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Answering the Three Basic Questions
Answering the Three Basic Questions II
Understanding Supply
Understanding Demand
Supply and Demand Combined
100
This is the method used by a society to produce and distribute goods and services:
economic system
100
This is where economic decisions are made by individuals and are based on exchange, or trade:
market economy
100
This is a cost that does not change, regardless of how much of a good is produced. Examples: rent and salaries:
fixed cost
100
This assumes all outside factors, such as income, are held constant:
demand curve
100
The point at which quantity demanded and quantity supplied come together is known as:
equilibrium
200
This is a social and political philosophy based on the belief that democratic means should be used to distribute wealth evenly throughout a society:
Socialism
200
These are systems that combine tradition and the free market with limited government intervention:
Mixed economies
200
This occurs when the marginal product of labor becomes negative:
Negative marginal returns
200
Demand for a good that is very sensitive to changes in price is known as:
elastic
200
This helps move land, labor, and capital into the hands of producers, and finished goods in to the hands of buyers:
Prices
300
This is a political system characterized by a centrally planned economy with all economic and political power resting in the hands of the government:
Communism
300
This is the regulating force of the free market:
Competition
300
This is the change in output from hiring one additional unit of labor, or worker:
marginal product of labor
300
Demand for a good that consumers will continue to buy despite a price increase is known as:
inelastic
300
If the market price or quantity supplied is anywhere but at the equilibrium price, the market is in a state called:
disequilibrium
400
They rely on habit, custom, or ritual to decide what to produce, how to produce it, and to whom to distribute it:
Traditional economies
400
This is an arrangement that allows buyers and sellers to exchange goods and services:
A market
400
These are costs that rise or fall depending on how much is produced:
Variable costs
400
This is a table that lists the quantity of a good all consumers in a market will buy at each different price:
market demand schedule
400
This is a situation in which quantity demanded is greater than quantity supplied:
shortage
500
This is where the central government makes all decisions about the production and consumption of goods and services:
centrally planned economy
500
This is the motivating force in the free market:
Self-interest
500
This equals fixed costs plus variable costs:
total cost
500
This states that consumers buy more of a good when its price decreases and less when its price increases:
law of demand
500
This is a situation in which quantity supplied is greater than quantity demanded:
surplus