Principles of Economics
Economics is the study of this.
What is the study of how people allocate scarce resources?
When someone has a lower opportunity cost than another person.
What is comparative advantage?
The law of demand states this.
An increase in price leads to a decrease in the quantity demanded.
The government sets the maximum a price can be.
What is a price ceiling?
The measurement of the value of all domestically produced final goods and services.
What is GDP?
An increase in the standard of living is linked to an increase in this phenomena.
What is GDP?
True or False: If a country has the absolute advantage in producing a good or service they cannot benefit from trade.
What is False?
Name the principles that can shift the supply curve.
What is input prices, the prices of related goods or services, technology, expectations, and a change in the number of producers.
This causes a price floor to be binding?
What is when the price is set above equilibrium?
State the GDP Equation.
GDP = C + I + G + X - IM
Missing a concert with friends to study for an important exam is an example of what.
What is opportunity cost?
These two factors can cause the PPF curve to shift to the right.
What is new technology and an increase in the factors of production?
Name the principles that shift the demand curve.
What are changes in the prices of related goods or services, changes in income, changes in tastes, changes in expectations, and changes in the number of consumers?
State the type of inefficiency: The government enacts rent control which causes the land lords to not want to spend money on maintenance.
What is inefficiently low quality?
State the difference between real GDP and Nominal GDP.
What is Nominal GDP measures the value of goods and services at current prices, while real GDP adjusts for inflation to reflect true economic growth?
This principle occurs when baker focusing solely on making artisan bread, while other workers handle pastries and cakes.
Specialization
Country X can produce either 8 laptops or 4 tablets in a day. Country Y can produce either 6 laptops or 6 tablets in a day. Calculate which country has the comparative advantage in producing tablets.
What is Country Y gives up 1 laptop to make 1 tablet?
The intersection of the demand and supply curve.
What is equilibrium?
Both price floors and price ceilings result in this type of inefficiency.
What is wasted resources?
State which of these contributes towards the United States GDP: Sarah bought a brand-new car made in Michigan for $30,000, James received a $1,200 Social Security payment from the government, Emily sold her used couch on Facebook Marketplace for $200, or Raj purchased $5,000 worth of stock in a U.S. tech company.
What is Sarah bought a brand-new car in Michigan for $30,000?
A surplus of smartphones leads producers to lower prices, increasing consumer demand until the quantity demanded equals the quantity supplied.
What is markets move towards equilibrium?
This causes the Production Possibilities Frontier to be curved out rather than a straight line.
What is diminishing returns?
A decrease in the cost of good A will lead an decrease in the quantity demanded of good B
What is a substitute?
The government sets a maximum price of $2 for a loaf of bread, while the market equilibrium price is $3. State the result of this.
What is a shortage?
Emily runs a bakery in Texas. This year, she sold $80,000 worth of cakes, bought $20,000 in baking supplies, received a $5,000 dividend from a Canadian stock, sold her old oven for $2,000, and spent $10,000 hiring a local contractor to renovate the bakery. State what is contributed towards GDP.
What is $90,000?