Economics Quiz 1

Economics

The study of how people and societies satisfy their unlimited wants with limited resources.

Scarcity

Exists when there are not enough resources to satisfy human wants.

What questions should you ask when thinking about scarcity?

What should be produced? How are we going to produce it? Who should we produce it for?

Macroeconomics

The study of the whole economy

Macroeconomic Units of Study

economic growth, economic stability, international trade

Macroeconomic Topics of Interest

money, banking, and finance; government taxing and spending policies; inflation

Microeconomics

The study of the individual consumer

Microeconomics Units of Study

consumer markets, business markets, and labor markets

Microeconomics Topics of Interest

markets, prices, costs, profits, competition, and government regulations; consumer behavior; business behavior

Product Substitute

A product or service that consumers see as essentially the same or similar enough to another product 

ex: coke vs. pepsi; yeti vs stanley

Product Complement

A good that adds value to another product

ex: peanut butter and jelly; printer and paper

Supply

Economic principle that refers to the total amount of a good or service that is available to consumers. 

Demand

The economic principle refers to the consumer's desire to purchase goods and services and willingness to pay for a good or service. 

Something is only worth what people want to pay for it 

Law of Demand

There is an inverse relationship between price and quantity demanded

As prices rise, the quantity demanded goes down; the reverse is also true 

Law of Supply

There is a direct or linear relationship between price and quantity supply 

Prices rise, quantity goes up; the company makes more money; they follow each other 

Demand=

downward sloping line

Supply=

upward sloping line

When do you move along the curve on the graph for both supply and demand?

when it talks about influence or price. there are also no shifters

When do you move the curve?

when it talks about factors or influence

shifts in the demand curve

change of price of relative goods, changes in income, changes in taste, number of consumers, expectations

shifts in the supply curve

changes in input prices (battery), changes in technology, natural disruptions, number of firms in market, expectations

Law of Marginal Utility

the more of an item that you use or consume, the less satisfaction you get from each additional unit consumed or used.