Economics Grade Flashcards

A company is the only seller of a product and faces no competition. This market structure is called:

Answer: Monopoly

A monopoly exists when a single seller controls the entire market for a product, allowing it to set prices above competitive levels.

GDP measures the total value of goods and services produced in a country. Which of the following would NOT be included in GDP?

Answer: A used car sold between two private citizens

GDP counts only newly produced goods and services; resale of existing items like used cars does not add new production to the economy.

A tariff on imported steel would most likely benefit which group in the short run?

Answer: Domestic steel producers

A tariff raises the price of imported steel, making domestic steel more competitive and protecting domestic steel producers from foreign competition.

Which economic indicator would signal that an economy is in a recession?

Answer: Two consecutive quarters of negative GDP growth

A recession is commonly defined as two consecutive quarters of negative real GDP growth, signaling contraction of economic output.

If demand for a product increases while supply remains constant, what happens to the equilibrium price and quantity?

Answer: Both price and quantity rise

When demand increases with no change in supply, the demand curve shifts right, raising both the equilibrium price and quantity.

Which of the following best describes the role of profit in a market economy?

Answer: It signals businesses to produce more of what consumers value

Profit serves as a signal that consumers value a product, incentivizing firms to increase production and attracting new competitors into the market.

A government wants to reduce cigarette consumption. Which policy most directly uses a price mechanism to achieve this goal?

Answer: Imposing a tax on each pack of cigarettes sold

An excise tax raises the price of cigarettes, directly reducing quantity demanded by making the product more expensive for consumers.