Basics 1
What are the four factors of production?
Land Labor Capital and Entrepreneurship
Define opportunity cost.
Value of the best alternative sacrificed as compared to what actually takes place
Define utility.
the total satisfaction received from consuming a good or service
What is the law of demand?
As the price of a good rises, the quantity of that good demanded falls
define elasticity in regards to price
Indicates how responsive the quantity demanded of a good is to changes in the price
what is a market surplus?
extra products
what is a market shortage?
not enough products
Define marginal utility
Additional utility gained from consuming one more unit of a good
What is the law of supply?
As price increases, the quantity of a good supplied will increase
give example of elastic good
vary
What is a PPC or PPF ?
Production Possibilities Curve or Frontier
What are the three types of economic governments?
Communism, Socialism, Capitalism
define marginal cost
Additional cost of producing another unit
what is price ceiling? is it above or below market price?
highest you can charge - below
give example of inelastic good
vary
What is comparative advantage?
Countries will benefit from specialization if one country has a comparative advantage in one good, and the other country has a comparative advantage in the other good
what is producer surplus?
Difference between the price a seller receives and the minimum price for which a seller would be willing to supply that good
what is the law of diminishing marginal utility mean?
Consuming additional units of a good will lead to decreasing satisfaction from that good
what is price floor? is it above or below market price?
lowest you can charge - above
the elasticity measure is 2, what does it mean?
elastic
what is the market equilibrium?
what is consumer surplus?
Value received from the purchase in excess of what is paid for it
list one reason (out of 10) why demand might go up and one reason (out of 7) why supply might go up
Answer will vary
does a price ceiling lead to a shortage or surplus? why?
shortage
if the elasticity measure is 0 what does it mean?
inelastic