Economics Unit 2 Vocab Quiz

What is comparative advantage?

• The producer that can produce the most output OR requires the least amount of inputs (resources).

• The producer with the lowest opportunity cost.

• Opportunity cost of the unit given up over the unit gained

• producers (businesses) will offer more for sale at higher prices.

What is the Law of Supply?

• Producers (businesses) will offer more for sale at higher prices.

• The producer that can produce the most output OR requires the least amount of inputs (resources).

• There is more supply than demand.

• Limit the amount of a product to keep prices on imports high to protect domestic producers.

What is equilibrium price?

• the lowest legal price – creates a surplus

• the highest legal price – creates a shortage

• designed to make money for the government.

• the price at which supply meets demand

What is a trade bloc?

• A trade barrier like a tariff or quota that makes imports expensive and more scarce.

• the buying and selling of the currencies of different nations.

• smaller, local trade organizations

• "I scratch your back; you scratch mine."

What does it mean when there is a shortage?

• there is more demand than supply

• there is more supply than demand

• Our supply of natural resources is finite.

• Spending all of your money on that new iPhone and not having enough left over to get groceries.

What is a price ceiling?

• the lowest legal price – creates a surplus

• the highest legal price – creates a shortage

• The lowest customers are willing to pay for a product.

• The highest price customers are willing to pay for a product.

What is demand?

• I need to pay the bills... but Imma go to Disneyland instead.

• The value, or worth, that we place on a product.

• the amount of something that producers will offer for sale at all prices.

• the desire, ability, and willingness to buy a product

What is a revenue tariff?

• Intended to make imported goods more expensive than domestic goods.

• A tax on imported tea that makes me want to dump it into the harbor.

• Designed to make money for the government.

• Limit the amount of a product to keep prices on imports high to protect domestic producers.

Foreign Exchange

• The buying and selling of the currencies of different nations.

• Another name for international trade.

• A program in which students can study in other countries.

• The process of exporting goods to other countries.

What is absolute advantage?

• "Unlimited power!"

• The producer that can produce the most output OR requires the least amount of inputs (resources).

• The producer with the lowest opportunity cost.

• The currency with the highest value in the foreign market.