Economic Concepts and Terms Quiz

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the marginal benefit equal to when spending additional units of a particular resource?

Equal to marginal cost (correct)

Less than marginal cost

Greater than marginal cost

Not affected by

Classify the following resources as scarce or plentiful:

Coal = Scarce Resource Sunlight = Plentiful Resource Oil = Scarce Resource Electricity = Scarce Resource Seawater = Plentiful Resource Wind = Plentiful Resource

What is Ben's incentive for choosing a salad for dinner?

To eat a healthier meal

What is the opportunity cost of Nick's trip?

Gaming console Signup and view all the answers

In a communist economy, all economic activities are controlled by __________.

the government Signup and view all the answers

What made Southern Brewers lower its prices?

Competition Signup and view all the answers

What effect will the tax increase have on savings and investment in the economy?

Savings decrease, and investment increases Signup and view all the answers

Match each economic activity with the correct economic term:

Receiving $5 for washing your father's car = Incentive Paying part of your income to the government = Taxation A person in China purchasing an American mobile phone = Injection in the US economy A person in the United States purchasing a car made in Germany = Leakage in the US economy Signup and view all the answers

Who introduced the concept of laissez-faire?

Adam Smith Signup and view all the answers

Laissez-faire, which means __________ government interference in the functioning of an economy.

minimal Signup and view all the answers

Which sentences describe two government policies that liberalize the economy?

The government decides to reduce tariffs on imported raw materials Signup and view all the answers

What feature is characteristic of a market economy?

Self-interest motivates buyers Signup and view all the answers

Which type of economy does Linda's scenario describe?

Communist economy Signup and view all the answers

What defines equilibrium in a graph showing demand and supply curves?

It is the point where the demand and supply curves intersect Signup and view all the answers

Which of the following are non-price determinants of demand?

Advertising Signup and view all the answers

Which statements are true according to the law of demand?

An increase in price leads to a decrease in quantity demanded Signup and view all the answers

What defines an externality?

It is the impact of production and consumption on unrelated third parties Signup and view all the answers

Study Notes

Economic Concepts and Terms

Marginal Benefit and Cost: People continue to allocate resources until their marginal benefit equals marginal cost.
Scarcity vs. Plentiful Resources:
- Scarce: coal, oil, electricity
- Plentiful: seawater, wind, sunlight

Decision-Making Incentives

Choice Motivation: Choosing a salad for dinner suggests Ben's incentive is to consume a healthier meal.
Opportunity Cost: For Nick, the cost of saving for his overseas trip is the bike and watch he forgoes, with the gaming console representing the primary opportunity cost.

Economic Systems

Communist Economy: In such economies, the government controls all economic activities, also known as command economies.
Market Competition: Introduction of competitors leads to price reductions; Southern Brewers lowers prices in response to competition from Albert Coffee and Café Brites.

Impact of Taxes

Effects of Increased Tax Rates: Higher taxes can decrease personal savings while simultaneously increasing overall investment in the economy.

Economic Activities and Terminology

Incentives and Economic Activities:
- Washing a car for $5 correlates with the incentive of earning.
- Taxation involves paying a portion of income to the government.
- Purchasing decisions indicate injections and leakages in the economy.

Historical Economic Principles

Laissez-Faire Concept: Introduced by Adam Smith, advocating minimal government interference in economic activities.

Government Policies

Liberalizing Measures: Examples include reducing tariffs on imports and establishing tax-free special economic zones.

Market Economy Characteristics

Motivation Factors: Self-interest is a key motivating force for buyers in a market economy.

Equilibrium in Supply and Demand

Equilibrium Definition: The intersection point of demand and supply curves on a graph signifies market equilibrium.

Demand Determinants

Non-Price Influencers: These include advertising, changes in population, and production technology, affecting demand independently of price changes.

Law of Demand

Demand Relationships: As prices increase, the quantity demanded decreases, and vice versa, highlighting the inverse relationship of price and demand.

Externalities

Definition: Externalities refer to effects of production and consumption on third parties not directly involved in the transaction, impacting overall societal welfare.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Test your understanding of key economic concepts such as marginal benefit, opportunity cost, and the differences between economic systems. This quiz covers decision-making incentives and the impact of taxes on economic behavior. Perfect for anyone looking to sharpen their knowledge in economics.