Openstax Principles of Economics 3e Exam Questions And Answers. Verified and Updated.
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Openstax Principles of Economics 3e
Institution
Openstax Principles Of Economics 3e
Openstax Principles of Economics 3e Exam
Questions And Answers. Verified and
Updated.
Circular flow diagram - answera diagram that views the economy as consisting of
households and firms interacting in a goods and services market and a labor market
command economy - answeran economy where econ...
Openstax Principles of Economics 3e Exam
Questions And Answers. Verified and
Updated.
Circular flow diagram - answer✔✔a diagram that views the economy as consisting of
households and firms interacting in a goods and services market and a labor market
command economy - answer✔✔an economy where economic decisions are passed down from
government authority and where the government owns the resources
division of labor - answer✔✔the way in which different workers divide required tasks to produce
a good or service
economics - answer✔✔the study of how humans make choices under conditions of scarcity
economies of scale - answer✔✔when the average cost of producing each individual unit declines
as total output increases
exports - answer✔✔products (goods and services) made domestically and sold abroad
fiscal policy - answer✔✔economic policies that involve government spending and taxes
globalization - answer✔✔the trend in which buying and selling in markets have increasingly
crossed national borders
goods and services market - answer✔✔a market in which firms are sellers of what they produce
and households are buyers
gross domestic product (GDP) - answer✔✔measure of the size of total production in an economy
imports - answer✔✔products (goods and services) made abroad and then sold domestically
labor market - answer✔✔the market in which households sell their labor as workers to business
firms or other employers
macroeconomics - answer✔✔the branch of economics that focuses on broad issues such as
growth, unemployment, inflation, and trade balance
market - answer✔✔interaction between potential buyers and sellers; a combination of demand
and supply
EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM
,market economy - answer✔✔an economy where economic decisions are decentralized, private
individuals own resources, and businesses supply goods and services based on demand
microeconomics - answer✔✔the branch of economics that focuses on actions of particular agents
within the economy, like households, workers, and business firms
model/theory - answer✔✔a representation of an object or situation that is simplified while
including enough of the key features to help us understand the object or situation
monetary policy - answer✔✔policy that involves altering the level of interest rates, the
availability of credit in the economy, and the extent of borrowing
private enterprise - answer✔✔system where private individuals or groups of private individuals
own and operate the means of production (resources and businesses)
scarcity - answer✔✔when human wants for goods and services exceed the available supply
specialization - answer✔✔when workers or firms focus on particular tasks for which they are
well-suited within the overall production process
traditional economy - answer✔✔typically an agricultural economy where things are done the
same as they have always been done
underground economy - answer✔✔a market where the buyers and sellers make transactions in
violation of one or more government regulations
allocative efficiency - answer✔✔when the mix of goods produced represents the mix that society
most desires
budget constraint - answer✔✔all possible consumption combinations of goods that someone can
afford, given the prices of goods, when all income is spent; the boundary of the opportunity set
comparative advantage - answer✔✔when a country can produce a good at a lower cost in terms
of other goods; or, when a country has a lower opportunity cost of production
invisible hand - answer✔✔Adam Smith's concept that individuals' self-interested behavior can
lead to positive social outcomes
law of diminishing marginal utility - answer✔✔as we consume more of a good or service, the
utility we get from additional units of the good or service tends to become smaller than what we
received from earlier units
law of diminishing returns - answer✔✔as we add additional increments of resources to
producing a good or service, the marginal benefit from those additional increments will decline
marginal analysis - answer✔✔examination of decisions on the margin, meaning a little more or a
little less from the status quo
EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM
,normative statement - answer✔✔statement which describes how the world should be
opportunity cost - answer✔✔measures cost by what we give up/forfeit in exchange; opportunity
cost measures the value of the forgone alternative
opportunity set - answer✔✔all possible combinations of consumption that someone can afford
given the prices of goods and the individual's income
positive statement - answer✔✔statement which describes the world as it is
production possibilities frontier (PPF) - answer✔✔a diagram that shows the productively
efficient combinations of two products that an economy can produce given the resources it has
available.
productive efficiency - answer✔✔when it is impossible to produce more of one good (or service)
without decreasing the quantity produced of another good (or service)
sunk costs - answer✔✔costs that we make in the past that we cannot recover
utility - answer✔✔satisfaction, usefulness, or value one obtains from consuming goods and
services
ceteris paribus - answer✔✔other things being equal
complements - answer✔✔goods that are often used together so that consumption of one good
tends to enhance consumption of the other
consumer surplus - answer✔✔the extra benefit consumers receive from buying a good or
service, measured by what the individuals would have been willing to pay minus the amount that
they actually paid
deadweight loss - answer✔✔the loss in social surplus that occurs when a market produces an
inefficient quantity
demand - answer✔✔the relationship between price and the quantity demanded of a certain good
or service
demand curve - answer✔✔a graphic representation of the relationship between price and
quantity demanded of a certain good or service, with quantity on the horizontal axis and the price
on the vertical axis
demand schedule - answer✔✔a table that shows a range of prices for a certain good or service
and the quantity demanded at each price
economic/social/total surplus - answer✔✔the sum of consumer surplus and producer surplus
EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM
, equilibrium - answer✔✔the situation where quantity demanded is equal to the quantity supplied;
the combination of price and quantity where there is no economic pressure from surpluses or
shortages that would cause price or quantity to change
equilibrium price - answer✔✔the price where quantity demanded is equal to quantity supplied
equilibrium quantity - answer✔✔the quantity at which quantity demanded and quantity supplied
are equal for a certain price level
excess demand - answer✔✔at the existing price, the quantity demanded exceeds the quantity
supplied; also called a shortage
excess supply - answer✔✔at the existing price, quantity supplied exceeds the quantity
demanded; also called a surplus
factors of production - answer✔✔the resources such as labor, materials, and machinery that are
used to produce goods and services; also called inputs
inferior good - answer✔✔a good in which the quantity demanded falls as income rises, and in
which quantity demanded rises and income falls
inputs - answer✔✔the resources such as labor, materials, and machinery that are used to produce
goods and services; also called factors of production
law of demand - answer✔✔the common relationship that a higher price leads to a lower quantity
demanded of a certain good or service and a lower price leads to a higher quantity demanded,
while all other variables are held constant
law of supply - answer✔✔the common relationship that a higher price leads to a greater quantity
supplied and a lower price leads to a lower quantity supplied, while all other variables are held
constant
normal good - answer✔✔a good in which the quantity demanded rises as income rises, and in
which quantity demanded falls as income falls
price - answer✔✔what a buyer pays for a unit of the specific good or service
price ceiling - answer✔✔a legal maximum price
price control - answer✔✔government laws to regulate prices instead of letting market forces
determine prices
price floor - answer✔✔a legal minimum price
producer surplus - answer✔✔the extra benefit producers receive from selling a good or service,
measured by the price the producer actually received minus the price the producer would have
been willing to accept
EXAM STUDY MATERIALS July 24, 2024 1:33:58 PM
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