Economics: Demand and Supply
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Questions and Answers

What is an economic model designed to do?

  • Make decisions on behalf of policymakers
  • Replace human judgment with artificial intelligence
  • Exactly replicate reality
  • Simplify reality to observe, understand, and make predictions about economic behavior (correct)

    • What is comparative statistics concerned with?

  • Regulating the factors of production
  • Analyzing how changes in certain variables impact financial models or economic systems (correct)
  • Analyzing the effects of changes over time
  • Studying the behavior of buyers and sellers in a market

    • What is dynamic analysis used to study?

  • The behavior of buyers and sellers in a market
  • The flow of money through an economy
  • The effects of changes over time (correct)
  • The factors of production

    • What is partial equilibrium used for?

    <p>Anticipating the economic effects of policy alternatives</p> Signup and view all the answers

    What does the circular flow of economic activity refer to?

    <p>The flow of money through an economy</p> Signup and view all the answers

    What is an economic system responsible for?

    <p>Organizing and distributing resources, services, and goods</p> Signup and view all the answers

    What is the law of supply?

    <p>The higher the price, the higher the quantity supplied</p> Signup and view all the answers

    What is the term for the state in which market supply and demand balance each other?

    <p>Equilibrium</p> Signup and view all the answers

    What is the price at which the quantity demanded equals the quantity supplied called?

    <p>Equilibrium Price</p> Signup and view all the answers

    What is the term for the quantity bought and sold at equilibrium price?

    <p>Equilibrium Quantity</p> Signup and view all the answers

    What is one factor that affects supply?

    <p>Cost of Production</p> Signup and view all the answers

    What is one factor that affects demand?

    <p>Number of Buyers</p> Signup and view all the answers

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

    <p>It becomes less elastic</p> Signup and view all the answers

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

    <p>Producers</p> Signup and view all the answers

    What is the direction of shift for normal goods when income rises?

    <p>Right</p> Signup and view all the answers

    What is the goal of the study of consumer behavior?

    <p>To understand how people make spending decisions</p> Signup and view all the answers

    How are cultural values typically learned?

    <p>Through observation and imitation</p> Signup and view all the answers

    What is a subculture?

    <p>A small group within a larger cultural group</p> Signup and view all the answers

    What occurs when the quantity demanded is greater than the quantity supplied?

    <p>Market Shortage</p> Signup and view all the answers

    At what price does a surplus occur?

    <p>Above the equilibrium point</p> Signup and view all the answers

    What is the formula for Price Elasticity of Demand?

    <p>Percentage change in quantity demanded divided by percentage change in price</p> Signup and view all the answers

    What is the basis of consumer demand according to the Theory of Utility?

    <p>The ability of goods and services to satisfy consumer wants</p> Signup and view all the answers

    What is a Utility Function?

    <p>A descriptive statement that relates satisfaction or well-being to the consumption of goods and services</p> Signup and view all the answers

    What is Point Elasticity describing?

    <p>The elasticity of one variable with respect to another between two given points</p> Signup and view all the answers

    What does Elasticity of Demand measure?

    <p>The responsiveness of demand for a commodity</p> Signup and view all the answers

    What is the concept that states that as an individual increases consumption of a given product, the marginal utility gained from consumption eventually declines?

    <p>The law of diminishing marginal utility</p> Signup and view all the answers

    What is fundamentally about substitutes in Elasticity of Demand?

    <p>Price Elasticity of Demand</p> Signup and view all the answers

    What is the term for the combination of goods and services desired by the consumer that reflect the combinations of goods and services available in the market place?

    <p>Market Basket</p> Signup and view all the answers

    What is the added satisfaction derived from a 1-unit increase in consumption of other goods and services constant?

    <p>Marginal Utility</p> Signup and view all the answers

    What is the simplest definition of consumption?

    <p>The act of using or drawing benefits from a resource, product, or service to fulfill a need or to attain satisfaction</p> Signup and view all the answers

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