Economics: Supply & Demand — Answer Key
Part A: Fill in the Blank
Write the missing word or number on each line.
1. What you give up when you choose one thing over another is called opportunity cost.
Opportunity cost is the value of the next-best alternative you give up when making a choice.
2. A plan for how to spend and save money is called a budget.
A budget tracks income and expenses to make sure you don't spend more than you earn.
3. Trading goods and services between countries is called international trade.
International trade allows countries to exchange goods they produce efficiently for goods they need.
4. If you spend your allowance on candy, the opportunity cost is what else you could have bought.
The opportunity cost of buying candy is whatever else you would have purchased with that money.
5. Income is the money a person earns from working.
Income is the money received in exchange for work or as payment for goods and services.
6. Expenses are the things you spend money on.
Expenses are costs — the money you pay for goods, services, or bills.
7. When a country makes something better or cheaper than others, it has an advantage.
Comparative advantage is when a country can produce a good more efficiently than another country.
8. Dividing work among people so each person does one task is division of labor.
Division of labor assigns specific tasks to different workers, improving efficiency and output.
9. A good budget makes sure expenses do not exceed income.
A balanced budget: expenses ≤ income. Spending more than you earn leads to debt.
Part B: Matching
Match each item on the left to the correct answer on the right.
1. Match each item to its correct answer.
Opportunity cost
→ what you give up
sell to another country
Budget
→ plan for spending money
plan for spending money
Import
→ buy from another country
what you give up
Export
→ sell to another country
buy from another country
Opportunity cost=what you give up(idx2); Budget=plan for spending(idx1); Import=buy from another country(idx3); Export=sell to another country(idx0)