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IB Economics SL Microeconomics questions & answers.
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IB Economics SL Microeconomicsquestions & answers.
Economics ANS -the study of how individuals and groups make decisions regarding the allocation of
scare resources.
Scarcity ANS -little of something available, rare, limited quantity. Key Problem is using limited resources
to satisfy relatively unlimited wants.
Opportunity Cost ANS -the value of the next best alternative that is foregone. What you give up in your
consumption and production of one thing when you choose to consume or produce another thing.
Services ANS -intangible products, such as a haircut or insurance and again may be consumed
immediately or overtime.
Public Sector ANS -the state:owned sector of the economy that provides goods and services.
Transitional Economy ANS -refers to any society (country) that is moving away from a centrally planned
economy towards a more free market based economy.
Demand ANS -the quantity of a good or service that consumers are willing and able to purchase, at a
given time, at all possible prices.
Quantity Demanded ANS -the quantity of a good or services that consumers are willing and able to
purchase at a given time, at one possible price.
Law of Demand ANS -As the price of a good rises, the quantity demanded for it falls. (As the price of a
good falls, the quantity demand for it rises)
Supply ANS -the quantity of a good or service that producers are willing and able to produce at all
possible prices.
, Quantity Supplied ANS -the quantity of a good or service that producers are willing and able to produce
at any one particular price.
Law of Supply ANS -As the prices increase, the quantity supplied increases. (Higher prices motivate
producers to expand output) - explains why slope moves upward to the right!
Equilibrium ANS -when a market has Quantity Demanded = Quantity Supplied
Privatization ANS -The repurchasing of all of a company's outstanding stock by employees or a private
investor.
Nationalization ANS -Government ownership of an industry or company. opposite of denationalization.
Elasticity of Demand ANS -measure of how much the demand for a product changes when there is a
change in one of the factors that determine demand.
Price Elasticity of Demand (P.E.D) ANS -measure of how much the quantity of demanded of a product
changes when there is a change in the price of a the product.
Cross Elasticity of Demand (X.E.D.) ANS -measure of how much the demand for a product changes when
there is a change in the price of another product.
Income Elasticity of Demand (Y.E.D.) ANS -measure of how much the demand for a product changes
when there is a change in the consumers income.
Price Elasticity of Supply (P.E.S.) ANS -measure of how much the quantity supplied of a product changes
when there is a change in the price of the product.
Perfectly Inelastic Demand ANS -To have a situation where the demand curve is a vertical line is to think
of a good where a certain quantity is demanded, regardless of the price. Any % change in price that will
not cause a % change in QD (unresponsive) - Heroin for addicts
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