Living Standards and Scarcity

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Questions and Answers

Match each type of resource with its correct description:

Natural resources = Raw materials from nature used for human purposes Labour resources = Human effort, skills, and knowledge used in production Capital resources = Man-made goods used to produce other goods and services Financial capital = Money and investments used to start or expand a business

Match the following concepts with their correct definitions related to living standards:

Material living standards = Economic well-being affected by per capita consumption of goods and services and income. Non-material living standards = Quality of life affected by factors like leisure time, happiness, and environmental quality. Living standards = Overall well-being of a nation considering both economic and quality of life factors. Per capita consumption = The average consumption of goods and services by each person in a population over a period of time.

Match each type of economic efficiency with its description:

Allocative efficiency = Resources are used to maximize society’s satisfaction of needs and wants. Productive efficiency = Maximum output is achieved with available resources at the lowest cost. Dynamic efficiency = Resources are reallocated quickly in response to changing consumer needs. Intertemporal efficiency = Optimal balance between current consumption and saving for future investment.

Connect each advantage to the condition of perfect competition it supports:

Many rival sellers = Prevents any single seller from controlling market prices. Low barriers to entry = Allows new competitors to enter the market easily. Homogenous products = Intensifies competition as products are identical. Customer sovereignty = Production reflects consumer purchases, not government planning. Signup and view all the answers

Match the following terms with their effects on the demand curve:

Increase in disposable income = Shifts the demand curve to the right (expansion). Increase in the price of a complementary product = Shifts the demand curve to the left (contraction). Increase in consumer confidence = Shifts the demand curve to the right (expansion). Decrease in the price of a substitute product = Shifts the demand curve to the left (contraction). Signup and view all the answers

Match each concept with its appropriate description in economics:

Needs = Basic requirements for human survival, like food, water, and shelter. Wants = Desires for goods and services that are not essential for survival. Resources = Inputs used to produce goods and services, which are limited in supply. Opportunity cost = The value of the next best alternative forgone when making a choice. Signup and view all the answers

Associate each change with its effect on the supply curve:

Increased number of suppliers = Shifts the supply curve to the right (expansion). Advances in technology = Shifts the supply curve to the right (expansion). Increased production costs = Shifts the supply curve to the left (contraction). Favorable climate conditions = Shifts the supply curve to the right (expansion). Signup and view all the answers

Connect each condition with its influence on market equilibrium:

Shortage = Excess of quantity demanded over quantity supplied, leading to upward pressure on prices. Surplus = Excess of quantity supplied over quantity demanded, leading to downward pressure on prices. Equilibrium price = The price at which quantity demanded equals quantity supplied. Market equilibrium = A state where supply and demand are balanced, with no tendency for change. Signup and view all the answers

Relate each elasticity scenario to its potential impact on resource allocation:

Demand is relatively elastic = A price rise will cause demand to fall significantly. Resources will be reallocated away from that good/service. Demand is relatively inelastic = A price rise has little to no impact on demand resulting in resources continuing to be allocate to these goods. Supply is relatively elastic = A price rise can easily lead to an increase in supply. Supply is relatively inelastic = A price rise has little to no impact on supply. Signup and view all the answers

Match the following economic questions with their focus:

What and how much to produce? = Considers the interaction of supply and demand of self-interested consumers and producers. How to produce? = Considers the cost and benefits of different production methods and which factors of production should be used. For whom to produce? = Considers who can actually consume the product. Why to produce? = This is NOT an economic question. Signup and view all the answers

Match each of the below terms to its correct mathematical definition:

Price elasticity of demand (PED) = Percentage change in quantity demanded divided by the percentage change in price Unit Elasticity = Price elasticity of demand is equal to 1 Relatively inelastic demand = Price elasticity of demand is greater than 0 but less than 1 Relatively elastic demand = Price elasticity of demand is greater than 1 Signup and view all the answers

Match the below factors with whether they cause an expansion or contraction of supply:

Decreased production costs = Expansion of supply Unfavourable climate conditions = Contraction of supply Obsolete Technology = Contraction of supply Increased productivity = Expansion of supply Signup and view all the answers

Match each of the examples to the correct condition for a free and competitive market:

Numerous clothing stores in a city = Strong competition and the absence of market power Minimal licensing required to start a bakery or restaurant = Low barriers to ease the entry into the market Crops such as wheat or food such as sugar = No product differentiation (homogenous products) Variety of products available based on the current trend. = Customer sovereignty exists Signup and view all the answers

Match the scenarios with the types of resources used:

Mining iron ore = Natural resources Software developers creating new apps = Labour resources Factories using automated machinery = Capital resources Financing a new business venture = Financial capital Signup and view all the answers

Match the events to how the Production Possibility Frontier is shifted:

Immigration of skilled workers = PPF shifts outward indicating increased productive capacity Increased Training = PPF shifts outward indicating increased productive capacity New technologies available = PPF shifts outward indicating increased productive capacity Increased regulations and taxes = Does not lead to a shifting of the PPF Signup and view all the answers

Match each of the events to the correct terminology based on the demand curve:

Movement of the demand curve = Change in position along the line due to a price factor Shift of the demand curve = A new line is drawn either showing an expansion or contraction in demand through non-price factors Movement of the demand curve when the price decreases = Expansion of quantity demand Movement of the demand curve when the price increases = Contraction of quantity demand Signup and view all the answers

Match each of the events to the correct terminology based on the supply curve:

Movement of the supply curve = Change in position along the line due to a price factor Shift of the supply curve = A new line is drawn either showing an expansion or contraction in supply through non-price factors Movement of the supply curve when the price decreases = Contraction of quantity supplied Movement of the supply curve when the price increases = Expansion of quantity supplied Signup and view all the answers

Match the correct theory to the description:

The income effect = When the good or service becomes more expensive and less affordable for most, fewer people have the necessary income to spend of it. The substitution effect = When the food or service becomes more expensive, buyers look for cheaper alternatives or substitutes of the good The profit motive = A higher selling price usually means an increase in sales revenue and profits Consideration of opportunity costs = If sellers receive a higher price for what they sell, the opportunity costs of producing another good or service rise Signup and view all the answers

Match the example of the good or service with its likely price elasticity of demand:

Gasoline = Relatively inelastic (Low PED) Luxury car = Relatively elastic (High PED) Water = Relatively inelastic (Low PED) Concert Ticket = Relatively elastic (High PED) Signup and view all the answers

Match the examples with whether it will lead to an increase or decrease in living standards:

Increase in GDP per capita = Increase in living standards Worsening environmental conditions = Decrease in living standards Increase in leisure time = Increase in living standards Increase in crime rate = Decrease in living standards Signup and view all the answers

Match the definition with the term:

Relative scarcity = The imbalance between people’s unlimited wants on the one hand, and on the other, limited resources available to satisfy those wants Living Standards = How well off a nation is overall Production possibility frontier = Illustrates the physical limits of a nation's production levels. Equilibrium = Point where demand and supply curves intersect Signup and view all the answers

Connect the events with the correct shift of the demand curve.

Decrease in interest rates = Shift to the Right - Expansion Decreased taste and preference for a product = Shift to the Left - Contraction Increased price of complement product = Shift to the Left - Contraction Increase price of substitute product = Shift to the Right - Expansion Signup and view all the answers

Connect the condition on what the PPF must be on to reach maximum efficency:

Allocative efficiency = This will be a point chosen by society located somewhere on the PPF. Productive efficiency = Any one choice selected by a society on the PPF could represent maximum efficiency where output per unit of input is at its maximum. Dynamic efficiency = Dynamic efficiency would influence the speed of change from one point selected by society on the PPF, to another point on the PPF Intertemporal efficiency = Finding the optimal balance between current consumption for future generations. Signup and view all the answers

Match the following economic actors with the economic behavior

Rise in price = Contraction in quantity demanded Fall in price = Expansion in demand Price rises = Expand the quantity supplied Price falls = Contract the quantity supplied Signup and view all the answers

Match the scenarios with its elasticity:

10% fall in price results in a 20% expansion in the quantity = Demand is relatively elastic 10% fall in price results in a 10% expansion in quantity demanded = Demand is of unit elasticity 10% fall in price results in a 5% expansion in quantity demanded = Demand is relatively inelastic 10% rise in price leads to a 10% increase in the quantity supplied = Supply is of unit elastic Signup and view all the answers

Match each type of efficiency with what it focuses on:

Allocative efficiency = Resources are used in ways that maximise society’s satisfaction Productive efficiency = Maximum output is achieved with the available resources Dynamic efficiency = Resources are reallocated quickly in response to the changing needs and tastes of consumers Intertemporal efficiency = Finding the optimal balance between current consumption Signup and view all the answers

Match these to what type of resources they are:

Minerals - iron ore, copper = Natural resources Skilled workers - engineers, doctors = Labour resources Machinery and equipment - manufacturing machines, computers = Capital resources Money, investments = Financial capital Signup and view all the answers

Match the factor that leads to each condition of a perfectly competitive market

Numerous rival sellers = Strong competition and the absence of market power Significant barriers to entry = Monopoly or oligopoly type markets have limited competition Producers sell identical products without differentiation = Competition intensifies in homogenous markets Government Intervention such as price control = Absence of government controls and restrictions Signup and view all the answers

Match the correct statement of the law:

Law of Demand = As price increases, quantity demanded decreases and as prices decrease, quantity demand increases The Law of Supply = As prices increase, quantity supply increase and as prices decrease, quantity supply decreases What and how much to produce? = Considers the interaction of supply and demand How to produce? = Consider the cost and benefits of different production methods Signup and view all the answers

Match each term of elasticity with its impact:

Demand is relatively elastic = Prices rise, demand falls significantly, leading to a reallocation of resources Demand is relatively inelastic = Prices rise, demand remains relatively stable, so resources continue to be allocated Dynamic efficiency = Increase in mobility and resources are highly mobile Intertemporal efficiency = Help to boost allocative efficiency Signup and view all the answers

Match which concept goes with a statement regarding the PPF curve

Allocative efficiency = Will be a point chosen by society located somewhere on the PPF Productive efficiency = Output per unit of input is at its maximum Dynamic efficiency = Resources are highly mobile and can be reallocated easily between alternative uses the PPF Intertemporal efficiency = Contrasts satisfying our immediate wants vs those of future generations Signup and view all the answers

Match each scenario with its location within the demand curve

Rise in price = Contraction in quantity demanded Fall in price = Expansion in demand New line is drawn either showing an expansion = Shift in the position of the demand line Demand to contract through non-price factors = Shift in a new line Signup and view all the answers

Match who will cause each shift in the supply curve:

Increased number of suppliers = Expansion Advances in technology = Expansion Increased productivity = Expansion Decreased number of suppliers = Contraction Signup and view all the answers

Connect these terms on describing demand.

Price elasticity of demand = Responsiveness of the quantity demanded, relative to the change in price Goods will have a higher PED if the absolute value is = Greater than one Goods will have a lower PED if the absolute value is = Less than one Unit Elasticity = PED = 1 Signup and view all the answers

Match the meaning of free and unregulated:

Absence of government controls = A free and deregulated market fosters competition Consumers behave rationally = Seeking low prices and avoiding high ones Good or perfect knowledge of the market = Prevent misallocation Firms use resources to try and maximise their profits = Shift for profit, aided by easy industry entry Signup and view all the answers

What is the definition of:

Allocative efficiency = Resources are diverted to where they are most wanted Productive efficiency = Resources are allocated so that maximum output is achieved Dynamic efficiency = Resources are highly mobile and can be reallocated Intertemporal efficiency = Finding the right balance between satisfying our immediate wants for goods and services Signup and view all the answers

Match the concept with the cause of either an expansion or contraction:

Increase disposable income = Expansion Increase price of substitute poricut = Expansion Increase tate and preference for a product = Expansion Increased price of complement product = Contraction Signup and view all the answers

Match each condition with its influence on market equilibrium

Equilibrium Price = There is no market glut or shortage Market equilibrium = The market is in a ‘state of rest’ Market Equilibrium = Supplier and consumers happy Signup and view all the answers

How does it affect the PPF?:

Immigration = Shifting the PPF curve Trade = Shifting the PPF curve Education = Shifting the PPF curve Inflation = Does not shift the PPF curve Signup and view all the answers

Flashcards

Living Standards

How well-off a nation is overall, considering both material and non-material aspects.

Material Living Standard

The economic wellbeing affected by per capita consumption and income per year.