#1
What is scarcity in economics?
The limited resources available to meet society's wants and needs
ExplanationScarcity refers to the limited resources available relative to unlimited wants and needs in society.
#2
What does the law of demand state?
As prices increase, quantity demanded decreases
ExplanationThe law of demand asserts an inverse relationship between price and quantity demanded.
#3
What does the term 'ceteris paribus' mean in economics?
All else being equal
ExplanationCeteris paribus refers to the assumption that all other variables remain constant except the ones being studied.
#4
What is the law of supply?
As prices increase, quantity supplied increases
ExplanationThe law of supply states a positive relationship between price and quantity supplied.
#5
What is a factor of production in economics?
The resources used to produce goods and services
ExplanationFactors of production are the inputs needed for the production of goods and services, including land, labor, capital, and entrepreneurship.
#6
What is opportunity cost?
The value of the next best alternative that is given up
ExplanationOpportunity cost measures the value of the foregone alternative when a choice is made.
#7
What is a perfectly competitive market characterized by?
Many buyers and sellers with identical products
ExplanationPerfect competition entails numerous buyers and sellers with homogeneous goods.
#8
What is a production possibility frontier (PPF) used to represent?
The maximum combination of goods and services an economy can produce with limited resources
ExplanationPPF illustrates the trade-offs in production due to resource constraints.
#9
In economics, what is the role of a price ceiling?
To prevent prices from rising above a certain level
ExplanationA price ceiling sets a legal maximum price to prevent prices from exceeding it.
#10
What is the difference between explicit and implicit costs?
Explicit costs are tangible expenses, while implicit costs are the opportunity costs of resources
ExplanationExplicit costs involve direct monetary payments, while implicit costs represent foregone opportunities.
#11
What is the law of diminishing marginal utility?
As consumption of a good or service increases, the marginal utility derived from each additional unit decreases
ExplanationThis law states that the satisfaction gained from each additional unit of consumption diminishes as total consumption increases.
#12
What does the elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
ExplanationElasticity of demand quantifies the sensitivity of quantity demanded to changes in price.
#13
What is the income elasticity of demand?
The responsiveness of quantity demanded to a change in income
ExplanationIncome elasticity of demand measures how sensitive demand is to changes in income.
#14
What is a monopoly characterized by?
One seller and many buyers
ExplanationMonopoly exists when a single firm dominates the market.
#15
What is price discrimination in economics?
A situation where firms charge different prices to different consumers for the same good or service
ExplanationPrice discrimination involves charging different prices based on consumer characteristics or willingness to pay.