Market Basics
What is supply? Provide an example.
The amount of a product or service that producers are willing and able to sell at various prices. Example: A bakery supplying 100 loaves of bread.
What is a price ceiling? Provide an example.
A maximum price set by the government, such as rent control.
What happens to prices when demand increases and supply remains constant?
Prices rise.
What is the labor market?
The market where workers offer their skills and employers provide jobs.
What is the foreign exchange market?
A market where currencies are traded, determining exchange rates.
What is demand? Provide an example.
The amount of a product or service consumers are willing and able to buy at various prices. Example: Consumers buying more ice cream during a heatwave.
What is a price floor? Provide an example.
A minimum price set by the government, such as the minimum wage.
What happens when supply increases but demand remains constant?
Prices fall.
What is unemployment?
The condition of being without a job while actively seeking work.
What is inflation?
The rate at which prices for goods and services rise over time, reducing purchasing power.
What is equilibrium price?
The price at which the quantity supplied equals the quantity demanded.
What is a subsidy? Provide an example.
Financial aid provided by the government to lower production costs, such as farm subsidies.
Explain elasticity and provide an example.
Elasticity measures how responsive demand or supply is to price changes. Example: Luxury cars have high price elasticity.
How do interest rates affect the credit market?
Higher interest rates make borrowing more expensive, reducing consumer spending and business investments.
How do tariffs impact international trade relations?
Tariffs can protect domestic industries but may lead to trade disputes and retaliation from other countries.
Define shortage and provide an example.
A situation where demand exceeds supply. Example: A toy being sold out during the holiday season.
What is a tariff, and how does it affect imported goods?
A tax on imports that makes foreign goods more expensive and encourages domestic production.
Provide an example of how a shortage in oil affects other goods.
Higher oil prices can increase transportation costs, leading to higher prices for groceries.
Describe a labor shortage and its impact on the market.
A labor shortage occurs when demand for workers exceeds supply, leading to higher wages and potential delays in production.
Explain how cultural factors influence global markets.
Preferences and traditions can shape demand for specific goods, such as the popularity of sushi in Western countries.
Define surplus and explain how it affects prices.
A situation where supply exceeds demand, leading to lower prices as producers try to sell excess goods.
Evaluate the effectiveness of price ceilings in addressing affordability.
Price ceilings can make goods more affordable but may lead to shortages and reduced supply.
Analyze how fluctuations in demand for computer chips affect related sectors.
Increased demand for chips can boost employment in tech manufacturing but create shortages in industries like automotive production.
Discuss the effects of implementing a minimum wage.
A minimum wage can increase worker income but may lead to reduced hiring or job losses for low-skill positions.
Provide an example of government intervention preventing an economic crisis.
During the 2008 financial crisis, government bailouts of banks stabilized the economy and prevented further collapse.