Economics Overview: Principles and Scarce Resources

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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?

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 Signup and view all the answers

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

The next best alternative that is given up Signup and view all the answers

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

Because they weigh the costs and benefits of different options Signup and view all the answers

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

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

What is the purpose of incentives in a market economy?

To encourage people to make certain decisions Signup and view all the answers

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

A shift to the left 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?

A shift to the left Signup and view all the answers

Economics Overview: Principles and Scarce Resources

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Questions and Answers

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

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

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

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

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

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

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

What is the purpose of incentives in a market economy?

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

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

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