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Questions and Answers
During a period of high demand, such as the Fingerling toy craze, if a retailer artificially caps the price of the product, what is the most likely outcome?
During a period of high demand, such as the Fingerling toy craze, if a retailer artificially caps the price of the product, what is the most likely outcome?
- The supply will increase to meet the demands.
- Demand will decrease due to perceived lack of value.
- The market will stabilize, creating an equilibrium.
- A shortage will occur, potentially leading to a black market. (correct)
Which of the following scenarios best illustrates a shift in the demand curve for a product?
Which of the following scenarios best illustrates a shift in the demand curve for a product?
- The cost of raw materials increases, raising the price of the product.
- A decrease in the product's price leads to increased sales.
- The product becomes more readily available in stores.
- A new celebrity endorsement significantly increases the product's popularity. (correct)
In a mixed market economy, what is the primary role of the government?
In a mixed market economy, what is the primary role of the government?
- To regulate certain industries and provide public goods while allowing private enterprise. (correct)
- To dictate production quotas for all industries.
- To completely abstain from economic intervention of any kind.
- To own and operate all major businesses.
If a country experiences a significant increase in productivity but its GDP remains stagnant, what is the most likely explanation?
If a country experiences a significant increase in productivity but its GDP remains stagnant, what is the most likely explanation?
During an economic recession, which fiscal policy measure would be most effective in stimulating economic activity?
During an economic recession, which fiscal policy measure would be most effective in stimulating economic activity?
Flashcards
Demand
Demand
The amount of a product consumers are willing to buy at various prices.
Supply
Supply
The amount of a product that producers are willing to sell at various prices.
Market Price
Market Price
The price at which the quantity of a product demanded equals its quantity supplied.
Business Cycle Stages
Business Cycle Stages
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Monetary Policy
Monetary Policy
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Study Notes
Chapter 2 Overview
- Economics is divided into microeconomics and macroeconomics.
- Microeconomics examines demand and supply.
- Macroeconomics considers the whole economy.
Microeconomics: The Forces of Demand and Supply
Demand
- Demand is influenced by examples like the COVID-19 pandemic.
Supply
- Supply is affected by various factors.
- Interactions between price and demand cause shifts in the demand curve. Understanding these shifts is crucial.
- Examples of situations where demand is underestimated should be explored.
How Price and Demand Interact
- Shifts in demand curves are crucial to understanding market dynamics. The factors causing these shifts should be understood.
- Understanding what happens when demand is underestimated is important for adjusting production and pricing strategies. Key elements to consider are listed to understand the implications of underestimation.
Factors Affecting Supply
- Various factors impact supply. Identifying and analyzing these factors is critical to predicting market behavior.
How Demand and Supply Interact
- The hula-hoop example can be used to illustrate how demand and supply interact in a specific market situation.
Macroeconomics: Issues for the Entire Economy
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Three major economic systems exist: identifying the features and differences amongst these is useful to comprehend macro-level economic structures and their associated problems.
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Capitalism/Private Enterprise has four types of competition inherent within private enterprise structures. Understanding these structures is critical to understanding economic markets.
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Planned Economies are a different economic model from capitalism/private enterprise.
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Mixed Market Economies combine elements of both planned and private enterprise models.
Evaluating Economic Performance
- Stages of the business cycle (stages of economic activity) influence economic decisions and planning.
- Ways to measure the performance of economies involve using productivity and GDP calculations.
Price-Level Changes
- Inflation refers to the rate of increase in the overall price level of goods and services in an economy over a period of time (commonly measured by the consumer price index).
- Deflation refers to a decrease in the general price level of goods and services in a particular economy.
Employment Levels
- Unemployment types are categorized and should be understood.
Managing the Economy's Performance
- Monetary policy and fiscal policy are tools used to manage an economy's performance.
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Description
Explore microeconomics and macroeconomics focusing on demand and supply. Understand how price and demand interact, leading to shifts in demand curves. Learn the factors affecting supply and the implications of demand underestimation.
