Chapter 1

Question 1

Outputs

Answer 1

Final goods and services that firms and industries sell to consumers.

Question 2

Inputs

Answer 2

Resources or factors of production required to produce final outputs.

Land, Labor, Capital, Raw materials, Entrepreneurship

Inputs are directly related to demand

Question 3

What are the 4 major types of markets

POMM

Answer 3

1. Perfect Competition- Large, Undifferentiated, Easy Entry, Complete information.
2. Oligopoly-
3. Monopolistic Competition- Barriers to Entry
4. Monopoly-

Question 4

4 Characteristics that distinguish the 4 markets

Answer 4

1. Number of Firms
2. Differentiated or undifferentiated products sold?
3. Difficulty of Entry
4. Amount of Info available to market participants

Question 5

Price Taker (characteristic of perfect competition)

Answer 5

Firm that doesn’t have to lower its price to sell more output.

Cannot influence the price of its product

Question 6

Perfect competition firms have no

Answer 6

Market Power - Ability to influence price

Question 7

The Monopoly Model firms produce products

Answer 7

having no close substitutes

Question 8

Monopolistic Model have _____ products and ____ _____

Answer 8

Differentiated, market power

Question 9

Oligopoly Model

Answer 9

Small number of large firms dominate market. Sensitive to competition. (interdependent)

Question 10

5 Major Catagories of spending

CIGXM

Answer 10

1. Consumption (C)
2. Investment (I)
3. Government (G)
4. Export (X)
5. Import (M)

Question 11

GDP = _ + _ + _ + _ - _

Answer 11

C + I + G + X - M

Question 12

Fiscal Policies

Answer 12

Implemented by national government and involve changing Taxes and Government Expenditure

Question 13

Monetary Policies focus on changing

Answer 13

the money supply to influence interest rates, which affect

Real Consumption
Investment Spending
Resulting levels of input and output

Question 14

Microeconomic influences on managers

Answer 14

How consumer behavior affects revenue

How Production technology and input prices affect costs

How market and regulatory environment influence ability to set prices and respond to competitor strategies.

Question 15

3 Factors affecting Macro Spending Behavior

P, M, F

Answer 15

1. Private sector changes in behavior
2. Monetary or fiscal changes of policy
3. Foreign sector changes

Question 16

4 Spending and Revenue provisions of the ARRA

P, E, P, T

Answer 16

1. Providing funds to state and local, aid for education and transportation
2. Extending unemployment benefits
3. Purchasing goods and services, construction and investment activities.
4. Temporary tax relief for individuals and businesses