Term 2 Recap

What factors affect the elasticity of supply?

• Consumer preferences

• Weather conditions

• Government regulations

• Factors affecting the elasticity of supply include availability of resources, production time, flexibility of production, and number of suppliers.

How does the availability of substitutes influence demand elasticity?

• The availability of substitutes increases demand elasticity.

• The availability of substitutes makes demand perfectly inelastic.

• Substitutes have no effect on demand elasticity.

• The availability of substitutes decreases demand elasticity.

What are the four main types of market structures?

• Perfect competition, monopolistic competition, oligopoly, monopoly

• Monopoly, perfect competition, competitive market, oligopolistic market

• Monopolistic monopoly, perfect competition, oligopoly, market failure

• Perfect monopoly, oligopolistic competition, duopoly, perfect competition

What are the primary causes of inflation in an economy?

• Government budget surpluses

• Increased savings rates

• Decreased consumer spending

• Demand-pull inflation, cost-push inflation, built-in inflation, monetary policy, and external factors.

What are some positive consequences of economic growth?

• Decreased job opportunities

• Increased employment, higher income levels, improved public services, enhanced living standards, and innovation.

• Lower income levels

• Deterioration of public services

How can market failures occur in an economy?

• Market failures occur only in monopolistic markets.

• Market failures are a result of high consumer demand.

• Market failures are caused by government intervention.

• Market failures can occur due to externalities, public goods, information asymmetry, and market power.

What is the definition of market equilibrium?

• Market equilibrium is the point where supply equals demand.

• Market equilibrium is when prices are at their highest.

• Market equilibrium is the point where demand exceeds supply.

• Market equilibrium occurs when there is a surplus of goods.

What happens during a state of disequilibrium in a market?

• Prices remain unchanged regardless of supply and demand.

• Supply and demand become irrelevant in a disequilibrium state.

• Consumers stop purchasing goods until prices stabilize.

• Prices adjust to restore balance between supply and demand.

How does employment impact economic growth?

• Employment has no effect on tax revenues.

• Employment leads to higher unemployment rates.

• Employment positively impacts economic growth by increasing consumer spending, stimulating production, and enhancing tax revenues.

• Increased employment decreases consumer spending.

What role does consumer preference play in demand elasticity?

• Consumer preference influences the sensitivity of demand to price changes, affecting demand elasticity.

• Consumer preference has no effect on demand elasticity.

• Higher consumer preference always leads to lower demand elasticity.

• Demand elasticity is solely determined by production costs.