Business in Action, 7e (Bovee/Thill)
Chapter 2 Understanding Basic Economics
1) Economics is the study of how a society uses its scarce resources to produce and distribute goods and services to its citizens.
Answer: TRUE
Explanation: Economics is the study of how a society uses its scarce resources to produce and distribute goods and services to its citizens.
Diff: 1
AACSB: Application of knowledge
Chapter LO: 1
Course LO: Compare and contrast different economic systems
Classification: Concept
2) Macroeconomics studies economic behavior among consumers, businesses, and industries that collectively determine the quantity of goods and services demanded and supplied at different prices.
Answer: FALSE
Explanation: The study of a
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Private enterprise and the pursuit of private gain are not encouraged in such a system.
Diff: 2
AACSB: Diverse and multicultural work environments
Chapter LO: 2
Course LO: Compare and contrast different economic systems
Classification: Concept
10) Global economists use the terms capitalism and private enterprise to describe centrally planned economic systems.
Answer: FALSE
Explanation: The terms capitalism and private enterprise are often used to describe free-market systems.
Diff: 2
AACSB: Application of knowledge
Chapter LO: 2
Course LO: Explain the benefits and challenges of engaging in international business
Classification: Application
11) Demand refers to the quantities of a good or service that producers will provide on a particular date at various prices.
Answer: FALSE
Explanation: Demand refers to buyers' willingness and ability to purchase products at various price points.
Diff: 1
AACSB: Application of knowledge
Chapter LO: 3
Course LO: Explain how economic performance is monitored
Classification: Concept
12) The demand curve will shift to the left if the price of substitute products increases.
Answer: FALSE
Explanation: The demand curve will shift to the right if the price of substitute products increases.
Diff: 2
AACSB: Analytical thinking
Chapter LO: 3
Course LO: Explain how economic performance is monitored
Classification: Application
13)
Any change that lowers the quantity that buyers wish to purchase at any given price shifts the demand curve to the left.
In economics, the demand for a good refers to the amount of the good people a.would like to have if the good were free.b.are willing to buy at various prices.c.need to achieve a minimum standard of living.d.will buy at alternative income levels. ANS
Supply and demand is a fundamental element of economics; it is the main support system of a market economy. Demand can be interpreted by the quantity of a product or service a consumer is desired to acquire at a given time period. Quantity demanded is the amount of product consumers are willing to purchase at a given price; the relationship between price and quantity demanded is commonly known as the demand relationship. Supply however, accounts for how much a market produces for consumers. The quantity supplied refers to the actual amount of a certain good firms are willing to supply to consumers when receiving a certain price. Having limited resources we all have to
Demand refers to the quantity of products people are willing and able to purchase during some specific time period, all other relevant factors being held constant. Price and quantity demanded stand in a negative (inverse) relationship: as price rises, consumers buy fewer units; and as price falls, consumers buy more units (Stone 75).
Economics is the branch of knowledge concerned with the production, consumption, and transfer of wealth. Economics can even be used a few different ways. They are the study of scarcity, the study of how people use resources, or the study of decision-making. One of the central tenets of economics is that people want certain things and will change their behavior to get those things according to American Economic Association. The economic study ranges from the very small to the very large. Much of economics involves the use of data gathered by governments, businesses, or in the laboratory to test the hypotheses about whether a certain program, event, or incentive will have the expected effect. Our nation is affected by economics in the way that you work, spend money, eat, simply just how you live on a regular
The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve. In demand the schedule is depicted graphically as the demand curve which represents the
To summarize the concept, when the price of a product falls, the quantity demanded of the product will increase, and conversely, when the price of a product increases, the quantity demanded of the product will decrease, where all other relevant factors are constant. (Glen, 2012).
1. Economics – the efficient allocation of the scarce means of production toward the satisfaction of human needs and wants.
This is a perfect example of a change in demand; when the demand increases, at the same or even a higher price, more quantity is demanded. In the figure below, a shift to the right in the demand curve signifies an increase in demand.
“Economics is the branch of social science that studies the production, distribution, and consumption of
The demand curve shows what happens to the quantity demanded of a good when its price varies, holding constant all the other variables that influence buyers. When one or more of these other variables changes, the demand curve shifts leading to an increase or decrease in demand. The table below lists all the variables that influence how much consumers choose to buy cigarettes.4
The Economy is the backbone to society. There are many factors that operate in, and govern our society’s economical structure. Factors such as scarcity and choice, opportunity cost, marginal analysis, microeconomics, macroeconomics, factors of production, production possibilities, law of increasing opportunity cost, economic systems, circular flow model, money, and economic costs and profits all contribute to what is known as the economy. These properties as well as a few others, work together to influence the economy. Microeconomics and Macroeconomics are two major components. Both of these are broken down into several different components that dictate societal norms and views.
The following graph demonstrate the demand curve of how many items of a product or service a consumer would like to purchase at different prices. Now by having the product at a lower price, the more a consumer is likely to buy. For that same reason it can be concluded that the price is one major factor of the product demand.
Demand is the relationship between price and quantity demanded for a particular good and service in particular circumstances. For each price the demand relationship tells the quantity the buyers want to buy at that corresponding price. The quantity the buyers want to buy at a particular price is called the Quantity Demanded.
Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.