Economics Chapter 1 & 2 quiz

Economics:

A social science that studies the scarce resources between the competing needs and wants of society

Market:

A place where buyers and sellers come together to engage in exchange with one another

Other

Please Specify:

Opportunity Cost:

Is what must be given up in order to make any economic excgange

The 3 Factors of Production (F.O.P):

Land (natural resources), Labour(employees), Capital (tools for production)

PPC:

Scarcity (all we can produce/ efficiency), Choices(Butter or Guns), Opportunity cost (what to give up to get to C)

Demand:

The quantity of a good or service that consumers are willing and able to buy

5 factors of Demand:

1. Income, 2. Price of related goods, 3. Taste & Preferences, 4. Expectations, 5. Number of consumers

Extra 3 Shifters of Demand:

1. Demographic change (age, gender), 2. Government policy (Laws: don't drink afte 12 o'clock, 3. Seasonal change (Temperature: ice cream in summer)

Income (downwards): The more

Normal Goods (Demand increases as income rises), 2. Inferior Goods (less demand for cheaper alternative goods than high quality), 3. Substitute Goods ( Increase of price for a good leads to a switch to a substitute good), 4. Complementary Goods ( Goods that are connected so if the price one good decreases the other good will have an Increase in demand)

Supply:

The quantity of a good or service that producers are willing to offer for sale

5 Shifters of Supply:

1. Price of Resources (the cost of producing it), 2. Number of producers (is it popular to produce), 3. Technology (How effective is the technology/production), 4. Taxes and Subsidies (How much tax do I lose or gain), 5. Expectations (when is it the right time to produce it)

2 Extra shifters of Supply:

1. Price of related goods (which good is cheaper to produce), 2. Supply shocks (natural disasters)

Profit incentive (Upwards): The more money I get, the more time and quantity Im willing to give

Economics Chapter 1 & 2 quiz

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