What is economics and what does it try to explain?
What will be an ideal response?
Economics is the study of how people allocate their limited resources in an attempt to satisfy their unlimited wants. Therefore, it is the study of how people make choices. Economics tries to explain real-world behavior, especially as it relates to interactions of people confronting limited resources.
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According to the text, the price elasticity of demand for oranges has been estimated to be -0.62. This implies that a doubling of the price of oranges would cause the quantity demanded of oranges to:
A) increase by 6.2 percent. B) decrease by 6.2 percent. C) increase by 62 percent. D) decrease by 62 percent.
When consumers would have been willing to pay higher prices at various quantities consumed than the market clearing price, the differences are called
A) consumer surplus. B) monopoly profits. C) opportunity cost. D) deadweight loss.