Types of Goods and Economic Concepts Quiz

Normal goods are those for which demand increases as consumer income rises, such as luxury cars.

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

Monetary policy aims to stabilize prices and control inflation by influencing the money supply and interest rates.

Gross domestic product (GDP) is the total market value of all final goods and services produced in a country.

Marginal cost is the additional cost of producing one more unit of a good or service.

Elasticity of demand measures how much the quantity demanded of a good changes in response to a change in its price.

Perfectly competitive markets feature homogeneous (identical) products, with many buyers and sellers.

Complementary goods are consumed together, like peanut butter and jelly, as the use of one enhances the use of the other.

Opportunity cost is the value of the next best alternative forgone when a choice is made, illustrating the trade-off between options.

Monopolistic competition features many firms with low barriers to entry, selling differentiated products in the market.

A public good is non-rivalrous and non-excludable, meaning consumption by one person does not reduce availability for others.

A pure public good is non-rivalrous and non-excludable, such as a fireworks display, where consumption by one does not affect others.

Pareto efficiency occurs when resources are allocated in a way that no one can be made better off without making someone else worse off.

In a command economy, the government makes decisions about what goods and services to produce, how to produce them, and for whom, exercising control over resource allocation.