The Basic Economic Problem
Define Opportunity cost:
The value of the next-best alternative
What is demand
The ability and willingness to buy a product
A decrease in supply will
raise the price/contraction in demand
What is elasticity of supply
the responsiveness of the quantity supplied of a particular good to a change in price
When supply increases, quantity demanded_______ and price_______.
Does free good has opportunity cost and give an example of it.
Free good doesn't have opportunity cost, example will be air.
Does the expectation of price in future shift demand curve?
Yes
Leather and beef is jointly supplied. True or false
True
What is the elasticity of demand
It is a measure of how sensitive, or responsive, consumers are to a change in price.
What is price mechanism
the way the decisions made by households and firms interact to decide the allocation of resources.
What is the economic problem?
Unlimited wants, and limited resources.
Price and demand are inversely or directly related?
Inversely
An increase in the cost of production will increase the supply. True or flase
False
Product A is a drug that people get addicted to. Product B has no close substitute. What is the elasticity of demand for product A and B.
Product A is inelastic; Product B is inelastic
Which of the statements below is false:
a.Demand is the ability and willingness to buy a product.
b.Supply is the ability and willingness to sell a product.
c.Examples of inferior good are second-handed car and good quality cloth.
d.An increase in income will lead a decrease in demand of inferior goods.
C.Examples of inferior good are second-handed car and good quality cloth.
What is the factors of production, and what is their incentives.
Labour:wage/salary
Capital:interest
Land: rent
Enterprise: Profit
The fall in price of a product
What happens to the demand and supply for coffee when there are an article saying that coffee is good for our body while the government give subsidy to coffee makers.
Demand and supply both increase.
Harvest products are mainly ____ of supply
Inelastic
What happens to price and quantity when demand and supply increase in the same amount?
Quantity increases and price remains the same.
What is occupational mobility
The ease with which a worker can leave one job for another in a different field.
If the price of a substitute(Pepsi) fall, what will happen to the demand of Coco-cola.
The demand for Coco-cola will decrease.
Define subsidy and tax and how they affect the supply curve.
Subsidy: given to the producer provides a financial incentives. It increase the supply
Tax:a payment to the government. It decrease supply
When demand is perfectly inelastic, it means that the total revenue move the _____ direction as _____ and by the same _____.
Same;price;percentage
The PED is 0.5 when the price increase by 50% and demand decrease by 25%. What happens to the revenue.
Revenue Increases