Economics Overview: Principles and Scarce Resources
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Questions and Answers

What is the primary function of prices in a market economy?

  • To stimulate economic growth
  • To redistribute wealth from one group to another
  • To guide economic decisions and allocate scarce resources (correct)
  • To control the production of goods and services

    • Which of the following would cause a shift in the demand curve for hybrid cars?

  • A decrease in the price of hybrid cars
  • A decrease in the production cost of hybrid cars
  • An increase in the price of gas (correct)
  • A change in the design of hybrid cars

    • What is the result of a shift in the demand curve for hybrid cars, assuming no change in the supply curve?

  • A decrease in the price and quantity of hybrid cars
  • An increase in the price and a decrease in the quantity of hybrid cars
  • An increase in the price and quantity of hybrid cars (correct)
  • A decrease in the price and an increase in the quantity of hybrid cars

    • What is the difference between a change in the quantity supplied and a change in supply?

    <p>A change in the quantity supplied is a movement along the supply curve, while a change in supply is a shift in the supply curve</p> Signup and view all the answers

    What is the opportunity cost of choosing to buy a hybrid car?

    <p>The next best alternative that is given up</p> Signup and view all the answers

    What is the primary reason why people make rational decisions in a market economy?

    <p>Because they weigh the costs and benefits of different options</p> Signup and view all the answers

    What is the result of a trade-off in a market economy?

    <p>A gain in one area at the expense of a loss in another area</p> Signup and view all the answers

    What is the purpose of incentives in a market economy?

    <p>To encourage people to make certain decisions</p> Signup and view all the answers

    What is the effect of an increase in the cost of producing hybrid cars on the supply curve?

    <p>A shift to the left</p> Signup and view all the answers

    What is the effect of a decrease in the price of gas on the demand curve for hybrid cars?

    <p>A shift to the left</p> Signup and view all the answers

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