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CH 2 Understanding Economics and How It Affects Business
Terms in this set (20)
The quantity of products that people are willing to _________ at different prices at a specific time describes the demand curve.
What does the intersection between the demand and supply curves show?
The point where quantity supplied equals the quantity demanded
As negotiation occurs between buyers demanding products and sellers supplying products, the ________ price will be determined in the long run.
The trend toward a(n) _________ price occurs naturally as supply and demand of products is negotiated between buyers and sellers.
Economists agree that there are four different degrees of competition within free markets. They include:
1. Perfect competition
In perfect competition:
1. There are many sellers
2. Products appear to be identical
Under monopolistic competition products are:
Similar but not identical
The degree of competition corresponding to the situation when one seller controls the total supply of a good or service is called a(n) _________.
__________ is an economic system based on free markets, in which all or most of the factors of production and distribution are privately owned and are operated for profit.
In a free market, the prices of products exchanged in the market:
are negotiated by buyers and sellers
In a free market, prices are determined by:
Buyers and sellers negotiating in the marketplace
The supply concept refers to the relationship between the quantity of products produced and price. If the market price of a product increases, quantity supplied will ________. If the market price of a product decreases, quantity supplied will ________.
In a free market economy, as the price of a product increases, so will the amount supplied.
1. High prices lead to high profits, attracting new firms to the market.
2. High prices lead to increased revenues, which allows firms to buy more raw materials and employ more workers.
1. Government owns and operates basic industries such as steel mills, utilities, or transportation
2. Individuals own some smaller businesses and property
The idea that some basic businesses such as steel mills, coal mines and utilities, should be owned and controlled by the government is indicative of a _________ economic system.
Adam Smith's book about capitalism is known as The ________ of _________.
Productivity in the US has risen because:
1. Computers have increased the speed of production
2. Changes to computerized equipment has improved speed and accuracy of production
Productivity is important to businesses because the higher it is:
1. The lower the cost of producing goods and services
2. The cost of production is lower, so profits can be higher
3. The cost of production is lower and prices can be lower
Free markets contribute to the creation of wealth because:
1. Successful business owners keep their profits and become wealthy
2. Successful businesses hire others who prosper
The indicator used by the US Bureaus of Economic Analysis since 2014 to measure the total sales volume at all stages of production is:
Gross Output (GO)
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