Economics Unit 1 Foundations Quiz

Unit 1 Foundations of Economics

• Economics: The study of how societies allocate scarce resources to satisfy unlimited wants.
• Opportunity Cost: The value of the next best alternative forgone when a choice is made.
• Scarcity: The fundamental economic problem of unlimited wants exceeding limited resources.
• Production Possibility Curve (PPC): A graphical representation showing the maximum possible output combinations of two goods or services given a set of resources and technology.
• Demand: The quantity of a good or service that consumers are willing and able to purchase at various price points, in a given time period.
• Law of Demand: As price increases, quantity demanded decreases, and vice versa, assuming other factors remain constant.
• Factors of Demand (Examples need to be listed 1-5): Factors influencing demand that include (but not limited to): price of substitutes, price of complements, income, tastes and preferences, expectations about the future, number of buyers.

Supply

• Law of Supply: As price increases, quantity supplied increases, and vice versa, assuming other factors remain constant.
• Factors of Supply (Examples need to be listed 1-7): Factors influencing supply that include (but are not limited to): input costs, technology, expectations, number of sellers, government regulations, and natural conditions.

Unit 2A + B: Elasticity + The Firm

• Elastic Demand: Measures the responsiveness of the quantity demanded to a change in price. If % change in quantity demanded > % change in price then it is elastic.

• Inelastic Demand: Measures the responsiveness of the quantity demanded to a change in price. If % change in quantity demanded < % change in price then it is inelastic.

• Perfectly Elastic Demand: A perfectly horizontal demand curve, meaning any price change will result in either zero demand or infinite demand.

• Perfectly Inelastic Demand: A perfectly vertical demand curve, meaning quantity demanded is unaffected by changes in price.

• Factors of elasticity of demand (Examples need to be listed 1-3): Factors influencing demand elasticity which include (but are not limited to). availability of substitutes, proportion of income spent on the good, time period considered.

• Revenue and price elasticity relationships: Description of revenue changes based on price elasticity (inelastic vs. elastic).

Cross Price Elasticity (Definition, formula and relationships)

• Income elasticity (Definition, formula, and relationships):

Factors of elasticity of supply (Examples need to be listed 1-4):

• Factors influencing supply elasticity: Factors influencing supply elasticity, i.e. factors influencing how quickly supply changes in relation to price changes, which include (but are not limited to): time period considered, availability of inputs, ease of changing production level.

Types of Firms

• Sole proprietorship, partnership, corporations (and characteristics), Non-profits (and characteristics): Explanations for characteristics, including liability, ownership structures, and management.

Unit 3: The Government

• Human Development Index (HDI): A composite statistic of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of development.
• Gross National Happiness (GNH): A philosophical concept that emphasizes happiness and well-being as primary goals of policy-making.
• Wage determination (list): Factors that establish the level of wages, including labor supply and demand, human capital, unions, government regulations.
• Lorenz curve: A graphical representation of income distribution within a population.
• Diagram and calculations: Calculations for constructing the Lorenz curve.

Unit 4: Macroeconomics

• GDP vs. GNP: Gross Domestic Product (GDP) vs. Gross National Product (GNP)
• GDP (Income and expenditure approach): Calculating GDP using income and expenditure methods.
• Circular flow model: A model of the flow of goods, services, and money between households and businesses, including the role of government, international trade, and financial markets.
• Types of employment (Examples need to be listed 1-3). Different forms of employment and how they work within economics, i.e. full-time, part-time, temporary.
• Inflation: A sustained increase in the general price level of goods and services in an economy over a period of time.
• Consumer Price Index (Formula): A measure of the average change over time in the prices paid by urban consumers for a basket of consumer goods and services. Formula to calculate.
• Fiscal Policy: Government policies that affect the economy through government spending and taxation.
• Expansionary Fiscal Policy: Government spending increase or tax cuts to stimulate the economy.
• Contractionary Fiscal Policy: Government spending restrictions or tax increases to cool down the economy.

Unit 2A + B: Elasticity + The Firm (continued)

• Cross price elasticity (continued): Definition, formula, and relationships.

Unit 2A + B: Elasticity + The Firm (continued):

• Income elasticity (continued): Definition, formula, and relationships.

Types of Market Structures (Unit 7)

• Perfect Competition: A market structure with many buyers and sellers, homogeneous products, free entry and exit, and no market power.

• Diagram of demand curve

• characteristics

• Monopoly: A market structure with a single seller, unique product, significant barriers to entry, and substantial market power.

• Diagram of demand curve

• characteristics

• Monopolistic Competition: A market structure with many buyers and sellers, differentiated products, relatively low barriers to entry, and some market power

• Diagram of demand curve

• characteristics

• Oligopoly: A market structure with a few significant sellers, differentiated or homogeneous products, and significant barriers to entry.

• characteristics

• Diagram of demand curve

Test your knowledge of the key concepts in Unit 1 of Economics, including scarcity, opportunity cost, and the law of demand. This quiz will challenge you on essential terms and their implications for economic decision-making.