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Economy Ch.1
| Question | Answer |
|---|---|
| The difference between the earnings that a firm recieves from selling its good or service and the costs of production for the good or service is the: | Profit |
| The additional or incremental benefit associated with a choice is known as: | The Marginal Benefit |
| Decisions made "at the margin" require: | comparing the benefits and costs of the next, or incremental, of consuming a good or service. |
| What is the law of diminishing marginal benefits | Ceteris paribus, as more and more of an activity is done, the marginal benefits derived from the activity tend to diminish. |
| What is the law of increasing marginal cost? | Ceteris paribus, as more and more of an activity is done, the marginal costs of the activity tend to increase. |
| Demand: | the effects on the consumer, The relationship between the price of a good and the quantity of the good that buyers are willing and able to buy at that price, ceteris paribus. |
| Supply: | The relationship between the price of a good and its quantity supplied, ceteris paribus. |
| Factors that shift supply curve: | 1. cost of production 2. prices of alternative goods produced 3. seller expectations 4. number of suppliers |
| Factors that shift demand curve: | 1. Income 2. Prices of related goods 3. Tastes and preferences 4. Number of consumers 5. Consumers expectations |
Created by:
jgaul
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