Economics section 1, 2, 3 2025-2026
What are the 5 basic assumptions about economics? - correct answer Scarcity, trade offs,
opertunity cost, rationality, gains from trade
What is scarcity? - correct answer There is limited capital but infinite desires
What does scarcity imply? - correct answer societies must learn how to allocate money
What is opportunity cost? - correct answer what you are giving up for a choice; not the same as
monetary cost
What is the explicit cost? - correct answer Expenses which are tangible; they may overstate
expenses
Is room and board an expense of college? - correct answer no!!! you would pay for housing
regardless thus it is not an expense of college
What is the opportunity cost of going to the movies instead of your job? - correct answer
Missed wages you could have earned
What is the monetary cost of going to the movies instead of your job? - correct answer the
price of the movie ticket
What is rationality? - correct answer People perform cost benefit calculations and act what
provides them teh greatest benefit
Why do people buy generally more expensive eco-friendly products? - correct answer
Rationality!! They believe the eco-friendly products benefits them => benefits can be broad
What is gains from trade? - correct answer people always benefit from trade!!!! With trade,
states can specialize which can lead to greater efficiency
What does efficiency as a goal mean? - correct answer Economists attempt to make process
with as little colateral as possible
How are economic models made? - correct answer Through observation, description,
measurements
What is positive economics? - correct answer What will happen in a circumstance, cause and
effect => backed by data, can be verified, objective, used for knowledge
What is normative economcics? - correct answer What should happen, econ to guide decisions
=> opinion based , cannot be verified, subjective, used to find solutions
,What is the positive outlook for the following situation: Should we increase the minimum
wage? - correct answer Increased wages lead to increased income and increased
unemployment and increased cost to consumers
What is the normative outlook for the following situation: Should we increase the minimum
wage? - correct answer This policy is good as it has the possibility to improve lives.
Do economists assume a system is efficient? - correct answer no!
What is pareto efficiency? - correct answer no way to help someone without hurting someone
else => not necessarily equitable, just efficient
Is this situation pareto? Total $100 10 ppl, everyone gets $9 - correct answer no!!!
Is this situation pareto? Total $100, 10 ppl, one person gets $91, everyone else gets $1 - correct
answer yes!!!
What is microeconomics? - correct answer how individual firms behave
What is macroeconomcics? - correct answer how the national economy behaves
What are the 6 elements concerned with macroeconomics? - correct answer decisions, makers
interactions, production influence, employment, price
Macro or micro? Individual markets - correct answer micro
Macro or micro? price of a singular good - correct answer micro
Macro or micro? Individual labor markets - correct answer micro
Macro or micro? individual behavior - correct answer micro
Macro or micro? supply - correct answer micro
Macro or micro? whole economy - correct answer macro
Macro or micro? inflation - correct answer macro
Macro or micro? employment / unemployment - correct answer macro
Macro or micro? Aggravate Demand - correct answer macro
Macro or micro? production capacity - correct answer macro
What does a market consist of? - correct answer Buyers and Sellers
What does perfect competition assume? (6) - correct answer
What is demand - correct answer the number of goods buyers are willing to purchase
Law of d and - correct answer price and quantity demanded are inversely related
,How to find market demand? - correct answer add every individua;'s demand curve horizontally
What does a demand curve right shift indicate? - correct answer increase in demand
what does a demand curve left shift indicate - correct answer decrease in demand
what is a normal good - correct answer demand is positively related with income
what is a inferior good - correct answer demand is inversely related with income
Are apple products a normal or inferior good? - correct answer normal
Is cheap instant ramen a normal or inferior good? - correct answer inferior
What does a product being a substitute mean? - correct answer When one good replaces the
use of another use of another
Is pepsi and coca-cola substitutes or complements? - correct answer Substitutes
How does substitutes impact changes in price and quantity demanded? - correct answer the
decrease in the price of one good leads to the decrease of teh quantity demanded of another
What are complements? - correct answer Two goods that are bought and used together
Are printers and inks complements or substitutes? - correct answer complements
How does complements impact changes in price and quantity demanded? - correct answer the
decrease in price of one good leads to teh increase in quantity demanded of another
How does tastes and preferences impact markets? - correct answer if perceived benefit
changes, quantity demanded change
Why do people drive less to become more climate conciounce? - correct answer
tastes/preferences => perceived benefit of driving less for climate conscious preference
How does expectations impact markets? - correct answer If someone expects something will
happen, quantity demanded will change
What will happen if people think mass layoffs are going to happen? - correct answer
expectations; people will demand less
How does the number of buyers impact demand? - correct answer Increased number of buyers
leads to increased market demand
What is supply? - correct answer The number of goods sellers are willing to produce
What is the law of supply? - correct answer Price and Quantity are positively related
How to find market supply? - correct answer Add em' up horizontally
What are the 4 things which can change the supply curve? - correct answer -Input price
, -technology
-expectations
-#sellers
What is input price? - correct answer The amount of money suppliers put in to produce
products
How does input price impact the supply curve? - correct answer decrease in IP leads to shift
right, increase in IP leads to shift left
How does technology impact input price? - correct answer Increased tech decrease input price
=> increased tech shifts S right, decreased shifts left
How will an expectation of a price increase impact the supply curve? - correct answer If sellers
expect this, they will increase production, supply curve shifts right
How does number of sellers impact the supply curve - correct answer If more people start
selling, market supply increases, thus the curve shifts right
Are airplanes and cars substitutes or complements? - correct answer substitutes
are interest rates and homes purchased substitutes or complements? - correct answer
complements
How will inflation impact the supply curve? - correct answer inflation will increase input prices,
supply curve will shift left
How will self check outs impact supply? - correct answer self checkouts will decrease input
prices, shifting the curve right
How did the COVID toilet paper crisis impact supply? - correct answer producers expect excess
demand, thus they produced more, shifting the curve right
How does expensive medicine shift the supply curve (this is convoluted)? - correct answer
medicine is expensive, thus more sellers ill enter with cheaper substitutes. As more sellers
enter, there is an increase in market supply and the curve will shift right
What is microeconomic equilibrium? - correct answer the point where no participant (buyer or
seller) will change thier behavior
At what price and quantity does microeconomic equilibrium occur? - correct answer The point
where the supply and demand curves intersect
What happens if market price is above equilibrium price? - correct answer A surplus: sellers will
produce more and people will demand less
What are the 5 basic assumptions about economics? - correct answer Scarcity, trade offs,
opertunity cost, rationality, gains from trade
What is scarcity? - correct answer There is limited capital but infinite desires
What does scarcity imply? - correct answer societies must learn how to allocate money
What is opportunity cost? - correct answer what you are giving up for a choice; not the same as
monetary cost
What is the explicit cost? - correct answer Expenses which are tangible; they may overstate
expenses
Is room and board an expense of college? - correct answer no!!! you would pay for housing
regardless thus it is not an expense of college
What is the opportunity cost of going to the movies instead of your job? - correct answer
Missed wages you could have earned
What is the monetary cost of going to the movies instead of your job? - correct answer the
price of the movie ticket
What is rationality? - correct answer People perform cost benefit calculations and act what
provides them teh greatest benefit
Why do people buy generally more expensive eco-friendly products? - correct answer
Rationality!! They believe the eco-friendly products benefits them => benefits can be broad
What is gains from trade? - correct answer people always benefit from trade!!!! With trade,
states can specialize which can lead to greater efficiency
What does efficiency as a goal mean? - correct answer Economists attempt to make process
with as little colateral as possible
How are economic models made? - correct answer Through observation, description,
measurements
What is positive economics? - correct answer What will happen in a circumstance, cause and
effect => backed by data, can be verified, objective, used for knowledge
What is normative economcics? - correct answer What should happen, econ to guide decisions
=> opinion based , cannot be verified, subjective, used to find solutions
,What is the positive outlook for the following situation: Should we increase the minimum
wage? - correct answer Increased wages lead to increased income and increased
unemployment and increased cost to consumers
What is the normative outlook for the following situation: Should we increase the minimum
wage? - correct answer This policy is good as it has the possibility to improve lives.
Do economists assume a system is efficient? - correct answer no!
What is pareto efficiency? - correct answer no way to help someone without hurting someone
else => not necessarily equitable, just efficient
Is this situation pareto? Total $100 10 ppl, everyone gets $9 - correct answer no!!!
Is this situation pareto? Total $100, 10 ppl, one person gets $91, everyone else gets $1 - correct
answer yes!!!
What is microeconomics? - correct answer how individual firms behave
What is macroeconomcics? - correct answer how the national economy behaves
What are the 6 elements concerned with macroeconomics? - correct answer decisions, makers
interactions, production influence, employment, price
Macro or micro? Individual markets - correct answer micro
Macro or micro? price of a singular good - correct answer micro
Macro or micro? Individual labor markets - correct answer micro
Macro or micro? individual behavior - correct answer micro
Macro or micro? supply - correct answer micro
Macro or micro? whole economy - correct answer macro
Macro or micro? inflation - correct answer macro
Macro or micro? employment / unemployment - correct answer macro
Macro or micro? Aggravate Demand - correct answer macro
Macro or micro? production capacity - correct answer macro
What does a market consist of? - correct answer Buyers and Sellers
What does perfect competition assume? (6) - correct answer
What is demand - correct answer the number of goods buyers are willing to purchase
Law of d and - correct answer price and quantity demanded are inversely related
,How to find market demand? - correct answer add every individua;'s demand curve horizontally
What does a demand curve right shift indicate? - correct answer increase in demand
what does a demand curve left shift indicate - correct answer decrease in demand
what is a normal good - correct answer demand is positively related with income
what is a inferior good - correct answer demand is inversely related with income
Are apple products a normal or inferior good? - correct answer normal
Is cheap instant ramen a normal or inferior good? - correct answer inferior
What does a product being a substitute mean? - correct answer When one good replaces the
use of another use of another
Is pepsi and coca-cola substitutes or complements? - correct answer Substitutes
How does substitutes impact changes in price and quantity demanded? - correct answer the
decrease in the price of one good leads to the decrease of teh quantity demanded of another
What are complements? - correct answer Two goods that are bought and used together
Are printers and inks complements or substitutes? - correct answer complements
How does complements impact changes in price and quantity demanded? - correct answer the
decrease in price of one good leads to teh increase in quantity demanded of another
How does tastes and preferences impact markets? - correct answer if perceived benefit
changes, quantity demanded change
Why do people drive less to become more climate conciounce? - correct answer
tastes/preferences => perceived benefit of driving less for climate conscious preference
How does expectations impact markets? - correct answer If someone expects something will
happen, quantity demanded will change
What will happen if people think mass layoffs are going to happen? - correct answer
expectations; people will demand less
How does the number of buyers impact demand? - correct answer Increased number of buyers
leads to increased market demand
What is supply? - correct answer The number of goods sellers are willing to produce
What is the law of supply? - correct answer Price and Quantity are positively related
How to find market supply? - correct answer Add em' up horizontally
What are the 4 things which can change the supply curve? - correct answer -Input price
, -technology
-expectations
-#sellers
What is input price? - correct answer The amount of money suppliers put in to produce
products
How does input price impact the supply curve? - correct answer decrease in IP leads to shift
right, increase in IP leads to shift left
How does technology impact input price? - correct answer Increased tech decrease input price
=> increased tech shifts S right, decreased shifts left
How will an expectation of a price increase impact the supply curve? - correct answer If sellers
expect this, they will increase production, supply curve shifts right
How does number of sellers impact the supply curve - correct answer If more people start
selling, market supply increases, thus the curve shifts right
Are airplanes and cars substitutes or complements? - correct answer substitutes
are interest rates and homes purchased substitutes or complements? - correct answer
complements
How will inflation impact the supply curve? - correct answer inflation will increase input prices,
supply curve will shift left
How will self check outs impact supply? - correct answer self checkouts will decrease input
prices, shifting the curve right
How did the COVID toilet paper crisis impact supply? - correct answer producers expect excess
demand, thus they produced more, shifting the curve right
How does expensive medicine shift the supply curve (this is convoluted)? - correct answer
medicine is expensive, thus more sellers ill enter with cheaper substitutes. As more sellers
enter, there is an increase in market supply and the curve will shift right
What is microeconomic equilibrium? - correct answer the point where no participant (buyer or
seller) will change thier behavior
At what price and quantity does microeconomic equilibrium occur? - correct answer The point
where the supply and demand curves intersect
What happens if market price is above equilibrium price? - correct answer A surplus: sellers will
produce more and people will demand less
