ECON 102 EXAM 1 WSU STUDY GUIDE
opportunity cost - Answers -sacrifice the value of the output the person would have
contributed to the civilian economy.
The value of the sacrificed alternative is called the opportunity cost of an activity.
Resources - Answers -1. Land includes natural resources, such as mineral deposits,
oil, natural gas, water, and actual land acreage.
2. Labor is the effort of workers.
3. Physical capital is manufactured items used to produce other goods and services.
4. Human capital is the educational achievements and skills of the labor force (which
increase labor productivity).
Economic Growth - Answers -An increase in factors of production: resources used to
produce goods and services.
Better technology: the technical means for producing goods and services.
market - Answers -a group of buyers and sellers of a particular product.
competitive market - Answers -one with many buyers and sellers, each has a negligible
effect on price.
perfectly competitive - Answers -All sellers produce identical products
Buyers & sellers so numerous that no one can affect market price—each is a "price
taker
quantity demanded - Answers -of any good is the amount of the good that buyers are
willing and able to purchase at a given price.
Law of demand - Answers -the claim that the quantity demanded of a good falls when
the price of the good rises, other things equal
normal good - Answers -positively related to income.
Increase in income causes
increase in quantity demanded at each price, shifts D curve to the right
inferior good - Answers -negatively related to income. An increase in income shifts D
curves for inferior goods to the left
, substitutes - Answers -they are viewed as alternatives by consumers.
complements - Answers -if they tend to be consumed together.
quantity supplied - Answers -any good is the maximum amount that sellers are willing
and able to sell at a given price.
Law of supply - Answers -the claim that the quantity supplied of a good rises when the
price of the good rises, other things equal
Equilibrium - Answers -P has reached
the level where
quantity supplied equals
quantity demanded
Equilibrium price - Answers -the price that equates quantity supplied with quantity
demanded
Equilibrium quantity - Answers -the quantity supplied and demanded at the equilibrium
price
Surplus (a.k.a. excess supply) - Answers -when quantity supplied is greater than
quantity demanded
Shortage (a.k.a. excess demand): - Answers -when quantity demanded is greater than
quantity supplied
Change in supply - Answers -: a shift in the S curve
different Q at every P
occurs when a non-price determinant of supply changes (like technology or costs)
Change in the quantity supplied - Answers -a movement along a fixed S curve
Different Q caused by change in P
occurs when P changes
Change in demand - Answers -a shift in the D curve
different Q at every P
occurs when a non-price determinant of demand changes (like income or # of buyers)
Change in the quantity demanded - Answers -a movement along a fixed D curve
opportunity cost - Answers -sacrifice the value of the output the person would have
contributed to the civilian economy.
The value of the sacrificed alternative is called the opportunity cost of an activity.
Resources - Answers -1. Land includes natural resources, such as mineral deposits,
oil, natural gas, water, and actual land acreage.
2. Labor is the effort of workers.
3. Physical capital is manufactured items used to produce other goods and services.
4. Human capital is the educational achievements and skills of the labor force (which
increase labor productivity).
Economic Growth - Answers -An increase in factors of production: resources used to
produce goods and services.
Better technology: the technical means for producing goods and services.
market - Answers -a group of buyers and sellers of a particular product.
competitive market - Answers -one with many buyers and sellers, each has a negligible
effect on price.
perfectly competitive - Answers -All sellers produce identical products
Buyers & sellers so numerous that no one can affect market price—each is a "price
taker
quantity demanded - Answers -of any good is the amount of the good that buyers are
willing and able to purchase at a given price.
Law of demand - Answers -the claim that the quantity demanded of a good falls when
the price of the good rises, other things equal
normal good - Answers -positively related to income.
Increase in income causes
increase in quantity demanded at each price, shifts D curve to the right
inferior good - Answers -negatively related to income. An increase in income shifts D
curves for inferior goods to the left
, substitutes - Answers -they are viewed as alternatives by consumers.
complements - Answers -if they tend to be consumed together.
quantity supplied - Answers -any good is the maximum amount that sellers are willing
and able to sell at a given price.
Law of supply - Answers -the claim that the quantity supplied of a good rises when the
price of the good rises, other things equal
Equilibrium - Answers -P has reached
the level where
quantity supplied equals
quantity demanded
Equilibrium price - Answers -the price that equates quantity supplied with quantity
demanded
Equilibrium quantity - Answers -the quantity supplied and demanded at the equilibrium
price
Surplus (a.k.a. excess supply) - Answers -when quantity supplied is greater than
quantity demanded
Shortage (a.k.a. excess demand): - Answers -when quantity demanded is greater than
quantity supplied
Change in supply - Answers -: a shift in the S curve
different Q at every P
occurs when a non-price determinant of supply changes (like technology or costs)
Change in the quantity supplied - Answers -a movement along a fixed S curve
Different Q caused by change in P
occurs when P changes
Change in demand - Answers -a shift in the D curve
different Q at every P
occurs when a non-price determinant of demand changes (like income or # of buyers)
Change in the quantity demanded - Answers -a movement along a fixed D curve
