Basic Concepts
Go to the market
Inefficiency
Abusive in Power
Intervention
100

The resources are limited

What is scarcity?

100
The resources are not enough for production

What does it mean when the point falls outside of PPC?

100

When price increases, quantity demanded decreases

What is the law of demand?

100

marginal private cost plus external cost

What is marginal social cost?

100

The price is higher than market equilibrium price, which causes surplus

What is minimum price? 

Or What is price floor?


200

The ability to innovate, seek opportunities and take risks

What are the main skills of entrepreneurship?

200

Production possibility increases. PPC shifts outside.

What happens to PPC of an economy if 

there are more resources found. 

or there is technology breakthrough 

or there is improvement in quality of resources.

200
Consumers turn to buy the other one when one good becomes more expensive.

What will consumers do when two goods are substitutes?

200

The good that may have positive externality, and may be ignored by the consumers

What is merit good?

200

One is fixed amount per unit of the good or service sold. 

The other is fixed percentage of the price of the good or service sold.


What is the difference between specific and ad valorem tax?

300

It includes private sector and public sector

What does mixed economy include?

300

There is no unused resources

What is efficiency in PPC?

300

When price decreases, real income increases, assuming nominal income stays constant. People buy more to raise total utility level 


What is income effect?

300

It is possible that the consumption by one person would reduce consumption by the others.

What is rivalry?

300
It causes non-price rationing, including waiting in line, and discrimination.

What is the disadvantages of price ceiling?

400

It is an opinion based on value judgement

What is normative statement?

400

There is less unemployment.

What is actual growth?

400
It depends on which inputs are fixed or changed

What is main difference between short run and long run?

400
Firms have incentive to cheat, have different costs. There is possibility of a price war.

Why do cartels break? 

Why cannot cartels be maintained?

400

Consumer burdens more tax than producers.

What is the consequence of low PED in the market which is levied on tax?

500

It is a phrase, which refers to free market without government intervention.

What is invisible hand of market? o

or What is laissez faire?

500

The productivity of resources for each product is constant

Why is PPC linear sometimes?

500

People are not always selfish, only to certain extent. There are situations where people will reduce personal welfare.

What is bounded selfishness?
500

The demand is relatively elastic, no barriers to entry, slight differences among products

What is the feature of monopolistic competition?

500
It has opportunity cost, which means the budget is spent in certain area such as hospital, education, the others such as infrastructure, military projects, have to be sacrificed.

What is the impact of subsidy on the government?

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