Economics Questions PDF

True - Economics is a Social Science. true or false economic - It is the study of how society manages its scarce resources. natural science - Mostly concern with the natural phenomena that exist in different areas. Deals with controlled variables Social Science - Deals with the human society and...

True - Economics is a Social Science. true or false economic - It is the study of how society manages its scarce resources. natural science - Mostly concern with the natural phenomena that exist in different areas. Deals with controlled variables Social Science - Deals with the human society and an individual's role in the society. Deals with uncontrolled variables. Efficiency - How well your use your resources. Doing things within the most economical way. It means attaining maximum output with the least possible input. Effectiveness - How well you get to your objectives. Producing the intended or expected result. Attained by getting the desired outcome. Scarcity - It is the condition where wants and needs of people are not satisfied because of limited resources. Resources are limited for the unlimited wants of man. Shortage - It is temporary condition where the demand on a certain commodity or service cannot be met by the current supply. Can be resolved by increasing the production of the commodity or by training more people in producing a certain service. True - Because resources are limited, decision makers should decide what to have and what to forgo. True or false Opportunity Cost - It is the cost we forgo to getting something else. Production Possibilities Frontier/Curve - It represents points at which an economy is most efficiently producing its goods and services. Rational Behavior - Means that the same person may make different choices under different circumstances. Marginal Analysis - An approach used to compare marginal cost and marginal benefits Microeconomics - Focuses on how decisions are made by individuals and firms Macroeconomics - Examines the aggregate behavior of the economy Positive Economics - Looks on how the economy works. It describes and explains economic phenomena without incorporating value judgments or opinions. Normative Economics - Looks on how should the economy works. It incorporates value judgments, opinions, and ethical considerations about economic policies or outcomes. true - An increase in interest rates leads to a decrease in consumer spending. True or false true - When the price of raw materials increases, the cost of production for businesses rises, leading to a decrease in the supply of goods. True or False True - The government should impose price controls on essential goods to ensure that they remain affordable for low-income families. True or False True - The government should increase the minimum wage to reduce income inequality. True or False Market - a place where buyers and sellers meet to exchange goods, services, or resources. Buyers - Determinants of market demand. Sellers - Determinants of the supply in the market. Demand - Refers to the quantity of goods or services that consumers are willing and able to purchase. Law of Demand - It states that as price increases ↑ , quantity demand will decrease ↓ assuming all factors are constant (ceteris paribus) Demand Schedule - a table that lists the quantity of a good or service that consumers are willing to buy at various prices. It's a way to visually represent the relationship between price and quantity demanded. It shows the inverse relationship between price and quantity demanded. Demand Function - is a mathematical equation that shows the relationship between the price of a good or service and the quantity demanded by consumers. A common formula of the demand function is Qd=a-bP - What is the formula of Demand Function? Intercept - It is the value that we can get, with the absence of the independent variable (price). It is the quantity demanded when the price is 0. Slope - It is the impact of the independent variable to the price. This shows how much the quantity demanded decreases when the price increases by 1 peso demand curve - It is a graphical representation of the relationship between the price of a good or service and the quantity demanded. What are the factors affecting Demand? 1. Income 2. Price of Related Goods & Services 3.Taste and Preference 4. Expectation on Future Prices 5. Changes in Population True - When income increases, quantity demand would generally increase and vice versa. True or false Income - It can influence the demand for both normal and inferior goods. Normal Goods - Are goods or services that have an increasing demand whenever income increases. ex. jewelry, expensive liquors Inferior Goods - Are goods or services that have a decreasing demand when income increases. Example: Instant noodles, sardines, dried goods. True - If the price of a commodity increases, the demand of its substitute goods increases and vice versa. True or False True - If the price of a commodity increases, the demand of its complementary good decreases, and vice versa. Substitute Goods - Goods that can replace each other in consumption. Positive relationship; as the price of one increases, demand for the other increases. Tea and coffee, butter and margarine, smartphones and landlines. Complementary Goods - Goods that are consumed together, where one enhances the use of the other. Negative relationship; as the price of one increases, demand for the other decreases. Coffee and creamer, printers and ink cartridges, cars and fuel/oil. Taste and Preference - refers to the individual likes or dislikes that consumers have for certain goods or services. has a significant impact on demand because it influences how much of a good or service people are willing to buy at any given price. is often influenced by cultural trends, advertising, societal changes, and personal experiences. True - When consumers expect the price of a good to rise in the future, they may buy more of that good now, anticipating that they will have to pay higher prices later. True or False true - Changes in population can have a significant effect on demand because they influence the number of consumers in the market. An increase or decrease in population can shift the demand for goods and services. True or False Supply - Refers to the quantity of a good or service that sellers are willing and able to offer for sale at different prices Law of Supply - states that as price increases ↑ , quantity supplied will also increase ↑, assuming all factors are constant. (ceteris paribus) Supply Function - It is a mathematical equation that shows the relationship between the quantity of a good or service that producers are willing and able to supply and the factors that influence this decision, primarily price. Qs=a+bP - What is the formula of Supply Funtion? Supply Curve - It represents the relationship between the price of a good or service and the quantity that producers are willing to supply in a given time period. Factors Affecting Supply 1.Input Price 2.Price of Related Goods & Services 3.Expectation on Future Prices 4.Technology 5.Government Regulations 6.Number of Suppliers 7.Unexpected Calamities or Natural Disasters Input Price/Cost - When the cost of input increases, quantity supplied is likely to decrease and vice versa. When input costs rise (e.g., due to higher raw material prices or wage increases), the cost of production increases. True - If the price of a substitute good of a commodity increases, the supply of the other will increase, and vice versa. True or False True - If the price of a complementary good of a commodity increases, the supply of the other will decrease, and vice versa. True or False true - A high amount of money to be paid due to government regulations is likely to decrease supply in an area. If the tax is high, we can expect a decrease in the supply of different commodities. When government subsidies increase, the supply would also increase. market equilibrium - It is the point where quantity demanded is equal to the quantity supplied It is the point where buyers are willing and able to buy the product or avail the service, and where the suppliers are also willing and able to sell their product or deliver the service. Elasticity - is a measure of the impact of one variable over the other PRICE ELASTICITY OF DEMAND (PED) - is the measure of how much the quantity demanded of a good responds to a change in the price of that good. INCOME ELASTICITY OF DEMAND (IED) - is the measure of how much the quantity demanded of a good responds to a change in consumer's income. CROSS PRICE ELASTICITY OF DEMAND (CPED) - is the measure of how much the quantity demanded of one good responds to a change in the price of another good. PRICE ELASTICITY OF SUPPLY (PES) - is the measure of how much the quantity supplied of a good responds to a change in the price of that good. Perfectly inelastic demand - Occurs when the quantity demanded remains unchanged regardless of price changes. This means that consumers will buy the same amount of a product no matter how high or low the price is. PED=Zero Inelastic demand - Occurs when the percentage change in quantity demanded is smaller than the percentage change in price. This means that consumers are not highly responsive to price changes. PED