Economic Agents and Market Dynamics Quiz

Households and firms are the primary economic agents as they engage in consumption, production, and resource allocation.

Opportunity cost is the concept that quantifies the value of the next best alternative forgone when a decision is made.

GDP stands for Gross Domestic Product, which measures the total value of all goods and services produced in a country.

Opportunity cost represents the foregone potential gain from choosing one alternative over others.

Fiscal policy involves the use of government spending and tax policies to impact economic conditions.

A public good is characterized by being non-excludable (everyone can use it) and non-rivalrous (one person's use does not diminish its availability to others).

A monopoly is characterized by a single seller dominating the market with many buyers, leading to limited competition.

Ceteris paribus means holding other factors constant to isolate the effect of the variable being studied.

The law of diminishing returns states that increasing one input in production, with others fixed, will eventually lead to diminishing marginal returns.

Market equilibrium occurs when the quantity demanded by consumers equals the quantity supplied by producers.

Monopolistic competition involves firms selling differentiated products with some market power, but there are many competitors.

Keynesian economics focuses on total spending in the economy and its influence on output and inflation.

The Phillips Curve illustrates the trade-off between inflation and unemployment in an economy.

Elasticity measures how much quantity demanded or supplied changes in response to a change in price.

Switching cost refers to the expenses or difficulties associated with changing from one economic activity, supplier, or product to another.

Nash equilibrium is a fundamental concept in game theory where players' strategies result in a stable outcome, given the choices of others.

The Laffer Curve illustrates the relationship between tax rates and the resulting government revenue, showing that excessively high tax rates may lead to lower revenue.