UNLIMITED WANTS correct answers The insatiable desire of consumers for goods and services that will give them satisfaction or utility
LIMITED MEANS correct answers Things that limit our ability to fulfil our wants and
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UNLIMITED WANTS correct answers The insatiable desire of consumers for goods and services that will give them satisfaction or utility
LIMITED MEANS correct answers Things that limit our ability to fulfil our wants and needs; time, skills, and money.
OPPORTUNITY COSTS correct answers The loss of potential gain from other alternatives when one alternative is chosen.
IMPORTANT DECISION MAKERS IN THE ECONOMY correct answers Households; Firms; Goverments
THE PRODUCTION PROBLEM correct answers What goods should be produced? How scarce resources will be allocated? What quantities can be produced? How production will take place?
THE DISTRIBUTION PROBLEM correct answers How the total of goods and services will distributed.
THE COMMAND ECONOMY correct answers All economic decisions are made by the government.
THE MARKET ECONOMY correct answers Economic decisions are made by individuals or the open market.
MARKETS correct answers Meeting place where buyers and sellers come together to determine prices.
PRICES correct answers The amount of money expected, required, or given in payment for something.
MARKET EQUILIBRIUM correct answers A situation in which quantity demanded equals quantity supplied.
A MODEL OF THE MARKET ECONOMY: DEVELOPING A MODEL correct answers Simplified representations of the real world.
THE MARKET ECONOMY / THE ECONOMIC CIRCUIT / CIRCULAR FLOW MODEL correct answers
ECONOMIC MAGNITUDES correct answers Total production of the economy (P); Total Expenditure of the Market (E); Total Income Earned (I) P = E = I
VARIABLES WITH A POSITIVE RELATIONSHIP correct answers Move in the same direction; Positive or Direct (Linear) Relationship.
VARIABLES WITH A NEGATIVE RELATIONSHIP correct answers Move in an opposite direction; Negative or Inverse (Non-Linear) Relationship
VARIABLES THAT ARE UNRELATED correct answers Denoted by a straight - line (Horizontal or Vertical); Either zero (Horizontal) or Infinitely Large (Vertical Curve)
TIME SERIES GRAPH correct answers Measures times on the horizontal axis and any other variable which we want to relate to time on the vertical axis.
CHANGES IN DEMAND correct answers An increase in demand leads to an increase in price. An increase in price leads to an increase in demand.
CHANGES IN SUPPLY correct answers An increase in supply will result in a fall in the price of the product and an increase in the quantity exchanged. Vice versa.
THE CETERIS PARIBUS CONDITION correct answers All other things remain the same.
ELASTICITY correct answers The measure of responsivness or sensibility.
PRICE ELASTICITY OF DEMAND correct answers A measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price.
PRICE ELASTICITY OF SUPPLY correct answers A measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied divided by the percentage change in price.
ELASTICITY : REASONS FOR USE correct answers 1. Compare the price sensitivities with different products.
2. They want to determine whether one marke is more price sensitive than another.
3. Elasticity is a unit free measure
4. Elasticities allow economists to quantify the differences among markets without standardising the units of measurement.
INELASTIC correct answers When elasticity is small (Between 0 and 1 in absolute value)
INELASTIC DEMAND correct answers Demand in which changes in price have little or no effect on the
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