D089 Principles of Economics - Set 3 - Part 3

Correct Answer: The additional or incremental change from one more unit

Marginal refers to the effect of producing or consuming one additional unit of a good or service, such as marginal cost or marginal benefit.

Correct Answer: When a country can produce a good at a lower opportunity cost than another country

Comparative advantage occurs when a country can produce a good at a lower opportunity cost, leading to more efficient production and beneficial trade.

Correct Answer: The recurring pattern of expansion and contraction in the economy

The business cycle consists of periods of economic expansion (growth) followed by contraction (recession), and these fluctuations impact employment and output.

Correct Answer: A reduction in total surplus due to market inefficiencies

Deadweight loss refers to lost economic efficiency that occurs when the equilibrium outcome is not achieved, often due to taxes, subsidies, or other market distortions.

Correct Answer: An economy where production and prices are controlled by the government

In a command economy, the government controls all major aspects of production and pricing, and individual choices are limited.

Correct Answer: Unemployment caused by changes in the structure of the economy, such as technological advancements or shifts in demand

Structural unemployment occurs when industries decline or technologies replace jobs, leading to a mismatch between workers' skills and available jobs.

Correct Answer: A market where only one firm supplies a product with no close substitutes

In a monopoly, a single firm dominates the market, often leading to higher prices and reduced consumer choices due to the lack of competition.

Correct Answer: The total value of all goods and services produced within a countrys borders over a specific period

GDP is the most common measure of a countrys economic performance, representing the total value of all goods and services produced domestically.

Correct Answer: A tax on the production or sale of a specific good

Excise taxes are levied on specific goods, such as gasoline, tobacco, or alcohol, and are often used to reduce consumption of harmful products.

Correct Answer: As more of a good is consumed, the additional satisfaction from consuming an extra unit decreases

The law of diminishing marginal utility states that as a person consumes more of a product, the satisfaction gained from each additional unit decreases.