of a relatively lower-priced good and less of a higher-priced
one.
Diminishing Marginal Utility - answer Decreasing satisfaction or
usefulness as additional units of a product are acquired.
Price Elasticity of Demand - answer Measure of how much
consumers respond to a price change.
, Elastic - answer Demand that is very sensitive to a change in price
Inelastic - answer Describes demand that is not very sensitive to a
change in price.
Law of Supply - answer As price increases, quantity supplied
increases
Factors of Supply - answer 1. Price of Inputs
2. Number of Firms
3. Taxes
4. Technology
Equalibrium price - answer The point where the quantity of demand
and the quantity of supplied meet.
Shortage - answer Situation where quantity supplied is less than
quantity demanded at a given price, causing the price to rise.
Surplus - answer A situation in which quantity supplied is greater
than quantity demanded, cause the price to drop.
Price Ceiling - answer A legal maximum on the price at which a good
can be sold. Often leading to shortages.
Price Floor - answer Prevents prices, such as minimum wage, from
dropping too low. Often leading to surpluses.
Perfect Competition - answer The situation prevailing in a market in
which buyers and sellers are so numerous and well informed that all
3: Economics fully solved &
updated(graded A+)
Microeconomics - answer The study of the economic behavior and
decision making of small units, such as individuals, families, and
businesses
Demand - answer Consumer willingness and ability to buy products.
Law of Demand - answer As price increases, quantity demanded
decreases.
Real Income - answer Income adjusted for inflation.
real income effect - answer Economic rule stating that individuals
cannot keep buying the same quantity of a product if its price rises
while their income stays the same.
Substitution Effect - answer An effect caused by a rise in price that
induces a consumer (whose income has remained the same) to buy
more of a relatively lower-priced good and less of a higher-priced
one.
Diminishing Marginal Utility - answer Decreasing satisfaction or
usefulness as additional units of a product are acquired.
Price Elasticity of Demand - answer Measure of how much
consumers respond to a price change.
, Elastic - answer Demand that is very sensitive to a change in price
Inelastic - answer Describes demand that is not very sensitive to a
change in price.
Law of Supply - answer As price increases, quantity supplied
increases
Factors of Supply - answer 1. Price of Inputs
2. Number of Firms
3. Taxes
4. Technology
Equalibrium price - answer The point where the quantity of demand
and the quantity of supplied meet.
Shortage - answer Situation where quantity supplied is less than
quantity demanded at a given price, causing the price to rise.
Surplus - answer A situation in which quantity supplied is greater
than quantity demanded, cause the price to drop.
Price Ceiling - answer A legal maximum on the price at which a good
can be sold. Often leading to shortages.
Price Floor - answer Prevents prices, such as minimum wage, from
dropping too low. Often leading to surpluses.
Perfect Competition - answer The situation prevailing in a market in
which buyers and sellers are so numerous and well informed that all
