question
What determines the price of a product?
answer
...
question
Coordinate
answer
To work together to meet a goal.
question
Law of Supply
answer
An economic law stating that the quantity supplied increases as prices rise and drops as prices fall.
question
Law of Demand
answer
An economic law stating that the quantity demanded increases as prices fall and decreases as prices rise.
question
Equilibrium
answer
The point where supply and demand meet and prices are set.
question
What do supply and demand coordinate to determine?
answer
Price
question
Supply
answer
Is the amount of a good or service available in a market at a given price.
question
What are the two parts of the law of supply? What do they mean?
answer
- Higher Price = Higher quantity supplied.
- Lower Price = Lower quantity supplied.
- Lower Price = Lower quantity supplied.
question
What does a supply schedule do?
answer
Shows how prices affect the quantity supplied by a producer.
question
What does a market supply schedule do?
answer
Can provide data for an entire market.
question
What is a supply curve?
answer
Is a graph that shows how prices affect the quantity supplied.
question
What are factors that affect supply?
answer
- Availability of materials, labor, and resources.
- Producer's ability to respond quickly to demand for goods.
- Competition and substitute goods.
- Changes in consumer spending.
- Producer's ability to respond quickly to demand for goods.
- Competition and substitute goods.
- Changes in consumer spending.
question
What can be represented on a supply curve?
answer
Shifts in Supply
question
Demand
answer
Means the amount of a good or service consumers want.
question
What are the two parts of the law of demand?
answer
- Higher Price = Lower quantity demand.
- Lower Price = Higher quantity demand.
- Lower Price = Higher quantity demand.
question
What are the consumers?
answer
Consumers are the shoppers or the ones buying the product.
question
What does a demand schedule do?
answer
Shows the link between demand and price for a consumer.
question
What does a market demand schedule do?
answer
Shows that relationship for a whole market.
question
Demand Curve
answer
Is a graph that shows how prices affect consumer demand.
question
What is the law of demand saying?
answer
That the lower the price the more the quantity is demanded, but the higher the price the lower the quantity is demanded.
question
What are factors that affect demand?
answer
- Individual tastes and preferences.
- Change in price of a substitute good.
- Number of consumers in the market.
- Change in price of a complementary good.
- Change in price of a substitute good.
- Number of consumers in the market.
- Change in price of a complementary good.
question
What can a demand curve be used to measure?
answer
Shifts in Demand
question
What do supply and demand work together to do?
answer
Determine prices.
question
When is equilibrium created?
answer
When supply and demand meet to set prices and and production levels.
question
When does disequilibrium occur?
answer
When the price or quantity moves away from the equilibrium point.
question
When the supply is higher then demand:
answer
- Prices rise above the equilibrium.
- Excess supply takes place.
- Prices will fall until equilibrium is reached.
- Excess supply takes place.
- Prices will fall until equilibrium is reached.
question
When demand is higher than supply:
answer
- Prices fall below the equilibrium price.
- Excess demand takes place.
- Prices will rise until equilibrium is reached.
- Excess demand takes place.
- Prices will rise until equilibrium is reached.
question
What statement best explains the law of demand?
answer
The quantity demanded by consumers decreases as prices rise, then increases as prices fall.
question
The point where supply and demand meet and prices are set is called what?
answer
Equilibrium
question
How do changing prices affect supply and demand?
answer
As price decreases, supply decreases, but demand increases.
question
A market supply schedule shows what?
answer
The prices and quantity in an entire market.
question
According to the law of supply, price and quantity move where?
answer
Along a track in the same direction.
question
How do supply and demand work together to determine price?
answer
...
question
Coordinate
answer
To work together to meet a goal.
question
Equilibrium
answer
The point where supply and demand meet and prices are set.
question
Excess Demand
answer
When the quantity demanded, at a given price, is higher then the quantity supplied.
question
Excess Supply
answer
When the quantity supplied, at a given price, is higher then the quantity demanded.
question
What is equilibrium?
answer
In Balance
question
What is disequilibrium?
answer
Out of Balance
question
What do supply and demand coordinate to determine?
answer
Price
question
What is created where quantity supplied and quantity demanded meet?
answer
Equilibrium
question
When does disequilibrium occur?
answer
When the quantity supplied does not equal the quantity demanded.
question
What happens in excess supply?
answer
Producers are supplying more than consumers are demanding.
question
What happens in excess demand?
answer
Consumers are demanding more than producers are willing or able to supply.
question
What occurs due to excess supply?
answer
- Prices are above the equilibrium price.
- Prices will fall until equilibrium is reached.
- Prices will fall until equilibrium is reached.
question
What occurs due to excess demand?
answer
- Prices are below the equilibrium price.
- Prices will rise until equilibrium is reached.
- Prices will rise until equilibrium is reached.
question
Which explains the connection between the law of demand and excess demand?
answer
The law states that decreases in price leads to greater quantity demanded and limited supply, which occurs during excess demand.
question
Equilibrium is defined when
answer
supply and demand meet.
question
Which needs to happen in order to stop disequilibrium from occurring?
answer
The price of goods needs to be increased.
question
What happens when the quantity of a good supplied at a given price is greater than the quantity demanded?
answer
Excess Supply
question
On a graph, an equilibrium point is where
answer
a supply curve and a demand curve meet.
question
What can occur during market equilibrium?
answer
- Supply and demand meet at a specific price.
- Supply and demand meet at a specific quantity.
- Supply and demand meet at a specific quantity.
question
How do changes in price influence the behaviors of consumers and producers?
answer
...
question
Produce
answer
To make a good or provide a service.
question
Incentives
answer
Rewards or punishments that encourage people to do or not to do certain things.
question
Price Ceiling
answer
A maximum allowed price for a good or service.
question
Price Floor
answer
A minimum allowed price for a good or service.
question
Needs
answer
Goods that are necessities.
Example: Drinking water.
Example: Drinking water.
question
Wants
answer
Goods that are desired but not needed.
Example: Drinking lemonade, iced tea, or juice.
Example: Drinking lemonade, iced tea, or juice.
question
Elasticity
answer
Is how much the quantity of a good demanded or supplied changes when its price changes.
question
Elastic
answer
The quantity supplied or the quantity demanded will change, it will increase or decrease when the price changes.
question
Inelastic
answer
The quantity supplied or the quantity demanded will tend to stay the same regardless of price.
question
Inelastic Demand
answer
Demand for an item is relatively inelastic if the quantity demanded changes very little when the price changes.
question
How does inelastic demand occur?
answer
With goods that are considered needs.
question
What is inelastic demand demonstrated by?
answer
A steep demand curve.
question
Elastic Demand
answer
Demand for an item is relatively elastic if the quantity demanded changes significantly when the price changes.
question
How does elastic demand occur?
answer
With goods that are considered wants.
question
What is elastic demand demonstrated by?
answer
A less steep demand curve.
question
If the quantity demanded of a good changes drastically when the price changes, the good is relatively
answer
Elastic
question
If the quantity demanded of a good does not change much when the price changes, the good is relatively
answer
Inelastic
question
Inelastic Supply
answer
Supply of a good is relatively inelastic when the amount produced does not change much as price changes.
question
When does inelastic supply occur?
answer
When the ability to produce more of a good is limited.
question
Elastic Supply
answer
Supply of a good is relatively elastic when the amount produced changes greatly when the price changes.
question
When does elastic supply occur?
answer
- With goods that have a low production cost.
- With goods that are created using resources that are readily available.
- With goods that are created using resources that are readily available.
question
What are incentives?
answer
Actions that encourage or discourage people from doing something.
question
What can incentives be?
answer
Positive and Negative
question
What do incentives affect?
answer
Producers and Consumers
question
Positive Incentives
answer
Encourage demand.
question
What can be positive incentives for consumers?
answer
Sales and discounts
question
Negative Incentives
answer
Discourage demand.
question
What is a positive incentive for producers?
answer
A positive incentive for producers can be the possibility of making more money.
question
What is a negative incentive for producers?
answer
A negative incentive for producers can be high production costs.
question
Will a good or service that is elastic respond more or less to incentives?
answer
More
question
Will a good or service that is inelastic respond more or less to incentives?
answer
Less
question
What is an example of a good or service that is elastic responding more to incentives?
answer
A sale on a game should increase demand.
question
What is an example of a good or service that is inelastic responding less to incentives?
answer
A discount on salt will not increase demand much.
question
In a free market system, what are prices set by?
answer
Supply and Demand
question
Where does the government set the price floor at?
answer
A point above the equilibrium price.
question
What will happen when the quantity supplied will exceed the quantity demanded?
answer
It will result in a surplus.
question
What is one example of a price floor set by the government?
answer
Minimum Wage
question
Minimum Wage
answer
Is the lowest rate per hour that a worker can receive as income.
question
What is a benefit of minimum wage?
answer
It helps workers with jobs, as they will receive a higher wage.
question
What is not a benefit of minimum wage?
answer
The quantity of labor demanded will decline, leading to more unemployment.
question
Governments impose price ceilings are what?
answer
Below the equilibrium price.
question
What is not a benefitting about the fact that the quantity demanded will exceed quantity supplied?
answer
Shortages will result.
question
What is a example of a price ceiling?
answer
Rent Control
question
What is the benefit of some cities setting a maximum price that can be charged for rent?
answer
It is good for the people who could not afford rent.
question
What is one bad effect of the quantity demanded being higher?
answer
A shortage of apartments results and then builders do not have incentive to build new apartments.
question
A consumer might respond to a negative incentive because it could be a chance to
answer
Avoid additional charges.
question
A reward or punishment that encourages people to behave in a certain way is called an
answer
Incentive
question
The lowest amount a manufacturer can pay factory workers is an example of
answer
A price floor.
question
Which is an example of a negative incentive for producers?
answer
A sharp increase in production costs.
question
Which statement best describes incentives?
answer
Incentives can be positive or negative.
question
How can producers maximize their profits?
answer
...
question
Maximize
answer
To make as large as possible.
question
Revenue
answer
The total income received from an economic action.
question
Marginal Benefit
answer
Change in benefit in response to a specific action.
question
Marginal Cost
answer
The cost associated with one additional unit of production.
question
Marginal Revenue
answer
The income received from selling one additional unit of a good or service.
question
Profit
answer
Income received from an economic action, minus the costs of taking the action.
question
What is profit?
answer
The money that producers make after covering their production cost.
question
Why do producers want to keep their production costs as low as possible?
answer
To allow for greater profit.
question
What does profit motivate producers to do?
answer
To change their supply when prices change.
question
How is profit calculated?
answer
By subtracting the total production costs from revenue.
question
What does production cost include?
answer
Any resources used to produce a good or service.
question
What is revenue?
answer
The amount that producers receive when selling a good.
question
Many factors can affect a company's profits, including:
answer
- Shifts in supply or demand that alter the market price.
- Changes in costs.
- Changes in revenue.
- Changes in costs.
- Changes in revenue.
question
Producers must understand marginal benefit, which is:
answer
- the change in benefit resulting from a specific action.
- the possible gain from producing an additional item.
- the possible gain from producing an additional item.
question
What is marginal cost?
answer
The cost of producing one more unit of a good or service.
question
Changes in marginal cost usually follows a pattern which is:
answer
- At first, marginal cost decreases as production increases.
- Eventually, marginal cost begins to rise as more costs are required.
- Eventually, marginal cost begins to rise as more costs are required.
question
What is marginal revenue?
answer
Is the income gained from selling an additional unit of a good or service.
question
In free markets, price is set by what forces?
answer
Supply and Demand
question
Producers can maximize profit by:
answer
- Keeping marginal costs below marginal revenues.
- Finding ways to reduce marginal costs.
- Finding ways to reduce marginal costs.
question
Where is the most profitable point?
answer
Where marginal cost = marginal revenue.
question
What happens once marginal cost exceeds marginal revenue?
answer
Money is lost.
question
To calculate profit, producers subtract their total production cost from their
answer
Total Revenue
question
What is the best definition of marginal cost?
answer
The price of producing one additional unit of a good.
question
Producers must understand the marginal benefit of making an additional unit, which shows the
answer
Possible Gain
question
The point of maximum profit is the point at which the marginal cost equals the
answer
Marginal Revenue
question
What is the best definition of marginal benefit?
answer
The possible income from producing an additional item.
question
To generate higher profits, producers must work to
answer
Decrease their production costs.
question
How do comparative and absolute advantage influence economic choices?
answer
...
question
Opportunity
answer
A favorable occasion to complete or participate in something.
question
Absolute Advantage
answer
The ability of one party to produce a good or service at a lower cost than any competitor.
question
Comparative Advantage
answer
The ability of one party to produce a good or service at a lower opportunity cost than any competitor.
question
Efficient
answer
Completed in the fastest amount of time using the fewest number of resources.
question
Specialization
answer
The act of limiting the kinds of goods and services produced.
question
When do producers have absolute advantage?
answer
If they can create a product more efficiently.
question
What is comparative advantage?
answer
The ability to produce goods with a lower opportunity cost than another producer.
question
A lower opportunity cost means what?
answer
The opportunity to do or produce something else is minimized.
question
What is the difference between comparative advantage and absolute advantage?
answer
Comparative advantage measures opportunity cost and absolute advantage measures efficiency.
question
What is specialization?
answer
Limiting the kinds of goods or services produced.
question
Producers choose to specialize based on what?
answer
Absolute and comparative advantage.
question
Specialization helps who?
answer
Producers and Consumers
question
In what ways do producers benefit from specialization?
answer
- Gaining an absolute advantage by specializing in what can be made most efficiently.
- Gaining a comparative advantage by specializing in the product with the lowest opportunity cost.
- Gaining a comparative advantage by specializing in the product with the lowest opportunity cost.
question
What are some ways consumers benefit from specialization?
answer
- Have more goods from which to choose.
- Get products at lower prices.
- Get products at lower prices.
question
How do market structures affect competition?
answer
...
question
Compete
answer
To work toward a goal while attempting to defeat rivals.
question
Monopolistic Competition
answer
A market structure in which many sellers produce the same item but each producer sets its own price and quality without impacting the whole market.
question
Monopoly
answer
A market that has a single supplier of a good or service.
question
Oligopoly
answer
A market situation that exists when there are few businesses in a marketplace.
question
Pure Competition
answer
A market with many sellers of products, free flow of information, and free entry to and exit from the marketplace.
question
Sovereignty
answer
A controlling influence on a market.
question
When does competition occur?
answer
When two or more producers work to gain business from consumers.
question
How do producers compete?
answer
By offering incentives to consumers.
question
Is competition always or not always present in the market?
answer
Not always present in the market.
question
Does monopoly have less competition or more competition?
answer
Less Competition
question
When is a monopoly formed?
answer
When businesses are attempting to shut out competition from their industry.
question
Monopolies can form when:
answer
- There are no close substitutes for available goods.
- There is a barrier preventing producers from entering the market.
- There is a barrier preventing producers from entering the market.
question
When do natural monopolies form?
answer
When one producer can naturally meet the entire demand of the market.
question
Why do natural monopolies occur?
answer
Because cost of production is too high for more producers.
question
When do technological monopolies occur?
answer
When one producer controls a method of production.
question
What can occur when a patent is issued?
answer
Technological Monopolies
question
What is a patent?
answer
A legal document that gives the inventor of the product exclusive rights to make and sell the product with no competition at all.
question
Government monopolies are created and run by who?
answer
The government of a nation.
question
Monopolies _________ competition in the market.
answer
Limit
question
In a _____________ monopoly, a producer controls the market because it is able to meet the demands of all consumers.
answer
Natural
question
In a ____________________ monopoly, a producer controls the market by the authority of the government, and private production cannot take place.
answer
Government
question
In a _____________________ monopoly, a producer controls the market by holding a patent on the process of creating a specific good.
answer
Technological
question
What is the effect of there being little to no sovereignty in a monopoly?
answer
- Consumers have few choices.
- Prices do not vary because there is no competition present.
- Consumers must purchase what is available to them.
- Prices do not vary because there is no competition present.
- Consumers must purchase what is available to them.
question
When does a oligopoly exist?
answer
When there are a few producers that dominate a marketplace.
question
What has less competition in markets, but has a little more competition than monopoly?
answer
Oligopoly
question
Oligopolies can form when:
answer
- There are no close substitutes for available goods.
- There is a barrier preventing producers from entering the market.
- Firms cooperate to set prices or shut out competition.
- There is a barrier preventing producers from entering the market.
- Firms cooperate to set prices or shut out competition.
question
In an oligopoly:
answer
- Competition is limited.
- Producers do not control the market entirely.
- Competition usually occurs through brand loyalty, advertising, and promotions.
- Producers do not control the market entirely.
- Competition usually occurs through brand loyalty, advertising, and promotions.
question
Which situation could be the best example of an oligopoly?
answer
A new producer of a smart phone operating system is trying to enter the market but cannot because most cell phone makers use one of two popular operating systems.
question
What is a result of consumers have limited sovereignty in an oligopoly market?
answer
Consumer choices are limited and usually resolve around brand knowledge.
question
What is a result of oligopolies being interdependent?
answer
Consumers often have to pay more for goods and services.
question
Where does monopolistic competition occur?
answer
In a competitive market without identical products.
question
Monopolistic competition occurs when:
answer
- Producers set their own prices, but their prices are in the same range as their competitors' prices.
- Producers compete with other sellers by producing differentiated goods.
- There are few barriers to entering the market.
- Producers compete with other sellers by producing differentiated goods.
- There are few barriers to entering the market.
question
Consumer sovereignty is less limited in a system of
answer
Monopolistic Competition
question
In monopolistic competition, there are _________ barriers to entering the market.
answer
Few
question
Competition happens based on
answer
features and branding.
question
Producers provide goods that are _________________________ their competitors' goods.
answer
Different From
question
When does pure competition occur?
answer
When producers sell identical goods and services.
question
What are some results of pure competition occurring when producers supply identical goods?
answer
- There are few barriers to entry.
- Firms have no control over price, as it is based solely on supply and demand.
- Producers have a relatively small market share.
- Firms have no control over price, as it is based solely on supply and demand.
- Producers have a relatively small market share.
question
Consumers decide what to purchase based on what?
answer
Purely on price.
question
What is some ways of why consumer sovereignty is greatest in a system of pure competition?
answer
- Consumers can affect the market by making choices based on price.
- Consumers have few choices because goods are identical and prices are the same.
- Competition creates lower prices.
- Consumers have few choices because goods are identical and prices are the same.
- Competition creates lower prices.
question
Which aspect of monopolistic competition gives consumers more choice?
answer
Few barriers to market entry exist.
question
Natural monopolies occur when one producer
answer
can meet the market's entire demand.
question
Why is competition limited in an oligopoly?
answer
High entry costs prevent new producers from entering the market.
question
In pure competition, producers compete exclusively on the basis of
answer
selling identical items.
question
__________________________ is the type of competition that occurs in a competitive market without identical producers.
answer
Monopolistic
question
In the United States, which type of industry is often considered part of an oligopoly?
answer
Cell phone carriers.
question
Which best describes the availability of substitutes in a monopoly?
answer
There are no substitutes.
question
If consumer sovereignty is considered greatest in a system of pure competition, why is sovereignty still limited?
answer
Choices are driven by price when goods are identical.
question
Which best describes how the government sanctions technological monopolies?
answer
By issuing a patent for the technology.
question
What economic choices do you need to make when starting a new business?
answer
...
question
Ability
answer
Being capable of doing something.
question
Produce
answer
To make a good or provide a service.
question
Efficiently
answer
Produced with little waste.
question
Saturation
answer
A level of maximum capacity.
question
Standard of Living
answer
The level at which individuals enjoy desired goods.
question
Survey
answer
A questionnaire that is used to collect data.
question
Question to Ask When Choosing a Business:
answer
- What demand exists in my community?
- What supply already exists?
- What supply would I have to provide?
- What supply already exists?
- What supply would I have to provide?
question
Questions to Ask When Choosing a Product:
answer
- What do I have a comparative advantage in producing?
- What are my opportunity cost?
- What are my opportunity cost?
question
Questions to Ask When Increasing Profits:
answer
- What are my profits?
- How can I consider marginal benefit?
- How should I consider marginal cost?
- How can I consider marginal benefit?
- How should I consider marginal cost?
question
What do you need to consider before deciding on a business plan?
answer
Consumer Demand
question
Use surveys to gather data about what?
answer
Hobbies, interests, and weekly purchases.
question
When considering supply you need to?
answer
Determine how much supply already exists in your town.
question
What can excess supply cause?
answer
Market Saturation
question
What do you need to evaluate in order to decide what to produce?
answer
What advantages you have.
question
Absolute Advantage
answer
- Is the ability to produce a good or service at a lower cost than competitors can.
- Requires low costs of production.
- Requires low costs of production.
question
Comparative Advantage
answer
- Is the ability to produce a good or service at a lower opportunity cost than competitors can.
- Requires less to be given up when producing one good over another.
- Requires less to be given up when producing one good over another.
question
Production possibilities schedules show:
answer
- The combination of goods that can be produced.
- The production of goods when resources are being used most efficiently.
- The production of goods when resources are being used most efficiently.
question
Production possibilities curves:
answer
- Show the maximum output for two goods in combination.
- Demonstrate when production is most efficient.
- Demonstrate when production is most efficient.
question
What is a major concern for all new business owners?
answer
Competition
question
What must you guarantee to ensure your business's success?
answer
That you are making a profit on what you sell.
question
What is profit determined by?
answer
Subtracting your costs of production from your revenue.
question
What do you need to think on to determine how to make the largest profit?
answer
Margin
question
Marginal Cost:
answer
- Is the cost of producing one additional unit.
- Shows how many units can be produced while still making a profit.
- Shows how many units can be produced while still making a profit.
question
Marginal Revenue:
answer
- Is the increase in revenue through the sale of one additional item.
- Shows how much profit can be made if one additional unit is sold.
- Shows how much profit can be made if one additional unit is sold.
question
When does profit maximization occur?
answer
When marginal cost is equal to marginal revenue.
question
Market saturation results from excess
answer
supply.
question
Profit equals the total amount of money made minus
answer
the production cost.
question
How can producers make the most profit? Check all that apply.
answer
They can work to decrease their marginal cost.
They can raise prices to increase marginal revenue.
They can keep marginal costs below marginal revenues.
They can raise prices to increase marginal revenue.
They can keep marginal costs below marginal revenues.
question
Standard of living is the level at which
answer
consumers enjoy desired goods.
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