Chapter 1
The statement "the government spends too much money on healthcare" is can example of what?
Normative Statement
Demand is the quantities which consumers are willing to buy per period of time.
Demand is the quantities which consumers are willing to buy per period of time at various prices.
What is a price floor?
A government regulation stipulating the minimum price which can be charged for a product
Go to Excel Question 6!
Production Possibilities Curve
400 tons of tea
What is equilibrium?
The price at which quantity demanded equals quantity supplied
What are the three fundamental questions economic societies must answer?
What?
How?
For Whom?
What is the substitution effect?
Provide an example
The substitution of one product for another as a result of a change in their relative prices
What is minimum wage legislation an example of?
Price Ceiling
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$2.25 and 24 kilos
What is the opportunity cost of a particular product?
The value of the next best alternative that is given up as a result of buying that particular product
What are the Four types of Economies?
Co-operative
Command
Customary
Competitive
If the business increases the price of a product what will happen to the quantity demanded?
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$35
Price Floor
What is efficiency? Differentiate between productive and allocative efficiency
Efficiency: Lowest amount of input resulting in the highest output
Productive: (optimal method for producing goods) – HOW
Allocative: production combination that best satisfies consumer demands - WHAT
What are the four types of resources and their payments?
Labour - wage
Land - Rent
Capital - Interest
Enterprise - Profit
What are the following an example of:
- Single ply toilet paper
- Mr.Noodles
Inferior products
What will happen if both demand and supply for a product increase simultaneously?
Quantity: Will increase
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List three determinants of Supply
Price of productive resources
Government taxes and subsidies
Technology
Prices of Substitutes in Production
Future Expectations
Number of Suppliers
Define Economics
Social science that studies the ways humans and societies organize themselves to make choices about the use of scarce resources, which are used to produce the goods and services necessary to satisfy human wants and needs.
List three determinants of demand
Consumer preference, consumer incomes, price of related products, expectation of future prices, population size or income distribution
Graphically, what is the effect of imposing an excise tax on a product?
It will shift the supply curve for the product to the left
The price would be above equilibrium and a surplus of 60 would be produced
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6 Kaldors