The process by which resources are transformed into useful forms is Production
The concept of choice would become irrelevant if Scarcity was eliminated.
Which of the following is not a resource as the term is used by economists? Money Opportunity cost, most broadly define, is What we give up, when we mae a choice or a decision !aboratory "or controlled# e$periments cannot be performed in economics because economics is a social science %ational choice or rational decision&maing involves Weighing up marginal costs ' marginal benefits associated with a decision The (law of demand( implies that )s prices fall, *uantity demanded increases The *uantity demanded "+d# of a soft drin brand ) has decreased. This could be because The price of ) has increased ,emand curves in P&+ space are derived while holding constant -ncomes, tastes, ' the prices of other goods Suppose the demand for good . goes up when the price of good / goes down. We can say that goods . and / are 0omplements. -f the demand for coffee decreases as income decreases, coffee is ) normal good Which of the following is consistent with the law of supply? )s the price of calculators rises, the *uantity supplied of calculators increases When the maret operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is nown as Price %ationing What is the effect of imposing a fi$ed per unit ta$ on a good on its e*uilibrium price and *uantity? Price rises, *uantity falls ) price floor is ) minimum price usually set by government, that sellers must charge for a good or service The need for rationing a good arises when ,emand e$ceeds supply -f a government were to fi$ a minimum wage for worers that was higher than the maret& clearing e*uilibrium wage, economists would predict that More worers would become employed The price elasticity of demand is the %atio of the percentage change in *uantity demanded to the percentage change in price -f the *uantity demanded of beef increases by 12 when the price of chicen increases by 342, the cross&price elasticity of demand between beef and chicen is 4.31 The burden "incidence# of a ta$ will fall mainly on the producers if Supply is inelastic and demand is elastic -ncome elasticity of demand is the 2 change in *uantity demanded divided by the 2 change in income. Which type of goods has negative income elasticity of demand? -nferior goods -f total revenue rises by 542 when price increases by 12, this means6 ,emand is price inelastic -f a 12 increase in price causes no change in total revenue, this means6 ,emand is unit elastic 7conomists use the term utility to mean The satisfaction a consumer obtains from a good or service 7conomists use the term marginal utility to mean )dditional satisfaction gained by the consumption of one more unit of a good The law of diminishing marginal utility states that The satisfaction derived from each additional unit of a good consumed will decrease 7conomists have used the idea of diminishing marginal utility to e$plain why ,emand curves slope downwards. ,emand curves become flatter at lower prices. ) consumer will buy more units of a good if the value of the good(s Marginal utility is greater than price 7conomists define an indifference curve as the set of points Which yield the same total utility The curve that is traced out when we eep indifference curves constant and move the budget line parallel to its original position is the income&consumption curve -ndifference curves cannot -ntersect each other The main problem with marginal utility analysis is6 -ts cardinal measurement of utility The costs that depend on output in the short run are both total variable costs and total costs the added revenue that a firm taes in when it increases output by one additional unit is Marginal revenue ) firm will shut down in the short run if Total variable costs e$ceed total revenues -f you were running a firm in a perfectly competitive industry you would be spending your time maing decisions on 8ow much of each input to use Maret power is ) firm(s ability to raise price without losing all demand for its product %elative to a competitively organi9ed industry, a monopoly Produces less output, charges higher prices and earns economic profits. -f firms can neither enter nor leave an industry, the relevant time period is the Short run -n the long run There is no fi$ed factors of production 7conomic profits are The difference between total revenue ' total costs ) group of firms that gets together to mae price and output decisions is called ) 0artel Price discrimination involves :irms selling the same product at different prices to different consumers )n industry that has a relatively small number of firms that dominate the maret is called ) concentrated industry. ) form of industry structure characteri9ed by a few firms each large enough to influence maret price is Oligopoly ) firm in a monopolistically competitive industry Must lower price to sell more output -n monopolistic competition, firms achieve some degree of maret power ;y producing differentiated products ) <iffen good -s a good which people buy more of as its price increases ) recession is ) period during which aggregate output declines The inde$ used most often to measure inflation is the 0onsumer price inde$ Per capita income is obtained by dividing =ational -ncome by Total population of that country -mports for any economy are considered as6 !eaages ,isposable income is6 Total income minus net ta$es The rate at which central ban lends to commercial bans is nown as ,iscount rate