SQA Higher Economics Economics of the Market overview quiz quiz

The total amount of money spent on the chosen option

The next best alternative that is given up to make the choice

The benefit gained from the option that is actually chosen

The cost of producing the good in the cheapest possible way

Land, labour, capital and enterprise

Rent, wages, interest and profit

Demand, supply, price and quantity

Money, machines, materials and management

The economy is producing more than it possibly can

Resources are scarce and the economy is growing quickly

Some resources are unemployed or used inefficiently

The economy is fully employing all of its resources

A leftward shift of the demand curve for the good

A rightward shift of the supply curve for the good

No change to either demand or supply at all

A movement along the demand curve, an extension of demand

Demand for coffee increases, shifting its curve to the right

Demand for coffee falls, shifting its curve to the left

Quantity of coffee demanded contracts along the same curve

There is no effect on the demand for coffee whatsoever

Higher prices reduce the profit firms can make on each unit

Consumers buy more of a good when its price is higher

A higher price widens profit margins, so firms supply more

Costs of production always fall as output is increased

Shift the supply curve to the left, decreasing supply

Move the economy up along the existing supply curve

Leave supply unchanged but reduce demand for the good

Shift the supply curve to the right, increasing supply

Price inelastic, so quantity changes less than proportionately to price

Price elastic, so quantity changes more than proportionately to price

Unit elastic, so quantity and price change in equal proportion

Perfectly elastic, so any price rise ends all demand at once

Raise its price, because revenue always rises with price

Cut its price, because the rise in quantity outweighs the lower price

Keep price the same, because revenue cannot be changed

Stop selling the product, because it can never be profitable

The flour used to bake each batch of bread

The wages of workers paid for each loaf produced

The rent paid on the bakery premises

The electricity used to run the ovens during baking

Communication becoming slower as the firm grows very large

A rise in the wages a firm must pay its factory workers

An increase in the tax charged on the firm's production

Buying raw materials in bulk at a discounted price

Very many small firms selling an identical product with no barriers to entry

A single dominant firm protected by very high barriers to entry

A few large interdependent firms that watch each other's prices

Many firms each selling a slightly differentiated branded product

Because it always produces at the lowest possible average cost

Because high barriers to entry keep potential rivals out of the market

Because it is forced by law to charge the competitive price

Because consumers have many close substitutes to choose from

A positive externality, so the market under-produces the good

A public good that the free market will not provide at all

A negative externality, so the market over-produces the good

Perfect information leading to an efficient market outcome

It is provided free by firms hoping to make a large profit

It is consumed only by people who choose to pay for it

It runs out quickly once a few people start to use it

It is non-rival and non-excludable, so non-payers cannot be excluded