IA ROSTA

"Define the term economics."

"Economics is the study of how individuals and societies allocate scarce resources to satisfy their unlimited wants and needs."

"Explain the importance of studying economics."

"Studying economics helps individuals understand how to make informed decisions, manage resources effectively, and comprehend the functioning of markets and economies."

"Identify and describe the most basic economic problem facing all societies."

"The most basic economic problem is scarcity, which arises because resources are limited while human wants are unlimited."

"What causes the problem of scarcity in economics?"

"Scarcity is caused by the limited availability of resources in relation to the unlimited desires of individuals and societies."

"Define productive resources."

"Productive resources are the inputs used to produce goods and services, including land, labor, capital, and entrepreneurship."

"Differentiate between needs and wants, providing examples."

"Needs are essential for survival (e.g., food, shelter), while wants are desires for non-essential items (e.g., luxury cars, vacations)."

"List the factors of production and provide two examples of each."

"The factors of production are land (e.g., natural resources, minerals), labor (e.g., workers, skills), capital (e.g., machinery, buildings), and entrepreneurship (e.g., business owners, innovators)."

"Define capital, labor, land, and entrepreneurship."

"Capital refers to financial assets and physical tools used in production; labor is the human effort in production; land encompasses natural resources; entrepreneurship is the ability to combine resources to create goods and services."

"Define interest, wages, rent, and profits, and explain their importance."

"Interest is the cost of borrowing money; wages are payments for labor; rent is payment for the use of land; profits are earnings from business activities. Each is crucial for incentivizing production and resource allocation."

"Identify the three basic economic questions all societies must answer."

"The three basic economic questions are: What to produce? How to produce? For whom to produce? These questions address resource allocation and distribution."

"Differentiate between an economic good and a free good, providing examples."

"An economic good is scarce and has a price (e.g., a car, a smartphone), while a free good is abundant and has no cost (e.g., air, sunlight)."

"Explain how a free good can change to an economic good, with examples."

"A free good can become an economic good when its availability decreases or demand increases (e.g., clean water in a drought, public parks becoming private)."

"Differentiate between goods and services, providing examples."

"Goods are tangible items (e.g., clothing, food), while services are intangible activities (e.g., haircuts, education)."

"Differentiate between capital goods and consumer goods, providing examples."

"Capital goods are used to produce other goods (e.g., machinery, tools), while consumer goods are intended for final consumption (e.g., clothing, electronics)."

"Define economic efficiency and technical efficiency, and explain their importance in dealing with scarcity."

"Economic efficiency refers to the optimal allocation of resources to maximize output, while technical efficiency means producing the maximum output with given inputs. Both are crucial for addressing scarcity effectively."

"Define utility and explain its importance in dealing with scarcity."

"Utility is the satisfaction or benefit derived from consuming goods and services. It is important in scarcity as it helps individuals prioritize their choices based on preferences."

"Differentiate between wealth and income, explaining their significance."

"Wealth is the total value of assets owned, while income is the flow of money received over time. Both are significant for understanding economic status and resource distribution."

"Explain the concept of thinking at the margin."

"Thinking at the margin involves considering the additional benefits and costs of a decision, rather than the total costs or benefits."

"Describe how thinking at the margin affects the basic economic problem."

"Thinking at the margin helps individuals and businesses make more informed decisions about resource allocation, thereby addressing scarcity more effectively."

"Define a shortage in economic terms."

"A shortage occurs when the demand for a good or service exceeds its supply at a given price."

"Define physical capital in economics."

"Physical capital refers to tangible assets used in the production of goods and services, such as machinery, buildings, and tools."

"Define human capital in economics."

"Human capital refers to the skills, knowledge, and experience possessed by individuals, which contribute to their productivity."

"Identify four economic goals that an economy should strive to achieve."

"Four economic goals include economic growth, full employment, price stability, and equitable distribution of income."

"Describe how economic goals can address the issue of scarcity."

"Economic goals such as efficiency, growth, and equity can help allocate resources more effectively, thereby reducing scarcity by ensuring that resources are used in ways that maximize output and meet the needs of society."

"Explain the concept of specialization and its impact on scarcity."

"Specialization refers to the focus on a specific task or production process, which increases efficiency and productivity. This can reduce scarcity by allowing for more goods and services to be produced with the same amount of resources."

"Define efficiency, underutilization, and cost in economic terms."

"Efficiency is the optimal use of resources to achieve the best possible output. Underutilization occurs when resources are not being used to their full potential. Cost refers to the value of resources used to produce goods or services."

"Illustrate the concept of opportunity cost with an example."

"Opportunity cost is the value of the next best alternative that is forgone when making a decision. For example, if you choose to spend time studying instead of working, the opportunity cost is the income you could have earned during that time."

"Analyze the opportunity cost of attending college versus buying a new car for $25,000."

"The opportunity cost of going to college includes not only the tuition fees but also the income you forgo by not working. In contrast, the opportunity cost of buying a new car for $25,000 could be the investment returns you could have earned if you had invested that money instead."

"Evaluate the opportunity cost of not attending college and entering the labor force instead."

"The opportunity cost of not attending college includes the potential higher earnings and career opportunities that a college degree could provide, as well as the personal growth and networking opportunities that come with higher education."

"Discuss how measuring opportunity cost influences the basic economic problem."

"Measuring opportunity cost helps individuals and societies make informed decisions about resource allocation, which is crucial in addressing the basic economic problem of scarcity and choice."

"Define trade-off and provide an example."

"A trade-off is the concept of giving up one thing to obtain another. For example, choosing to spend money on a vacation means sacrificing the ability to save that money for future expenses."

"Explain the production possibilities frontier (PPF) and provide an example of its application."

"The production possibilities frontier is a graph that shows the maximum possible output combinations of two goods that can be produced with available resources. An example is a PPF showing the trade-off between producing cars and computers."

"Describe how the production possibilities frontier can be increased."

"The production possibilities frontier can shift to the right, indicating an increase in production capacity, through factors such as technological advancements, an increase in resources, or improvements in labor productivity."

"Interpret what it means for a nation to produce below the production possibilities curve."

"Producing below the production possibilities curve indicates that a nation is not utilizing all of its resources efficiently, leading to wasted potential and lower overall output."

"Demonstrate how growth is represented on a production possibility curve."

"Growth is shown on a production possibility curve as an outward shift of the curve, indicating that the economy can produce more of both goods due to increased resources or improved technology."

"Analyze how consumption and savings can influence economic growth."

"Higher consumption can stimulate demand and production, while savings can provide funds for investment, both of which are essential for driving economic growth."

"Illustrate how underutilization is represented on a production possibility curve."

"Underutilization is shown on a production possibility curve as a point inside the curve, indicating that resources are not being used to their full potential."

"Define the law of increasing costs and its representation on a production possibility curve."

"The law of increasing costs states that as production of one good increases, the opportunity cost of producing additional units of that good also increases. This is represented on a production possibility curve as a bowed-out shape."

"Define a demand curve and provide an example."

"A demand curve is a graphical representation of the relationship between the price of a good and the quantity demanded. For example, a downward-sloping line showing that as the price of apples decreases, the quantity demanded increases."

"Explain the law of demand with an illustrative example."

"The law of demand states that, all else being equal, as the price of a good decreases, the quantity demanded increases. For example, if the price of coffee drops, more consumers are likely to buy it."

"Describe the income effect and provide an example."

"The income effect refers to the change in quantity demanded of a good due to a change in consumer income. For example, if a person's income increases, they may buy more luxury items like designer clothes."

"Explain the substitution effect with an example."

"The substitution effect occurs when consumers switch from one product to another due to a change in price. For example, if the price of butter rises, consumers may buy margarine instead."

"Differentiate between complements and substitutes."

"Complements are goods that are consumed together, such as coffee and sugar, while substitutes are goods that can replace each other, like butter and margarine."

"Identify two products that are complements to each other."

"Peanut butter and jelly are two products that are complements, as they are often used together in sandwiches."

"Explain how the price of one complement affects the demand for the other complement."

"When the price of one complement decreases, the demand for the other complement typically increases because consumers are more likely to purchase both items together."

"Identify two products that are substitutes for each other."

"Coke and Pepsi are two products that serve as substitutes for each other."

"Explain how the price of one substitute affects the demand for the other substitute."

"If the price of Coke increases, the demand for Pepsi is likely to increase as consumers switch to the cheaper alternative."

"Describe the difference between a CHANGE IN (THE LEVEL) DEMAND and a CHANGE IN THE QUANTITY DEMANDED."

"A change in demand refers to a shift in the demand curve due to factors like consumer preferences, while a change in quantity demanded refers to a movement along the demand curve due to a change in price. For example, a new trend making a product popular can increase demand, while a price drop can increase quantity demanded."

"Draw a graph illustrating a change in demand."

"A graph showing a rightward shift of the demand curve indicates an increase in demand."

"Draw a graph illustrating a change in quantity demanded."

"A graph showing a movement along the demand curve to the right indicates an increase in quantity demanded due to a price decrease."

"Describe TWO reasons why a change in demand occurs."

"One reason for a change in demand is a change in consumer income, which can increase demand for normal goods. Another reason is a change in consumer preferences, such as a trend that makes a product more desirable."

"Identify ONE reason for a change in the Quantity Demanded."

"A change in the price of the product itself can lead to a change in the quantity demanded."

"What is DEMAND ELASTICITY?"

"Demand elasticity measures how much the quantity demanded of a good responds to a change in price. For example, if a 10% increase in price leads to a 20% decrease in quantity demanded, the demand is elastic."

"What is INELASTICITY OF DEMAND?"

"Inelasticity of demand occurs when the quantity demanded changes little in response to price changes. For example, if the price of insulin rises, the quantity demanded may not significantly decrease because it is a necessity."

"What is the total revenue (receipts) test?"

"The total revenue test assesses how total revenue changes with price adjustments to determine elasticity; if total revenue increases when price decreases, demand is elastic."

"What is the effect on total revenue when prices are increased for a product that is ELASTIC IN DEMAND?"

"When prices are increased for a product that is elastic in demand, total revenue decreases because the drop in quantity demanded outweighs the higher price."

"What is the effect on total revenue when prices are increased for a product that is INELASTIC IN DEMAND?"

"When prices are increased for a product that is inelastic in demand, total revenue increases because the quantity demanded decreases only slightly."

"What is the effect on total revenue when prices are increased for a product that is UNIT ELASTIC?"

"When prices are increased for a product that is unit elastic, total revenue remains unchanged because the percentage change in quantity demanded equals the percentage change in price."

"What is the effect on total revenue when prices are decreased for a product that is ELASTIC IN DEMAND?"

"When prices are decreased for a product that is elastic in demand, total revenue increases because the increase in quantity demanded outweighs the lower price."

"What is the effect on total revenue when prices are decreased for a product that is INELASTIC IN DEMAND?"

"When prices are decreased for a product that is inelastic in demand, total revenue decreases because the increase in quantity demanded is not enough to offset the lower price."

"What is the effect on total revenue when prices are decreased for a product that is UNIT ELASTIC?"

"When prices are decreased for a product that is unit elastic, total revenue remains unchanged because the percentage change in quantity demanded equals the percentage change in price."

"Describe 3 factors that affect ELASTICITY OF DEMAND."

"One factor is the availability of substitutes; more substitutes lead to more elastic demand. Another factor is the proportion of income spent on the good; higher proportions lead to more elastic demand. Lastly, the necessity versus luxury nature of the good affects elasticity; necessities tend to have inelastic demand."

"Define utility, total utility and marginal utility."

"Utility is the satisfaction or pleasure derived from consuming a good. Total utility is the overall satisfaction received from all units consumed, while marginal utility is the additional satisfaction gained from consuming one more unit."

"Why are the concepts defined in question 6 important in understanding why a demand curve is downward sloping?"

"These concepts explain that as consumers consume more of a good, the additional satisfaction (marginal utility) decreases, leading them to be willing to pay less for additional units, thus creating a downward sloping demand curve."

"Why is the LAW OF DIMINISHING MARGINAL UTILITY important to producers?"

"This law is important to producers because it helps them understand pricing strategies; as consumers derive less satisfaction from additional units, producers must adjust prices to maintain demand."

"What is the LAW OF DIMINISHING MARGINAL UTILITY?"

"The law of diminishing marginal utility states that as a person consumes more units of a good, the additional satisfaction gained from each subsequent unit decreases."

"Describe the SUPPLY CURVE and provide an example."

"The supply curve is a graphical representation showing the relationship between the price of a good and the quantity supplied. For example, as the price of apples increases, farmers are willing to supply more apples, resulting in an upward-sloping curve."

"Explain the LAW OF SUPPLY with an example."

"The Law of Supply states that, all else being equal, an increase in the price of a good will lead to an increase in the quantity supplied. For instance, if the price of coffee rises, coffee producers will supply more coffee to the market."

"Define the difference between a CHANGE IN SUPPLY and a CHANGE IN THE QUANTITY SUPPLIED, with examples."

"A CHANGE IN SUPPLY refers to a shift in the supply curve due to factors like production costs, while a CHANGE IN THE QUANTITY SUPPLIED refers to movement along the supply curve due to price changes. For example, if a new technology reduces production costs, the supply curve shifts right (change in supply). If the price of a product increases, the quantity supplied increases along the existing curve (change in quantity supplied)."

"Describe TWO factors that influence a CHANGE IN SUPPLY and provide examples."

"Two factors that influence a change in supply are production costs and technology. For example, if the cost of raw materials decreases, supply may increase. Conversely, if a natural disaster disrupts production, supply may decrease."

"Explain ELASTICITY OF SUPPLY and INELASTICITY OF SUPPLY with examples."

"Elasticity of supply measures how responsive the quantity supplied is to a change in price. For example, if a small price increase leads to a large increase in quantity supplied, supply is elastic. Inelasticity of supply occurs when quantity supplied changes little with price changes, such as in the case of essential medications."

"Describe ONE factor that affects ELASTICITY OF SUPPLY and provide an example."

"One factor that affects elasticity of supply is the time period for production adjustment. For example, agricultural products may have inelastic supply in the short term due to growing seasons, but more elastic supply in the long term as farmers can adjust their production methods."

"Explain the LAW OF VARIABLE PROPORTIONS with an example."

"The Law of Variable Proportions states that as one input in production is increased while others are held constant, the output will increase up to a certain point, after which the additional output will begin to decrease. For example, adding more workers to a fixed amount of land will initially increase crop yield, but eventually, the benefit will diminish."

"Define increasing marginal returns with an example."

"Increasing marginal returns occur when adding an additional factor of production results in a greater increase in output. For example, hiring more workers in a factory may lead to a more than proportional increase in production due to better collaboration."

"Define decreasing marginal returns with an example."

"Decreasing marginal returns occur when adding an additional factor of production results in a smaller increase in output. For example, adding more workers to a factory may lead to less efficient production as workers become overcrowded."

"Define negative marginal returns with an example."

"Negative marginal returns occur when adding an additional factor of production results in a decrease in total output. For example, if too many workers are added to a small factory, they may hinder each other's productivity, leading to lower overall output."

"Explain the LAW OF DIMINISHING RETURNS with an example."

"The Law of Diminishing Returns states that as more units of a variable input are added to a fixed input, the additional output produced will eventually decrease. For example, in farming, adding more fertilizer will initially increase crop yield, but after a certain point, it may lead to less effective growth."

"Describe the difference between the LONG RUN and the SHORT RUN in production, with examples."

"The long run is a period in which all factors of production can be varied, allowing for adjustments in capacity, while the short run is a period where at least one factor is fixed. For example, in the short run, a factory may increase output by adding more shifts, but in the long run, it can build a larger facility."

"Define ECONOMIES OF SCALE PRODUCTION and DISECONOMIES OF SCALE PRODUCTION."

"Economies of scale production occur when increasing production leads to lower average costs per unit, while diseconomies of scale production occur when increasing production leads to higher average costs per unit."

"Explain the factors that allow companies to achieve ECONOMIES OF SCALE PRODUCTION with examples."

"Factors that allow companies to achieve economies of scale include bulk purchasing of materials, specialization of labor, and improved technology. For example, a car manufacturer can reduce costs by buying steel in large quantities."

"Describe a factor that leads to DISECONOMIES OF SCALE with an example."

"A factor that leads to diseconomies of scale is management inefficiency. For example, as a company grows larger, communication may become more complex, leading to slower decision-making and increased costs."