Fundamentals & Scarcity
Opportunity Cost & PPC
Comparative & Absolute Advantage
Supply & Demand
Equilibrium & Market Dynamics
100
What is Scarcity in economics?
Limited resources but unlimited wants
100
What is the definition of Opportunity Cost?
What is The next best alternative foregone when a decision or choice is made. (aka Cost of the Opportunity Lost)
100
What does it mean for a country or individual to have an Absolute Advantage in producing a product?
What is: The ability to produce more total output using fewer resources/time.
100
If demand applies to consumers, what does supply apply to?
What is: producers
100
What is the condition known as Market equilibrium?
What is: 
200
What are the four Factors of Production?
What is Land, Labor, Capital (goods), and Entrepreneurship. (Note: Money is NOT an economic factor of production!)
200
What type of Opportunity Cost is represented by a Production Possibilities Curve (PPC) that is concave (bowed outward) from the origin?
What is an increasing opportunity cost.
200
What economic concept forms the basis for mutually beneficial trade between individuals or nation?
What is: Comparative Advantage (producing at a lower opportunity cost).
200
What is the relationship between prices and quantity according to The Law of Demand?
What is: an inverse relationship (the higher the price, the lower the quantity will be demanded, and vice versa, the lower the price, the higher the quanitity demanded).
200
What type of disequilibrium occurs when market price is set above the equilibrium price, and what is the relationship between QS and QD?
What is: A Surplus, where Quantity Supplied (QS) is greater than Quantity Demanded (QD).
300
Which of the following is considered a factor of production: Money, Government policies, Labor, or Consumer preferences?
What is Labor?
300
On a PPC, where would you plot points that represent Inefficient resource use and Unattainable production level
What is: Inefficient: Inside the curve.
Unattainable: Outside the curve.
300
What are the mathematical formulas for calculating opportunity cost for Output and Input questions?
What is:
300
A major study reveals that mopeds release dangerous emissions compared to cars. Given that cars and mopeds are substitutes, what shift occurs in the Car Market?
Also, name the shifter
Demand for cars will increase (shift right).
Shifter: Alternatives/subsitutes
300
Wildfires destroy one-third of a nation's grape crop during growing season. What happens to the market equilibrium price and quantity of grapes?
Supply decreases (shifts left); Equilibrium Price increases and Equilibrium Quantity decreases.
400
True or False: Economics is primarily the study of stock market investments and banking.
Explain why.
What is: False. It is the behavioral social science concerned with how scarce resources are allocated to produce, distribute, and consume goods and services.
400
If a country shifts its current production focus on the PPC to produce significantly more Capital Goods rather than Consumer Goods, what will happen to its future economic growth rate?
What is: Its future economic growth rate will increase (the PPC will shift outward faster in the long run).
400
Scenario: Country A can produce 30 tons of sugar or 20 tons of wheat. Country B can produce 20 tons of sugar or 10 tons of wheat.
Which country has the Comparative Advantage in Wheat?
What is: (Opportunity cost for Country A to make 1 wheat is 1.5 sugar, while Country B's is 2 sugar).
400
How does an increase in national minimum wage affect the supply curve for the Bicycle Industry? Explain why.
What is: It increases input prices (wages) , causing Supply to decrease (shift left).
Wages are part of what goes into making a product.
400
At a pizza price of $8, Quantity Demanded is 70 and Quantity Supplied is 30. Calculate the shortage/surplus amount and state what will happen to market price to reach equilibrium.
What is: Shortage of 40 pizzas (70-30=40). The market price will increase to restore equilibrium.
500
In Macroeconomics, what does the term "Capital" specifically refer to?
What is: Physical tools, machinery, equipment, and structures used in the production of goods and services (not money itself). Thus a factor of production
500
List two specific factors that would cause an entire PPC curve to shift outward (to the right).
What is: Any of the following: Increase in the quantity or quality of resources , technological improvements , or expansion of international trade.
500
Scenario: With 10 units of labor, Japan can produce 3 cars or 12 bicycles. The US can produce 2 cars or 15 bicycles.
Who has the Comparative Advantage in Cars?
What is: Japan. (Japan gives up 4 bicycles per car, while the US gives up 7.5 bicycles per car).
500
Distinguish between a Change in Demand vs. a Change in Quantity Demanded.
What is:
Change in Quantity Demanded: Caused only by a price change of the good itself (movement along the curve).
- Change in Demand: Caused by non-price determinants, shifting the entire curve left or right
500
If pizza oven technology improves AND simultaneously the number of consumers buying pizza increases, what happens to Equilibrium Price (P) and Equilibrium Quantity (Q)?
What is:
Equilibrium Quantity (Q): Increases.
- Equilibrium Price (P): Indeterminate (depends on the relative magnitude of the shifts).
