Podcast
Questions and Answers
The vertical axis of a demand curve shows:
The vertical axis of a demand curve shows:
The total amount of a product available in a market at a given price is called the:
The total amount of a product available in a market at a given price is called the:
Which statement best explains the law of supply?
Which statement best explains the law of supply?
According to the law of supply, price and quantity move:
According to the law of supply, price and quantity move:
Signup and view all the answers
The point where supply and demand meet and prices are set is called:
The point where supply and demand meet and prices are set is called:
Signup and view all the answers
The amount of goods and services consumers want is called the:
The amount of goods and services consumers want is called the:
Signup and view all the answers
A factor that most directly affects the demand for automobiles is:
A factor that most directly affects the demand for automobiles is:
Signup and view all the answers
How might a drop in price for washing machines affect the demand for dryers?
How might a drop in price for washing machines affect the demand for dryers?
Signup and view all the answers
How do changing prices affect supply and demand?
How do changing prices affect supply and demand?
Signup and view all the answers
Which factor most directly affects a furniture company's supply?
Which factor most directly affects a furniture company's supply?
Signup and view all the answers
Which statement best explains the law of demand?
Which statement best explains the law of demand?
Signup and view all the answers
What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?
What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?
Signup and view all the answers
Supply and demand coordinate to determine prices by working:
Supply and demand coordinate to determine prices by working:
Signup and view all the answers
On a graph, an equilibrium point is where:
On a graph, an equilibrium point is where:
Signup and view all the answers
Which occurs during market equilibrium? (Check all that apply)
Which occurs during market equilibrium? (Check all that apply)
Signup and view all the answers
Which explains the connection between the law of demand and excess demand?
Which explains the connection between the law of demand and excess demand?
Signup and view all the answers
On a graph, a(n) ____________________ supply shows the demand portion of equilibrium.
On a graph, a(n) ____________________ supply shows the demand portion of equilibrium.
Signup and view all the answers
A limited amount of goods available means that excess _____________ is occurring.
A limited amount of goods available means that excess _____________ is occurring.
Signup and view all the answers
What is the difference between a price floor and a price ceiling?
What is the difference between a price floor and a price ceiling?
Signup and view all the answers
A consumer might respond to a negative incentive by:
A consumer might respond to a negative incentive by:
Signup and view all the answers
Which statement best describes incentives?
Which statement best describes incentives?
Signup and view all the answers
The lowest amount a manufacturer can pay factory workers is an example of:
The lowest amount a manufacturer can pay factory workers is an example of:
Signup and view all the answers
The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?
The government has set a price floor on bread. Manufacturers cannot sell loaves for less than $5.00, which is a dollar above the market price. What will most likely result from this price control?
Signup and view all the answers
In the market, actions known as incentives affect:
In the market, actions known as incentives affect:
Signup and view all the answers
Which statement best explains how elasticity and incentives work together?
Which statement best explains how elasticity and incentives work together?
Signup and view all the answers
Which is an example of a negative incentive for producers?
Which is an example of a negative incentive for producers?
Signup and view all the answers
Price controls on goods can be set by:
Price controls on goods can be set by:
Signup and view all the answers
Producers often work to maximize their debts ___________________ and make them as large as possible.
Producers often work to maximize their debts ___________________ and make them as large as possible.
Signup and view all the answers
What is the difference between marginal cost and marginal revenue?
What is the difference between marginal cost and marginal revenue?
Signup and view all the answers
Brenda's Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total profit the company earns after selling 100 boards?
Brenda's Boards manufactures skateboards. Each skateboard sells for $45 and includes the following expenses: $3 for the wheels and mounts, $1 for the plastic board, $1 for the paint, and $10 for the labor. What is the total profit the company earns after selling 100 boards?
Signup and view all the answers
In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of:
In order to calculate marginal cost, producers must compare the difference in the cost of producing one unit to the cost of:
Signup and view all the answers
How can producers maximize their profit? (Check all that apply)
How can producers maximize their profit? (Check all that apply)
Signup and view all the answers
To generate higher profits, producers must work to:
To generate higher profits, producers must work to:
Signup and view all the answers
Profit equals the total amount of money made minus:
Profit equals the total amount of money made minus:
Signup and view all the answers
It is better for businesses to have higher __________________ opportunity costs, as it often gives them a comparative advantage.
It is better for businesses to have higher __________________ opportunity costs, as it often gives them a comparative advantage.
Signup and view all the answers
Which calculation helps determine which producer has the absolute advantage?
Which calculation helps determine which producer has the absolute advantage?
Signup and view all the answers
Which of these best describes an opportunity cost?
Which of these best describes an opportunity cost?
Signup and view all the answers
Which is the best measurement to use to determine who might have the absolute advantage?
Which is the best measurement to use to determine who might have the absolute advantage?
Signup and view all the answers
Which best describes how consumers may benefit from specialization?
Which best describes how consumers may benefit from specialization?
Signup and view all the answers
A producer with a comparative advantage has the ability to produce a good or service at:
A producer with a comparative advantage has the ability to produce a good or service at:
Signup and view all the answers
Which best explains why producers choose to specialize? (Choose two answers)
Which best explains why producers choose to specialize? (Choose two answers)
Signup and view all the answers
Which best describes how producers benefit from specialization?
Which best describes how producers benefit from specialization?
Signup and view all the answers
The term ______________________, often used in conjunction with absolute advantage, is defined as making the best use of resources.
The term ______________________, often used in conjunction with absolute advantage, is defined as making the best use of resources.
Signup and view all the answers
Study Notes
Demand and Supply Basics
- Demand curve's vertical axis represents the price of a product.
- Supply refers to the total quantity of a product available in the market at a specific price.
- The law of supply indicates that as prices rise, the quantity supplied by producers increases, and vice versa.
- Price and quantity supplied move in the same direction according to the law of supply.
- The equilibrium point is where supply and demand curves meet, determining prices.
Demand and Supply Interactions
- Demand reflects the amount of goods and services consumers wish to purchase.
- Factors affecting demand include consumer tastes and preferences.
- A drop in the price of one good can increase demand for complementary goods.
- Changes in price cause differing impacts; as prices decrease, supply decreases, while demand may increase.
Market Conditions and Responses
- When quantity supplied exceeds quantity demanded, it results in excess supply.
- Market equilibrium occurs when supply meets demand at a specific price and quantity.
- The law of demand states that quantity demanded decreases as prices rise and increases as prices fall.
- Excess demand occurs when demand outweighs supply due to limited availability.
Price Controls and Incentives
- A price floor is a minimum price set above the market price, causing a decrease in quantity demanded and an increase in quantity supplied.
- Incentives can influence both consumers and producers, being either positive or negative.
- A price ceiling is the maximum price allowed, often leading to shortages if set below equilibrium price.
Cost and Revenue Dynamics
- Marginal cost is the cost of producing one additional unit, while marginal revenue is the income from selling one additional unit.
- To maximize profit, producers should manage marginal costs and aim to keep them below marginal revenues.
- Total profit is calculated as total revenue minus total expenses.
Specialization and Comparative Advantage
- Comparative advantage enables a producer to create goods at a lower opportunity cost than competitors.
- Specialization enhances efficiency, leading to increased profits and a greater market presence.
- Absolute advantage relates to producing more efficiently with fewer resources, enhancing competitive capability.
Opportunity Costs and Decision Making
- Opportunity cost represents the trade-offs made when choosing one option over another.
- Higher opportunity costs may still provide a comparative advantage under certain market conditions.
- Producers benefit from specialization by achieving lower costs and enhancing product quality for consumers.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your knowledge on key concepts from Economics Unit 2 with these flashcards. Learn about demand curves, supply, and more essential economic principles through engaging questions and answers. Perfect for students preparing for exams.
