Economic Concepts and Market Structures Quiz

The concept that when analyzing a relationship between two variables, all other factors are assumed to remain constant.

When the price of a good goes down, consumers buy more of it because it's relatively cheaper. This is the reason why the demand curve slopes downward.

When the price of a good goes down, consumers substitute it for other, now relatively more expensive goods.

Goods that are used together, like cars and petrol. If the price of one goes down, demand for the other increases.

Goods that can be used in place of each other, like tea and coffee. If the price of one goes up, demand for the other increases.

Products that are consumed together or simultaneously.

A situation where a decrease in the price of one good causes a decrease in demand for the other good.

Goods that satisfy the same want and can be used interchangeably.

The relationship between the demand for a product and the price of its substitutes is positive, meaning as the price of the substitute goes up, the demand for the original product increases.

A production function exhibits increasing returns to scale when a proportional increase in all inputs leads to a more than proportional increase in output. This means that output grows at a faster rate than the inputs.

In a Cobb-Douglas production function (Q = K^aL^b), increasing returns to scale occur when the sum of the exponents (a + b) is greater than 1. This signifies that the combined effect of capital (K) and labor (L) on output is amplified.

Technical economies arise from the efficient use of resources and technology in large-scale production. This includes economies of scale, specialization, and improved production processes.

The supply curve of labor typically slopes upward, meaning that as the wage rate increases, the quantity of labor supplied also tends to increase. This is because higher wages incentivize more people to work or work longer hours.

A market is a place where buyers and sellers interact to exchange goods and services for a price. It's characterized by the interaction of supply and demand forces, leading to price determination.

The elements of a market include buyers and sellers, a product or service, bargaining for a price, and knowledge about market conditions. These elements facilitate the exchange process.

Marginal revenue (MR) is the additional revenue earned from selling one extra unit of a product. While marginal cost (MC) represents the extra cost incurred to produce one more unit. A firm maximizes its profit by producing at the level where marginal revenue equals marginal cost (MR = MC).

A type of economy where the government plays a significant role in regulating the market, alongside private businesses. It combines elements of both capitalism and socialism.

The analysis of the costs and benefits of a decision or action. This helps to determine if the potential positive outcomes outweigh the potential negative ones, especially in economic decisions.

An economic system where the government owns or controls vital industries and resources, aiming for equality in resource distribution. The government makes decisions about production and allocation.

An economic system driven by private ownership and free markets. Individuals and businesses make decisions about production and consumption, driven by profit.

A market where buyers and sellers interact to determine the price of a product or service.

A market where the price elasticity of demand is infinite. This means that even a small change in price can lead to a large change in quantity demanded.

A market where buyers and sellers interact in person, and goods are sold in small quantities.

A market where buyers and sellers interact online or through other means, and goods are sold in large quantities.

A market where goods are sold for immediate delivery.

A market where goods are bought or sold for delivery at a future date.

The proportion of a firm's product sales compared to the total sales of all firms in the same industry.

A market where the government sets regulations and controls the price or quality of goods.

The amount of a good or service that consumers are willing and able to buy at a specific price and time.

Demand that is backed by the ability and willingness to pay for a good or service.

A market where there are no government regulations, and prices are determined by market forces.

A market characterized by a large number of buyers and sellers, a homogeneous product, and perfect information.

Factors that influence the quantity demanded of a good or service.

A market characterized by a small number of buyers and sellers who have significant influence on the price.

The price at which a good or service is exchanged in the market.

The income available to consumers after paying taxes and essential expenses.

The study of how individuals and societies choose to allocate scarce resources among competing uses.

Products that are consumed quickly, have a short lifespan, and need to be replenished frequently.