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Economics Basics
What is opportunity cost?
What is an externality?
Economics Basics
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Answers
1
What is an externality?
Something that happens outside
The appearance of a marketplace to consumers
An effect of an economic decision on a third-party
The opposite of an ‘internality’
2
What is opportunity cost?
The total cost of a business venture
The value of your next-best alternative
The benefits of an economic decision
The price of a product
3
The minimum wage is an example of a price ceiling.
False
True
4
Which statement is true (in this typical supply and demand graph)?
The supply curve goes down
The dotted lines represent the community surplus
The y-axis represents the price
The equilibrium price is labelled with a ‘Q’
5
LAW OF SUPPLY: 1. As the price of a good increases… 2. As the price of a good decreases…
1. its supply increases, 2. its supply increases
1. its supply increases, 2. its supply decreases
1. its supply decreases, 2. its supply increases
1. its supply decreases, 2. its supply decreases
6
Which is the formula for PED?
PED = (% change in price)/(% change in quantity demanded)
PED = (% change in quantity demanded)/(% change in price)
PED = (% change in price demanded)/(% change in supply)
PED = (% change in supply)/(% change in demand)
7
Factors of production include land, labor, and capital.
True
False
8
how do you feel about economics?
worst thing i’ve ever seen.
i feel pretty confident!
it’s okay, i guess.
meh.
9
LAW OF DEMAND: 1. As the price of a good increases… 2. As the price of a good decreases…
1. demand for it increases, 2. demand for it decreases
1. demand for it decreases, 2. demand for it decreases
1. demand for it increases, 2. demand for it increases
1. demand for it decreases, 2. demand for it increases
10
What does PED for?
Please (study) Economics Diligently!
Potential Energy of Demand
Price Elasticity of Demand
Price Equilibrium of Decisions
11
What causes movement ALONG a supply or demand curve?
A price change
None of the above
Cutting production (supply)
New purchasing trend (demand)
12
Which is the best manifestation of ‘free market’ principles?
Oligopoly
Monopolies
Perfect Competition
Monopolistic Competition
13
Which market is likely to be inelastic?
market for books
market for toilet paper
market for earrings
market for decorative socks
14
Which is the KEY issue of economics?
The Problem of Production
The Problem of Communism
The Problem of Scarcity
The Problem of Consumption
15
Movement OF a curve is caused by a price change.
True
False
16
What’s an example of a price ceiling?
high supply
minimum wage
rent control
low demand
17
What is marginal utility?
a small amount of satisfaction
satisfaction one derives from consuming one more unit of something
slowly increasing satisfaction with a product
satisfaction one derives from producing one more unit of something
18
A market equilibrium is:
A point at which there will be no shortage/surplus
All of the above!!!
The point at which the supply and demand curves intersect
Also called a market-clearing price/quantity
19
What does the term “market(place)” refer to?
A place where consumers buy a bunch of things they’ll never use
The buyers and sellers of all products globally
A place where you go to sell things you don’t need
All buyers and sellers of a good/service & their interactions
20
A price ceiling is a set MAXIMUM price that a good/service could be.
True
False
21
What is a price floor?
A set CHEAP price that a good/service could be.
A set MINIMUM price that a good/service could be.
A set EXPENSIVE price that a good/service could be.
A set MAXIMUM price that a good/service could be.
