General Terms
what one must give up when one makes a particular choice; one’s second highest-valued alternative
Opportunity Cost
This four-letter word is the economics term for a business.
Firm
The Law of Supply states that as the price of a good increases, the quantity of supply ____________________________.
increase
The Law of Demand states that as price increases, the quantity of demand ____________________.
decreases
What direction will the demand curve shift on a graph if the overall demand has decreased?
Left
the study of how the principles of economics apply to the behavior of individual consumers and businesses
Microeconomics
The primary goal of any business in a market or mixed-market economy.
Profit
The price and quantity at which the supply equals the demand is known as _______________________.
Equilibrium
This word is an acronym to remember the primary shifters of demand.
BONUS: Name the primary shifters of demand.
INSECT
Income, Number of Buyers, Substitutes, Expectations, Complements, Trends
Name one of the three Shifters of Supply. (You will receive 200 points for each one you can name.)
Costs of Production
Number of Suppliers
Expectations of Future Price
Revenue
When a business subtracts its costs from its revenue, what's left is known as accounting _______________.
BONUS: When opportunity costs are also factored in, this is known as _________________________.
Profit
Economics Profit
When supply is less than demand, there is a ______________________.
Shortage
If the price of Nikes goes up, what will happen to the overall demand for Reeboks (a substitute good)?
It will increase.
Name something that could lead to a decrease in the costs of production.
BONUS: Which direction would the supply curve shift?
Lower input prices
New technology
Improved productivity
Decreased taxes
New or increased subsidies
the natural, human, and capital resources that are available to make goods and services; also known as productive resources
Factors of Production
Who determines the price of a good/service in a market economy?
When supply is greater than demand, there is a ____________________.
Surplus
If the price of noodles increases, what will happen to the overall demand for noodle sauce (a complementary good)?
It will decrease.
What will happen to the price of a good / service during a shortage?
What will happen to the price of a good / service during a surplus?
Shortage = price goes up
Surplus = price goes down
A payment made by the government to support a business or industry. No good or service is provided in return for the payment.
Subsidy
In a market economy, competition between businesses will typically cause the price of goods / services to ____________________.
Decrease
When a person has more income to spend, their overall demand for ___________ will increase, but the demand for ____________ will decrease.
Normal Good
Inferior Goods
RECHS announces that next week all RECHS-branded merchandise will be 20% off.
What will happen to the demand for RECHS merch today?
Graph the demand shift correctly. Include proper labels, an arrow indicating the shift, and the new equilibrium point.
Demand will shift left / down as people wait for the sale.
There is a direct correlation between the amount of beans someone eats and the stinkiness of their farts. For the past two weeks, beans have been on sale, and people in Rockingham County have been buying / eating a lot of beans!
Will the price of AIR FRESHENERS go up or down?
BONUS: Graph the market shift correctly. Include proper labels, an arrow indicating the shift, and the new equilibrium point.
BONUS 2: Before the price adjusted, was there a shortage or a surplus?
It will go up.
BONUS 2: Shortage