Essential Foundations of Economics Quiz

A decision-making process where the choice favored by the majority is selected.

Resources are given to the winners of a competition.

Resources are given to those who arrive first in line.

Resources are divided equally among everyone.

Resources are given to random winners selected using a lottery system.

Resources are allocated based on desirable personal qualities.

Resources are obtained through coercion or force; potentially, war or theft.

Methods of resource allocation that maximize benefits and minimize waste.

Producing the quantities of goods and services that people value most highly. It's impossible to increase one good without decreasing another.

The benefit a person receives from consuming one more unit of a good or service. It decreases as you consume more.

Producing on the Production Possibility Frontier (PPF).

The opportunity cost of producing one more unit of a good or service, shown by the slope of the PPF.

A graph that shows the various combinations of output that could be produced given the available resources and technology.

The added benefit from getting one more unit of something goes down as you get more of it.

The PPF shows what can be produced, however the value of each output is not included on the PPF itself.

The curve showing the willingness to give up other goods for an additional unit of a good (Pizzas, in the example.)

A graphical representation showing the quantity of a good or service consumers are willing to buy at different prices, all other factors remaining constant.

The demand curve shows the quantity demanded at each price and the maximum price a consumer is willing to pay for the last unit available.

The difference between the total value a consumer places on a good and the total amount they pay for it.

A consumer will buy one more unit of a good or service if its price is less than or equal to the marginal benefit they receive.

A graphical representation showing the quantity of a good or service producers are willing to sell at different prices, all other factors remaining constant.

A seller will produce one more unit of a good or service if the price they receive exceeds or equals the marginal cost.

Government intervention that sets limits on how much a good or service can cost.

Government intervention that limits the amount of a good or service that can be produced.

A payment made by buyers to the government for the right to consume a good or service.

A payment made by the government to sellers for producing a good or service.

A cost or benefit that affects someone other than the buyer or seller of a good or service.

A good that is non-rivalrous (one person's use doesn't diminish another's) and non-excludable (no one can be prevented from using it).

A resource that is rivalrous (one person's use diminishes another's) but non-excludable (no one can be prevented from using it).

A firm that is the sole provider of a good or service.

The market where event organizers directly sell tickets to consumers.

The market where individuals resell tickets they bought in the primary market.

The act of buying tickets in the primary market and then reselling them at a higher price in the secondary market.

The value of the next best alternative forgone.

When the cost of buying or selling a good or service is significant, it can discourage transactions and result in underproduction.

A market is considered efficient when it allocates resources in a way that maximizes the benefits for society. It produces the goods and services people value most and provides the right mix of outputs.

Situations where the market fails to allocate resources effectively. This can occur due to high transaction costs, externalities, or imperfect information.

Two perspectives on fairness in economic outcomes. The 'Fair Rules' approach emphasizes equal opportunity and fair processes. 'Fair Results' focuses on achieving an equitable distribution of wealth and resources.

The conflict between efficiency and fairness in economic policy. Policies that promote equality, such as income redistribution, can reduce economic efficiency, and vice versa.

Government policies aimed at reducing income inequality by transferring wealth from higher-income earners to lower-income earners through mechanisms like taxes and benefits.

The practice of reselling tickets for events, concerts, or sports games at a price higher than the original ticket.

Economists generally argue that ticket scalping should not be illegal as it helps allocate tickets to those who are willing to pay the most, increasing efficiency.