Supply
What is supply?
The willingness and ability to sell a product.
Define demand.
Demand is the willingness and ability to buy something.
Why are there opportunity costs?
Because resources are limited.
What are factors of production?
Land, labour, enterprise and capital.
Which is not a basic principle of a market system? Competition, voluntary exchange, socialism or self-interest?
Socialism
Price elasticity of supply measures the responsiveness of quantity supplied to change in price.
What is more beneficial to producers, elastic demand or inelastic demand?
Inelastic
What is the opportunity cost when you chose an AP course?
Sacrifice your GPA when you are not confident with that subject. And, you can't do other course during the same time period.
What does a PPC show?
The opportunity cost of producing more of one product in terms of how much of another must be given up.
Which of the following does not follow with the basic principles of market systems?
1. People are driven by their desire to make a profit
2. Competition is discouraged
3. People feel best when they freely trade for what they want
4. Innovation is encouraged
Answer: Competition is discouraged
Why supply and price are positively related?
Because people are more willing and able to sell when the price is high.
What brings a demand change?
What is a the production possibility curve?
a graph that shows how much an economy can procure between 2 goods.
What is the basic economic problem?
Scarce resources cannot satisfy unlimited wants.
All of the following contribute to a free market system except
1. Economic freedom
2. Competition
3. Self-Interest
4. Government ownership
Government ownership
What is one the factors that affect supply?
Availability of resources, labour productivity, disasters and war, taxes and subsidies, weather, etc.
Using an example, explain how to distinguish between a movement along the demand curve and a shift of demand curve.
Accept any logical answer
A woman owns a TV which she bought for 300. she is considering buying a better modle for 450. Her neighbor is offering 200, what is her opportunity cost if she rejects?
200
What is resource allocation?
The action of deciding how to use scarce resources to satisfy as many needs and wants as much as possible.
Which economic system relies solely on the government to produce and distribute goods and services?
1. Market
2. Centrally-planned (command)
3. Capitalism
4. Mixed
Centrally-planned (command)
Why is it important that the government should know the elasticity of supply?
Because it can tell the government something about what the incidence of taxes will be
What are the 3 main determinants of demand for Holidays in Scotland
People's level of income.
· Tastes and preferences of consumers.
· Holiday costs.
· Level of competition.
· Distribution of people’s wealth.
· Vacation entitlements.
· Government policy and regulation.
The opportunity cost is the value of the _______ that had to be given up for the alternative that was chosen.
the next best alternative
What is production?
Using inputs (resources) to make outputs (goods and services) to satisfy the needs and wants of consumers
Market System (500 points):
Question: Which broad social goal is important in a market system but not as important in a centrally-planned (command) one?
1. Equity
2. Efficiency
3. Security
4. Stability
Efficiency