Market Basics
A feature of this economy is private ownership and prices set by market forces.
What is a market economy?
This happens to demand when a good’s price decreases.
What is an increase in demand?
An initial investment to begin operations, like buying machinery.
What is a start-up cost?
This economic indicator measures the final sale price of all goods/services produced within a country.
What is Gross Domestic Product?
This occurs in a market when the price is above the equilibrium, leading to excess supply.
What is a surplus?
Two categories like Land and Labor belong to this economic classification.
What are factors of production?
This GDP type uses current prices, unlike its counterpart, which uses constant prices.
What is nominal GDP?
One happens when quantity demanded exceeds supply; the other happens when supply exceeds demand.
What are a shortage and a surplus?
If demand for a good is elastic, this happens in the revenue when the price increases.
What is a decrease in revenue?
This innovation lowers costs by increasing efficiency, shifting a key curve rightward.
What is technology?
Things GDP excludes, like nonmarket activities and environmental costs.
What are the limitations of GDP?
This government intervention below equilibrium price creates shortages, often leading to illegal markets.
What is a price ceiling leading to a black market?
The three basic economic questions are what to produce, how to produce it, and.....
What is "for whom"?
If a good’s supply is this, producers don’t increase output much even if the price doubles.
What is inelastic supply?
This process boosts efficiency through division of labor and comparative advantage.
What is specialization?
This happens to consumer and business spending when borrowing costs rise due to higher rates.
What is a decrease in spending?
This type of monopoly, like utilities, can be efficient due to high fixed costs and economies of scale.
What is a natural economy?
The primary goal of these laws is to increase competition and prevent monopolies.
What are antitrust laws?
If demand for a product like medicine is this, a price hike doesn’t reduce the quantity bought much.
What is inelastic demand?
On a PPF (PPC) graph, this inside position shows resources aren’t fully used, signaling inefficiency.
What is underutilization on a Production Possibilities Frontier (Curve)?
This sudden event, like an oil crisis, disrupts supply and can trigger an economic downturn.
What is an external shock?