Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
ACE Test Questions
Agricultural and Consumer Economics
| Question | Answer |
|---|---|
| As consumption increases the amount of satisfaction per unit gained decreases. This statement describes the: | Law of diminishing marginal utility. |
| What is the consumer choice problem? | How to allocate a budget among various goods to maximize utility. |
| Which of the following is NOT a property of indifference curves. | It is possible for two indifference curves of an individual to cross. |
| Utility is | Ordinal in nature. |
| A budget constraint line shows: | The combinations of two goods that can be purchased with a given budget, when the consumer spends all her income. |
| Scarcity arises because: | What some people want, other people are unwilling to provide. |
| Which of the following is not an example of an opportunity cost of attending a sporting event at your institution this weekend?: Studying for this course or Buying a hot dog at the stadium. | Buying a hot dog at the stadium. |
| Which of the following describes what economists are primarily concerned with: | How human beings coordinate their unlimited wants and desires given a society's decision-making mechanisms and limited resources. |
| An economic system: | Answer the questions of what to produce, how to produce, and for whom to produce. |
| According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover" According to economists, "Want" exceeds "Have" because: | productive resources are limited. |
| Arc elasticity | The price elasticity of demand (supply) calculated from the observations at two points on a demand (supply) curve. |
| Budget line | A line that shows the different combinations of two products a consumer can purchase with a given money income. It is the dividing line between affordable and unaffordable combinations of goods. |
| Cross-price elasticity of demand* | The ratio of the percentage change in quantity demanded of one good to the percentage change in the price of some other good. |
| Cross-price elasticity of demand coefficient | A negative coefficient for the cross-price elasticity of demand indicates that the two goods are substitutes. A positive coefficient indicates that they are complementary. |
| Elasticity | # A measure of the amount by which one variable changes in response to a change in another variable. |
| Indifference curve | A curve connecting all the combinations of goods among which the consumer is indifferent (that give an individual equal utility). |
| Law of demand | The inverse relationship between the price and the quantity demanded of a good or service during some period of time. |
| Marginal utility | The extra utility a consumer obtains from the consumption of one additional unit of a good or service. |
| Diminishing marginal utility | As an individual consumes more of a good, less additional utility is derived from the last unit consumed |
| Wants | A concept of need or desire generally without content in economics, unless related to value such as value in exchange. |
| Suppose there is an early freeze in California that ruins the lemon crop. What happens to consumer surplus for lemonaide consumers? | It decreases. |
| If the prices of pizza and hamburgers remain the same, and your budget increases, then your budget constraint line for pizza and hamburger will | result in a larger pizza intercept and a larger hamburger intercept. |
| Jack Horner is a pie lover. The price of his favorite mincemeat pie decreases. What will happen to Jack’s consumption of pies? | Increase |
| If the price of pizza decreases while the price of hamburgers remains the same, and your budget remains constant, then your budget constraint line for pizza and hamburgers will | rotate outward and touch the pizza axis at a higher point. |
| Budget line | A line that shows the different combinations of two products a consumer can purchase with a given money income. It is the dividing line between affordable and unaffordable combinations of goods. |
| Cross-price elasticity of demand | The ratio of the percentage change in quantity demanded of one good to the percentage change in the price of another good. |
| Elasticity | A measure of the amount by which one variable changes in response to a change in another variable. |
| Indifference curve | A curve connecting all the combinations of consumption goods that give the consumer equal satisfaction. |
| Law of demand | The inverse relationship between the price and the quantity demanded of a good or service during some period of time. |
| Marginal utility | The extra utility a consumer obtains from the consumption of one additional unit of a good or service. |
| Diminishing marginal utility | As an individual consumes more of a good, less additional utility is derived from the last unit consumed. |
| microeconomics | # The part of economics concerned with individual units within the economy - such as industries, firms, and households - and with individual markets, particular prices, and specific goods and services. |
| macroeconomics | The part of economics concerned with a nation's economy as a whole; with such major aggregates as the household, business, and governmental sectors; and with totals for the economy. |
| factors of production | Economic resources whose services can be used in the production of economically useful commodities: natural resources, capital, and human capital. |
| What is the consumer choice problem? | How to allocate a budget among various goods to maximize utility |
| A budget constraint line shows: | All combinations of two goods that can be purchased with a given budget. |
| As consumption increases the amount of satisfaction per unit gained decreases. This statement describes the: | Law of diminishing marginal utility |
| Which of the following inputs into milk most closely fits the definition of a fixed input in the short run.The amount of antibiotics used. or The capacity of the milking barn. | The capacity of the milking barn. |
| Increased productivity of inputs (often called technical change) means: *** | An increase in the amount of output produced for at least some levels of input. |
| If a firm increases all of its inputs by 10 percent and its output increases by 8 percent, we can say: | it is encountering diseconomies of scale. |
| A market supply curve tends to be: *** | perfectly elastic in the long run because consumers have time to fully adjust to any change in amount supplied. |
| If we compare the changes in TVC and TC as an additional unit of output is produced: | TVC and TC both change by the same amount. |
| The price elasticity of supply measures how: | responsive the quantity supplied of X is to changes in the price of X. |
| Which of the following is not a variable input in the restaurant business in the short run? Ingredients for food. orThe lease payment for the restaurant building. | The lease payment for the restaurant building. |
| Widgets are normal goods sold in a competitive market. If everything else is unchanged, what happens to the price and quantity of widgets sold if consumer income increases? | Price increases and quantity increases. |
| Which one of the following will cause a change in the quantity supplied of hamburgers? *** The price of hamburgers increases or An increase in the number of hamburger stands. | The price of hamburgers increases |
| In a competitive market, both the equilibrum price and the quantity sold increase over time if | The demand curve shifts out and the supply curve is unchanged. |
| To obtain the market demand for DVD players, we | Take the horizontal sum of the individual demand curves. |
| A shortage or a surplus in a competitive market will cause: | Cause buyers and sellers to react in ways that will eliminate the surplus or shortage. |
| Ceteris paribus, which of the following will NOT cause the market demand curve to shift.A change in the number of firms in a market. or A change in the number of buyers in the market. | A change in the number of firms in a market. |
| Which type of agreement between them would NOT align their incentives as principal-agent? *** | Revenue Sharing |
| Barrier to entry | Anything that prevents the entry of firms into an industry, such as patents, high start-up costs, or loyalty to the brands of other producers. |
| Complementary good | Goods or services for which there is an inverse relationship between the price of one and the demand for the other. When the price of one falls (rises), the demand for the other increases (decreases). |
| Homogenous product | A product such that buyers are indifferent to the seller from whom they purchase if the price charged by all sellers is the same; products of competing firms are perfect substitutes. |
| Pure competition | A market in which a very large number of buyers and sellers exchange a homogenous product. Entry is very easy, the individual seller has no control over the price at which the product sells, and there is perfect information. |
| Superior good | A good that has an income elasticity of demand greater than one. |
| Time utility | The utility created by firms that store products for future use. |
| Market equilibrium | The situation when sellers can sell as much as they desire and buyers can buy as much as they want at the market price. |
| Average total costs | The sum of average fixed costs and average variable costs. It is the average total costs divided by the amount of output produced. |
| Break-even point | The output at which a (competitive) firm's total cost and total revenue are equal. The firm has neither an economic profit nor a loss. |
| Economies of scale | The forces that reduce the average cost of producing a product as the firm expands the size of its plant (its output) in the long run; the economies of mass production. Also applies to different sizes of plants in the short run. |
| Long-run average cost curve | A curve that envelopes the average total cost curves of firms operating at different sizes as they employ various levels of the fixed and variable factors of production. |
| Marginal revenue | The change in revenue for a one-unit change in output. |
| Pecuniary economies | The ability of a firm to realize savings by purchasing at a lower price or selling at a premium, usually resulting from the size of the firm. |
| Short-run supply curve | For the firm, the MC curve above the AVC curve. |
| Opportunity cost | An implicit cost of using a resource to produce a given product that is equal to the payment that could be received if the resource were used in the production of another product. |
| Production function | he technical relationship between inputs and output. |
| Economic profit | The total revenue of a firm less all its economic costs. |
| Variable input | An input employed by a firm the quantity of which can be increased or decreased. |
| Marginal physical product | The (eventually declining) increase in output resulting from successive increases in one input. |
| Which of the following is true with all forms of imperfect competition compared to pure competition? Product prices are higher and quantity purchased is higher or Product prices are higher and quantity purchased is lower. | Product prices are higher and quantity purchased is lower. |
| Which of the following is not a characteristic of a perfectly competitive market? | Small number of buyers and sellers. |
| An agricultural economist on the morning farm report makes the claim: "Monsanto has a monopoly on Roundup Ready agriculture." If Monsanto is a monopoly then which of the following is TRUE? | Monsanto is the only company that can provide Roundup Ready products. |
| Which of the following is true under both perfect and imperfect competition? | A firm chooses the output to maximize profit by setting MR=MC. |
| In the short run a pure monopolist's profits | May be positive, negative or zero. |
| A kinked demand curve is characteristic of | Oligopoly. |
| Imposing a tariff on an imported good causes the price of that good for domestic consumers to | increase |
| What is the small country assumption? | The trade of any single, small country has little effect on the world price. |
| An increase in domestic demand for an exported good causes the amount exported to | decrease |
| Which of the following statements about national income accounting is false? | Macroeconomic models can forecast economic activity independent of national income accounting. |
| Gross domestic product is equal to | C + I + G + (X - M). NI. C + S + T. |
| Gross domestic product is not a "perfect" measure of economic performance because it does not account for | resource depletion and environmental externalities. volunteer and black market activities. the value of leisure activities. |
| The discount rate is the | interest rate at which the Central Banks lend to commercial banks. |
| The money supply is controlled by the | The Federal Reserve System |
| Which of the following is NOT a method used to control the money supply? | Taxes |
| Which of the following is the most important determinant of aggregate consumption? | Income |
| Which of the following terms is not a part of the aggregate demand (expenditures) equation? *** | Investment |
| The marginal propensity to consume out of an additional dollar of disposable income is: | between zero and one. |
| What is true about aggregate consumption? | It is one of the components of aggregate demand. |
| change in consumption / change in disposable income = | Marginal propensity to consume |
| Absolute advantage | The ability of one country to produce a good more efficiently than another country. |
| Comparative advantage | A situation in which one country has a relatively lower opportunity cost in producing a good than that of another country. |
| Import quota | A limit imposed by a nation on the quantity of a good that may be imported during some period of time. |
| Tariff | A tax imposed on an imported good. |
| Terms of trade | The rate at which units of one product can be exchanged for units of another product; the price of a good or service; the amount of one good or service that must be given up to obtain one unit of another good or service. |
| Quota rent | The revenue to a quota holder, earned solely by virtue of holding the quota, because of the difference between the purchase and sales price. |
| Open economy | An economy that allows international trade, in contrast to a closed economy, which prohibits the purchase of goods from foreign markets or the sale of goods to these markets. |
| Final goods and services | Goods and services that have been purchased for final use and not for resale or further processing or manufacturing. |
| Final-expenditure approach | A method for measuring the gross domestic product (GDP), based on aggregate national expenditures on final goods and services for consumption, investment, government and net exports. |
| Value added | The value of the product sold by a firm less the value of the goods purchased and used by the firm to produce the product. It is equal to the revenue that can be used for wages, rent, interest, and profits. |
| Gross domestic product | The total market value of all final goods and services produced annually within the boundaries of the United States, whether by U.S. or foreign-supplied resources. |
| Price index | An index number that shows how the average price of a "market basket" of goods changes through time. |
| Net exports | Exports minus imports. |
| Inflation | A rise in the general (average) level of prices in the economy. |
| Savings | The part of disposable income that households do not use for consumption. |
| Unemployment | Failure to use all available economic resources to produce goods and services. |
| Aggregate demand | A schedule or curve that shows the total quantity of goods and services demanded (purchased) at different aggregate price levels. |
| Aggregate supply | A schedule or curve showing the total quantity of goods and services supplied (produced) at different aggregate price levels. |
| Balanced budget multiplier | The effect of equal increases (decreases) in government spending for goods and services and in taxes. The effect is to increase (decrease) the equilibrium gross domestic product by the amount of the equal increases (decreases). |
| Consumption function | A schedule or curve showing the amounts households plan to spend for consumer goods at different levels of disposable income. |
| Fiscal policy | Changes in taxes (tax rates) and government spending to move the economy toward a full-employment, noninflationary gross domestic product and economic growth. |
| Inflationary gap | The amount by which the aggregate expenditures schedule (curve) must decrease (shift downward) to decrease the nominal GDP to the full-employment noninflationary level. |
| Recessionary gap | The amount by which the aggregate expenditures schedule (curve) must increase (shift upward) to increase the real GDP to the full-employment, noninflationary level. |
| Wealth effect | The tendency for increases (decreases) in the price level to lower (raise) the real value (or purchasing power) of fixed incomes or assets and thus to reduce (expand) total spending in the economy. |
| Barrier to entry | Anything that prevents the entry of firms into an industry, such as patents, high start-up costs, or loyalty to the brands of other producers. |
| Differentiated product | A product that differs physically or in some other way from the products produced by competing firms; buyers prefer the product of one seller over that of another. |
| Game theory | A theory that analyzes the behavior of participants in strategic games, such as in a market with a small group of mutually interdependent firms (an oligopoly). |
| Imperfect competition | All market structures except pure competition. Among sellers it includes monopoly, duopoly, oligopoly, and monopolistic competition. Among buyers it includes monopsony, duopsony, oligopsony, and monopsonistic competition. |
| Kinked demand curve | The demand curve faced by noncollusive oligopolist that is based on the assumption that rivals will follow a price decrease but not a price increase. |
| Monopolistic competition | A market in which many firms sell a differentiated product. Entry is relatively easy, the firm has some control over the price at which the product it produces is sold, and there is considerable nonprice competition. |
| Oligopoly | A market in which a few firms sell either a standardized or differentiated product. Entry is difficult, the firms control over price is limited by mutual interdependence (except when there is collusion among firms), and there is typically a great deal of |
| Monopoly | A market in which one firm sells a unique product (one for which there are no close substitutes), entry is blocked, the firm has considerable control over the price at which the product sells, and nonprice competition may or may not be found. |
| Pure competition | A market in which a very large number of buyers and sellers exchange a homogenous product. Entry is very easy, the individual seller has no control over the price at which the product sells, and there is perfect information. |
| The Interstate Commerce Commission | provided for controlling railroad rates and services in ways desired by farmers and other shippers. |
| Which of the following founded the cooperative extension system for agriculture and home economics? | the Smith-Lever Act of 1914. |
Created by:
melissaunicorn