Economics Basics: Price Equilibrium and More

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What is the primary purpose of an economic model?

To provide a simplified version of reality (correct)

To analyze the effects of changes over time

To predict the exact outcomes of economic behavior

To regulate the factors of production

Who is the founder of monetarism?

Adam Smith

Karl Marx

John Maynard Keynes

Friedrich Von Wieser (correct)

What is the primary goal of economic activity?

To maximize profits

To satisfy the needs and desires of individuals (correct)

To create jobs

To reduce inflation

What type of analysis is used to study the effects of changes over time?

Dynamic Analysis Signup and view all the answers

What is the purpose of economic analysis?

To facilitate well-informed decision-making Signup and view all the answers

What is the term for the flow of money around an economy?

Circular Flow of Economic Activity Signup and view all the answers

What is the focus of the Marginal Utility Theory of Value?

Utility Signup and view all the answers

What is the main goal of an economic system?

To organize and distribute resources Signup and view all the answers

What is the name of the analysis tool used to anticipate the likely economic effects of various policy alternatives?

Partial Equilibrium Signup and view all the answers

What is the definition of economic theory?

A set of thoughts and standards that outline how diverse economies work Signup and view all the answers

What is the purpose of economic policy?

To influence the economy of a city, state, or nation Signup and view all the answers

What concept analyzes how changes in certain variables impact financial models or economic systems?

Comparative Statistics Signup and view all the answers

What is the effect of an increase in the number of potential buyers on the demand for a particular good or service?

It increases the demand Signup and view all the answers

What is the relationship between the price of a good or service and the quantity supplied, according to the Law of Supply?

The higher the price, the higher the quantity supplied Signup and view all the answers

What is the effect of an expectation of higher prices in the future on the current demand for a good or service?

It increases the current demand Signup and view all the answers

What is the term for the price at which the quantity demanded equals the quantity supplied?

Equilibrium price Signup and view all the answers

What is the effect of a decrease in the cost of production on the supply of a good or service?

It increases the supply Signup and view all the answers

What is the term for the state in which the market supply and demand balance each other, resulting in a stable price?

Equilibrium Signup and view all the answers

What is the term for the price point at which the needs of producers and consumers match?

Price Equilibrium Signup and view all the answers

Who is regarded as the father of modern economics?

Adam Smith Signup and view all the answers

What is the term for a market with only one seller of a particular product or service?

Monopoly Signup and view all the answers

What is the term for the effect of a market exchange on a third party who is outside or 'external' to the exchange?

Externality Signup and view all the answers

What is the term for the voluntary exchange of goods or services between economic actors?

Trade Signup and view all the answers

What is the name of the American economist who advocated for free-market capitalism?

Milton Friedman Signup and view all the answers

What happens to demand when there are few or no alternative products?

It becomes less elastic Signup and view all the answers

Who bears the majority of the tax burden when supply is more elastic than demand?

Buyers Signup and view all the answers

What type of goods are characterized by a positive income elasticity of demand?

Normal goods Signup and view all the answers

What is the term for the study of how people decide to spend their money based on their individual preferences and budget constraints?

Theory of Consumer Behavior Signup and view all the answers

What is the term for the ideas, customs, and social behavior of a particular people or society?

Culture Signup and view all the answers

What is a subculture?

A group of people with the same beliefs and values Signup and view all the answers