ATAR Year 11 Economics test

What is microeconomics concerned with?

Microeconomics focuses on individual economic agents, such as consumers and firms, and their interactions in specific markets.

What does macroeconomics examine?

Macroeconomics examines the aggregate economy, including broad issues such as inflation, unemployment, and economic growth.

What is opportunity cost?

Opportunity cost is the value of the next best alternative forgone when a choice is made.

What does marginal analysis involve?

Marginal analysis involves comparing the additional benefit (marginal benefit) of an action with the additional cost (marginal cost) to make rational decisions.

What does a Production Possibility Frontier (PPF) represent?

A PPF shows the maximum combinations of two goods or services that an economy can produce given its available resources and technology.

What does it mean if a point lies inside the PPF?

A point inside the PPF represents inefficient production, meaning some resources are not being fully utilized.

What is one key characteristic of a market economy?

A key characteristic of a market economy is that resource allocation is primarily determined by the interaction of supply and demand in free markets.

What is the Law of Demand?

The Law of Demand states that there is an inverse relationship between price and quantity demanded, ceteris paribus.

How is market demand derived?

Market demand is the horizontal summation of all individual demand curves for a particular good or service.

What indicates a movement along the demand curve?

A movement along the demand curve occurs due to a change in the price of the good itself.

What do increasing opportunity costs in production mean?

Increasing opportunity costs mean that as more of one good is produced, increasingly more of the other good must be given up, reflecting the fact that resources are not perfectly adaptable.

What is the equilibrium in the market?

Market equilibrium is the point where supply and demand curves intersect, resulting in quantity demanded equaling quantity supplied.

What is meant by a surplus in the market?

A surplus occurs when quantity supplied is greater than quantity demanded, typically above the equilibrium price.

What non-price factors can affect demand?

Non-price factors affecting demand include income, population, tastes and preferences, prices of related goods, and expected future prices.

What effect do technological advancements have on supply?

Technological advancements typically increase supply, causing a rightward shift of the supply curve.

Define market clearing price.

Market clearing price is the price at which the market clears, meaning quantity demanded equals quantity supplied.

What do you illustrate to analyze the impact on equilibrium after a demand shift?

You illustrate the shift on the supply and demand graph and analyze its impact on equilibrium price and quantity.