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Economics
Hell
| Question | Answer |
|---|---|
| Without this word Economics would not exist. With limited resources, having more of this means having less of that. | Scarcity Principle |
| The 7th glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero. The cost benefit principle predicts that Tim will | Drink the 7th glass and continue until the marginal benefit of drinking another glass of soda is zero. |
| The use of economics models, like the cost benefit principle, means that economists believe that. | This is a reasonable abstraction of how people choose between alternatives. |
| If one fails to account for opportunity costs in decision making, then applying the cost benefit rule will be flawed because | The costs will be understated |
| Any two points of the production possibilities curve is considered | equally efficient - utilizing all of your resources |
| Any point above or below the production possibilities curve is considered | inefficient |
| Buyers and Sellers of a particular good comprise te | market for the good |
| As the price of a good rises | more firms can cover their opportunity costs of producing the good. |
| The point where price and quantity intersect | Equilibrium |
| If the demand for a good decreases as income decreases, it is a | normal good |
| As the price of a good rises | more firms can cover their opportunity costs of producing the good. |
| Change in quantity demanded | movement along the demand curve |
| The point where price and quantity intersect | Equilibrium |
| Change in demand | shift of the entire demand curve - If the entire demand curve goes up = increase in demand and vice versa. |
| If the demand for a good decreases as income decreases, it is a | normal good |
| A decrease in demand could be caused | |
| For two goods, x and y, to be classified as substitutes, it must be the case | when the price of x rises, the demand for y increases |
| Change in quantity demanded | movement along the demand curve |
| Change in demand | shift of the entire demand curve - If the entire demand curve goes up = increase in demand and vice versa. |
| An increase in the price of a compliment | cause a decrease in the demand curve of a normal good - golf ball problem |
| An increase in the price of a close substitute | cause a decrease in the demand curve of a normal good |
| The technology used to manufacture Personal Computers has improved. The likely result will be | An increase in the supply of PC's |
| What might cause demand to shift to the right | an increase in incomes. |
| Suppose the coffee lobby convinced the legislature to impose a price control requiring that coffee prices must at least $2.50 at a time when the original original demand and supply function were applicable. The most likely result would be | excess supply of coffee that would not correct itself because price is set by law. |
| What is the equation to calculate a surplus? | max price (-) equilibrium price x equilibrium quantity (/) 2 |
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btrflysue33
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