Introduction to Economics
48 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the main reason why economics teaches a way of thinking?

  • To analyze opportunity costs (correct)
  • To understand societal changes
  • To evaluate fiscal policies
  • To measure national incomes

Which of the following best describes marginalism?

  • Analyzing the impact of scarcity
  • Examining total costs over time
  • Evaluating incremental costs and benefits (correct)
  • Measuring market efficiency

How did the Industrial Revolution influence British society?

  • By driving population movements to cities (correct)
  • By promoting rural isolation
  • By establishing global trade networks
  • By increasing agricultural debts

What is the primary focus of microeconomics?

<p>Individual industries and decision-making units (D)</p> Signup and view all the answers

What aspect of economics helps in becoming an informed citizen?

<p>Understanding local and federal government decisions (D)</p> Signup and view all the answers

Which economist is associated with 'Wealth of Nations'?

<p>Adam Smith (C)</p> Signup and view all the answers

In which context does macroeconomics primarily operate?

<p>Assessing national output and employment (C)</p> Signup and view all the answers

What does the concept of an efficient market imply?

<p>Profit opportunities are eliminated quickly (A)</p> Signup and view all the answers

What is the primary focus of behavioral economics?

<p>Impact of automatic enrollment in savings programs (B)</p> Signup and view all the answers

Which area of economics examines the differences between market and command systems?

<p>Comparative economic systems (A)</p> Signup and view all the answers

Econometrics primarily deals with what type of analysis?

<p>Inferences based on conditional moment inequalities (A)</p> Signup and view all the answers

What does normative economics do?

<p>Analyzes outcomes with value judgments (A)</p> Signup and view all the answers

How does environmental economics evaluate the effects of a tax on carbon?

<p>By comparing rules to tax implications on emissions (B)</p> Signup and view all the answers

Which field of economics discusses the implications of minimum wage increases on employment?

<p>Labor economics (C)</p> Signup and view all the answers

What is a model in economics primarily defined as?

<p>A mathematical representation of a theory (B)</p> Signup and view all the answers

What is one question that economic development aims to answer?

<p>Can increasing job opportunities for girls improve education? (D)</p> Signup and view all the answers

What defines a producer's absolute advantage in production?

<p>Ability to produce goods using fewer resources (B)</p> Signup and view all the answers

In which scenario does a producer have a comparative advantage?

<p>When they can produce goods at a lower opportunity cost (B)</p> Signup and view all the answers

What is the main purpose of investing in capital goods?

<p>To trade present benefits for future gains (D)</p> Signup and view all the answers

What does the Production Possibility Frontier (PPF) illustrate?

<p>The maximum combinations of goods that can be produced efficiently (C)</p> Signup and view all the answers

What does a negative slope on the PPF indicate?

<p>More capital goods can only be produced by sacrificing consumer goods (C)</p> Signup and view all the answers

Which of the following best describes the relationship between capital and consumer goods?

<p>Trading present advantages for future gains involves capital goods (B)</p> Signup and view all the answers

How does the concept of opportunity cost relate to weighing present and future benefits?

<p>It considers the benefits one foregoes when choosing the present over the future (A)</p> Signup and view all the answers

What point on the PPF represents unattainable production combinations?

<p>Points above the curve indicating unachievable output (A)</p> Signup and view all the answers

What occurs when new firms enter an industry?

<p>The supply curve shifts right. (D)</p> Signup and view all the answers

What happens at market equilibrium?

<p>Quantity supplied equals quantity demanded. (C)</p> Signup and view all the answers

Which condition indicates a shortage in the market?

<p>Excess demand. (D)</p> Signup and view all the answers

What is the result of excess demand in the market?

<p>Prices tend to rise. (B)</p> Signup and view all the answers

How is market supply derived from individual firm supply curves?

<p>By summing all individual quantities supplied at each price. (D)</p> Signup and view all the answers

Which of the following conditions does not contribute to a shift in the supply curve?

<p>Changes in consumer preferences. (D)</p> Signup and view all the answers

What signifies that a market is in equilibrium?

<p>No tendency for price to change. (A)</p> Signup and view all the answers

When firms exit the market, what happens to the supply curve?

<p>The supply curve shifts left. (C)</p> Signup and view all the answers

What characterizes perfectly inelastic demand?

<p>Quantity demanded does not respond to price changes (A)</p> Signup and view all the answers

How is unitary elasticity defined?

<p>The percentage change in quantity demanded is the same as the percentage change in price (C)</p> Signup and view all the answers

What defines point elasticity in relation to demand?

<p>It uses the slope measurement. (A)</p> Signup and view all the answers

What is indicated by a demand elasticity with an absolute value greater than 1?

<p>Elastic demand (D)</p> Signup and view all the answers

What does the midpoint formula help improve in elasticity calculations?

<p>Provides a more precise calculation of percentages (B)</p> Signup and view all the answers

What happens to total revenue when demand is elastic and the price is cut?

<p>Total revenue increases. (A)</p> Signup and view all the answers

Which of the following describes inelastic demand?

<p>The numerical value of elasticity is between 0 and 1 (A)</p> Signup and view all the answers

What is the effect on demand elasticity when substitutes are more available?

<p>Demand elasticity becomes elastic. (D)</p> Signup and view all the answers

When the percentage decline in quantity demanded is larger than the percentage increase in price, what happens to total revenue?

<p>Total revenue decreases. (B)</p> Signup and view all the answers

What type of demand is characterized by quantity demanded falling to zero with any increase in price?

<p>Perfectly Elastic Demand (D)</p> Signup and view all the answers

When can you say that demand is perfectly inelastic?

<p>When any change in price leads to no change in quantity demanded (D)</p> Signup and view all the answers

Which type of elasticity measures the responsiveness of quantity demanded to changes in income?

<p>Income elasticity of demand (A)</p> Signup and view all the answers

Which statement about elasticity of demand is true?

<p>Elasticity is a ratio of percentage changes in quantity demanded and price (D)</p> Signup and view all the answers

What is the primary impact of a price increase on the quantity demanded when demand is inelastic?

<p>Quantity demanded decreases moderately. (A)</p> Signup and view all the answers

What does the cross-price elasticity of demand measure?

<p>Response of quantity of one good to price changes of another good (C)</p> Signup and view all the answers

What is the likely sign of elasticity of supply in output markets?

<p>Always positive (A)</p> Signup and view all the answers

Flashcards

Opportunity Cost

The best alternative given up when making a choice.

Marginalism

Analyzing the extra costs or benefits of a decision.

Efficient Market

A market where profit opportunities vanish quickly.

Microeconomics

The study of individual markets and decision-makers (firms and households).

Signup and view all the flashcards

Macroeconomics

The study of the whole economy, including national output and employment.

Signup and view all the flashcards

Industrial Revolution

A period of major advancements in agriculture, manufacturing, and transportation, leading to population shifts.

Signup and view all the flashcards

Scarcity(Limited Resources)

Limited resources that force people to make choices .

Signup and view all the flashcards

Absolute Advantage

Producing a good/service with fewer resources (lower cost per unit).

Signup and view all the flashcards

Comparative Advantage

Producing a good/service at a lower opportunity cost than another.

Signup and view all the flashcards

Opportunity Cost

The value of the next best alternative given up.

Signup and view all the flashcards

Capital Goods

Goods used to produce other goods (e.g., machinery, tools).

Signup and view all the flashcards

Consumer Goods

Goods produced for immediate consumption.

Signup and view all the flashcards

Production Possibility Frontier (PPF)

Graph showing possible combinations of goods/services using all resources efficiently.

Signup and view all the flashcards

Production Efficiency

Producing the maximum output from available resources.

Signup and view all the flashcards

PPF Negative Slope

Producing more of one good means producing less of another.

Signup and view all the flashcards

Market Supply

The total amount of a product supplied by all producers in a market at various prices.

Signup and view all the flashcards

Behavioral Economics

Studies how people make economic decisions, considering psychological factors.

Signup and view all the flashcards

Shift of Supply Curve

A change in supply, caused by factors other than price (e.g., input costs, technology).

Signup and view all the flashcards

Comparative Economic Systems

Examines how different economic systems allocate resources (like market vs. command).

Signup and view all the flashcards

Econometrics

Uses statistical methods to analyze economic data and test theories.

Signup and view all the flashcards

Market Equilibrium

The state where quantity supplied equals quantity demanded, and there's no tendency for price to change.

Signup and view all the flashcards

Economic Development

Studies how economies grow and improve. Focuses on factors like employment and education.

Signup and view all the flashcards

Excess Demand

A situation where quantity demanded is greater than quantity supplied at a given price.

Signup and view all the flashcards

Economic History

Examines economic events and trends throughout history, especially their impacts.

Signup and view all the flashcards

Excess Supply

A situation where quantity supplied is greater than quantity demanded at a given price.

Signup and view all the flashcards

Environmental Economics

Examines the economic impact of environmental issues and policies.

Signup and view all the flashcards

Deriving Market Supply

Calculating total market supply by summing the supply of all individual firms.

Signup and view all the flashcards

Finance

Deals with the markets, investments, and management of money.

Signup and view all the flashcards

Health Economics

Studies the economic aspects of healthcare systems and choices.

Signup and view all the flashcards

History of Economic Thought

Studies how economic ideas have changed over time.

Signup and view all the flashcards

Industrial Organization

Analyzes how firms and industries operate in markets.

Signup and view all the flashcards

International Economics

Studies trade relations and economic interactions between countries.

Signup and view all the flashcards

Labor Economics

Studies the labor market, including wages, employment, and workforce issues.

Signup and view all the flashcards

Law and Economics

Studies the intersection of law and economics, examining policy impacts.

Signup and view all the flashcards

Public Economics

Studies government policies and their impact on the economy, including corruption.

Signup and view all the flashcards

Urban and Regional Economics

Studies economic activity in urban and regional areas.

Signup and view all the flashcards

Positive Economics

Describes economic behavior and outcomes without evaluating them.

Signup and view all the flashcards

Normative Economics

Evaluates economic outcomes and suggests policies.

Signup and view all the flashcards

Economic Model

Mathematical representation of a theory, or expected relationship between variables.

Signup and view all the flashcards

Elasticity of Demand

How responsive quantity demanded is to price changes.

Signup and view all the flashcards

Perfectly Inelastic Demand

Quantity demanded does not change when price changes.

Signup and view all the flashcards

Perfectly Elastic Demand

Quantity demanded drops to zero with any price increase.

Signup and view all the flashcards

Elastic Demand

Percentage change in quantity demanded is greater than percentage change in price.

Signup and view all the flashcards

Inelastic Demand

Quantity demanded changes less than the percentage change in price.

Signup and view all the flashcards

Unitary Elasticity

Percentage change in quantity demanded equals percentage change in price.

Signup and view all the flashcards

Calculating Elasticity

Determines how responsive quantity demanded is to price changes.

Signup and view all the flashcards

Percentage Change of Quantity Demanded

Calculates the proportion of change in quantity demanded.

Signup and view all the flashcards

Percentage Change of Price

Calculates the proportion of change in price.

Signup and view all the flashcards

Midpoint Formula

More precise method for calculating percentage changes, using the midpoint of values.

Signup and view all the flashcards

Point Elasticity

A measure of elasticity calculated using the slope of a demand curve at a specific point.

Signup and view all the flashcards

Elasticity Formula

Percentage change in quantity demanded divided by the percentage change in price.

Signup and view all the flashcards

Elastic Demand

A situation where the percentage change in quantity demanded is greater than the percentage change in price.

Signup and view all the flashcards

Inelastic Demand

A situation where the percentage change in quantity demanded is smaller than the percentage change in price.

Signup and view all the flashcards

Total Revenue

Price multiplied by quantity demanded.

Signup and view all the flashcards

Substitutes (in demand)

Goods that can be used in place of each other (e.g., Coke & Pepsi).

Signup and view all the flashcards

Income Elasticity of Demand

Responsiveness of quantity demanded to changes in consumer income.

Signup and view all the flashcards

Cross-Price Elasticity of Demand

How the demand for one good changes when the price of another good changes.

Signup and view all the flashcards

Elasticity of Supply

Responsiveness of quantity supplied to changes in price.

Signup and view all the flashcards

Elasticity of Labor Supply

Responsiveness of labor supplied to changes in the price of labor (wages).

Signup and view all the flashcards

Excise Tax

A tax per unit on a specific good or service.

Signup and view all the flashcards

Study Notes

Introduction to Economics

  • Economics is the study of how societies use scarce resources to satisfy unlimited wants and needs.
  • Three reasons to study economics:
    • Develop critical thinking skills
    • Understand societal structures
    • Become an informed citizen

Scarcity, Choice, and Opportunity Cost

  • Scarcity: Limited resources, unlimited wants.
  • Choice: A necessary result of scarcity
  • Opportunity cost: The value of the next best alternative forgone when a choice is made

Factors of Production (Resources)

  • Land: Natural resources (e.g., land, minerals, water)
  • Labor: Human effort and skills
  • Capital: Man-made resources used in production (e.g., tools, machinery, factories).

Production Possibility Frontier (PPF)

  • PPF: A curve/graph depicting all possible combinations of output for two goods or services using all available resources efficiently
  • Its slope represents the opportunity cost of producing one good over another

Economic Systems

  • Command Economy: Government controls the factors of production (e.g., output, prices).
  • Market Economy: Individuals and firms own resources and pursue self-interest.
  • Mixed Economy: An economy that combines characteristics of command and market economies (e.g., US).

Demand and Supply

  • Demand: The relationship between a good's price and the amount consumers are willing to buy.
  • Law of Demand: Higher prices lead to lower quantities demanded (and vice versa).
  • Supply: The relationship between a good's price and the amount producers are willing to sell.
  • Law of Supply: Higher prices lead to higher quantities supplied (and vice versa).
  • Market Equilibrium: Where supply and demand curves intersect; The price where quantity supplied = quantity demanded.

Elasticity

  • Elasticity: The responsiveness of one variable to a change in another variable.
  • Price Elasticity of Demand: Responsiveness of quantity demanded to a change in price.
  • Price Elasticity of Supply: Responsiveness of quantity supplied to a change in price.
  • Determinants of Elasticity: Availability of substitutes, time, and proportion of income spent on the good.

Total Revenue

  • Total Revenue = Price × Quantity
  • The relationship between price changes and total revenue depends on the elasticity of demand.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Introduction to Economics PDF

Description

This quiz provides an overview of key concepts in economics, including scarcity, choices, opportunity costs, and the factors of production. It also explores the production possibility frontier and the different economic systems. Test your understanding of how economies function and the critical thinking skills necessary for informed citizenship.

More Like This

Fundamental Concepts of Economics Quiz
5 questions

Fundamental Concepts of Economics Quiz

GlamorousAmethyst avatar
GlamorousAmethyst
Economics Concepts: Scarcity and Trade-Offs
20 questions

Economics Concepts: Scarcity and Trade-Offs

KeenMookaite avatar
KeenMookaite
Economics Concepts and Definitions
76 questions

Economics Concepts and Definitions

AwestruckMeteor avatar
AwestruckMeteor
Introduction to Economics Concepts
48 questions

Introduction to Economics Concepts

SubstantiveSupernova8432 avatar
SubstantiveSupernova8432
Use Quizgecko on...
Browser
Open
Browser
Browser