the individual who brings together economic resources and assumes the risk in a capitalist economy
When an economy is full employment and full production, more of any one product
can be produced only if there is less production of some other products
on a production possibilities curve, the single optimal or best combination of output for an society:
depends upon the preferences of the society
a movement along the production possibilities curve would imply that:
society has chosen a different set of outputs
A reduction in the level of unemployment would have which effect with respect to the nation's production possibilities curve?
It would not shift the curve; it would be represented by moving from a point inside the curve toward the curve.
the law of increasing opportunity costs indicates that:
to produc more of one good, the society must sacrifice larger and larger amounts of alternative goods
All of the following would affect the position of a country's production possibilities curve, except:
the level of employment
Economic systems differ according to what two main characteristics?
Ownership of resources, and methods of coordinating economic activity.
In a market system, well-defined property rights are important because they:
encourage economic activity
Why might a company use barter rather than money to make a transaction?
Barter can enable two firms to trade when cash flows are limited.
the term consumer sovereignty means that:
what is produced is ultimately determined by what consumers buy.
Within a market economy, some industries may be declining while other industries may be expanding. This indicates that:
resources are being reallocated
A rightward shift in the demand curve for product C might be caused by:
a decrease in the price of a product that is complementary to C.
Other things equal, which of the following might shift the demand curve for gasoline to the left?
the development of a low-cost electric automobile
price initially above equillibrium level
price will decrease, quantity demanded will increase, and quantity supplied will decrease
effects on equillibrium price is dependent on magnitude of shifts of supply and demand when
demand rises and supply rises
if supply and demand curves both decrease
equillibrium quantity must decline, but equillibrium price may rise, fall, or remain unchanged
along a linear downward sloping demand curve, the price elasticity of demand will be:
different across each price
requirements for economic growth
increase in one or more factors of production, improvement in production technology
sources of economic growth
technological progress, physical capital investment, human capital investment, specialization and division of labor, population growth
property resources are mostly privately owned and decentralized markets are used to direct and coordinate economic activity
new products and production methods destroy market positions of firms that are not able or willing to adjust
determinants of supply
resource prices, technology, taxes and subsidies, prices of other goods, expectations, number of sellers
determinants of demand
consumer income, prices of related goods, consumer tastes and preferences, consumer expectations, number of buyers