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Econ
| Question | Answer |
|---|---|
| Utility mean | pleasure and satisfaction |
| Marginal benefit-marginal analysis | choosing the easier path |
| Study of economics primary is | choices that are made in seeking the best use of resources |
| Decide to go to a movie if | the marginal benefit of the movie exceeds its marginal cost |
| "There is no lunch for free" | all production involves the use of scarce resources and thus the sacrifice of alternative goods. |
| An economic hypothesis | is a possible explanation of cause and effect |
| The greatest degree of confidence in an economic generalization is | A principle |
| Economists | use both the economic perspective and the scientific method |
| The scientific method is | used by economists and other social scientists, as well as by physical scientists and life scientists. |
| Economic models | emphasize basic economic relationships by purposefully simplifying the complexities of the real world. |
| The term "ceteris paribus" means | other things equal. |
| An hypothesis is | a tentative, untested statement of possible cause and effect |
| Microeconomics is concerned with | a detailed examination of specific economic units that make up the economic system. |
| A normative statement is one that | is based on value judgments |
| A positive statement is concerned with | what is |
| The economizing problem is one of deciding how to make the best use of | limited resources to satisfy virtually unlimited wants. |
| When the economist says that economic wants are insatiable, this means that | these wants are virtually unlimited and therefore incapable of complete satisfaction |
| The scarcity problem | persists because economic wants exceed available productive resources. |
| Which of the following is a labor resource | a computer programmer |
| The four factors of production are | land, labor, capital, and entrepreneurial ability |
| Economic resources are also called | factors of production. |
| Which of the following is real capital | a construction crane |
| Which of the following will not produce an outward shift of the production possibilities curve | the reduction of unemployment |
| If the production possibilities curve is a straight line | economic resources are perfectly substitutable between the production of the two products |
| Unemployment | is illustrated by a point inside the production possibilities curve |
| A production possibilities curve illustrates | scarcity |
| A nation's production possibilities curve is bowed out from the origin because | resources are not equally efficient in producing every good |
| a market is in equilibrium | if the amount producers want to sell is equal to the amount consumers want to buy |
| the rationing function of prices refers to the | capacity of a competitive market to equate the quantity demanded and the quantity supplied |
| which of the following will cause a decrease in market equilibrium price and an increase in equilibrium quantity? | an increase in supply |
| a market | is an institution that brings together buyers and sellers |
| the law of demand states that | price and quantity demanded are inversely related |
| graphically, the market demand curve is | the horizontal sum of individual demand curves |
| the demand curve shows the relationship between | price and quantity demanded |
| the relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____ | direct, inverse |
| in presenting the idea of a demand curve economists presume that the most important variable in determining the quantity demanded is | the price of the product itself |
| the construction of demand and supply curves assumes that the primary variable influencing decisions to produce and purchase goods is | Price |
| in the past few years, the demand for donuts has greatly increased. this increase in demand might best be explained by | A change in buyers taset |
| which of the following will not cause the demand for product k to change | A change in the price of K |
| an economist for a bicycle company predicts that, other things equal, a rise in consumer incomes will increase the demand for bicycles. this prediction is based on the assumption that: | Bicycles are normal goods |
| a rightward shift in the demand curve for product c might be caused by | a decrease in the price of a product that is complementary to c |
| if two goods are complements | a decrease in the price of one will increase the demand for the other |
| dvd players and dvds are | complementary goods |
| if the price of product l increases, the demand curve for close-substitute product j will | Shift to the right |
| if z is an inferior good, an increase in money income will shift the | demand curve for z to the left |
| the demand curve for a product might shift as the result of a change in | Consumer tastes, income, and the price or related goods. |
| the law of supply indicates that | producers will offer more of a product at high prices than they will at low prices |
| the supply curve shows the relationship between | price and quantity supplied |
| a leftward shift of a product supply curve might be caused by | some firms leaving an industry |
| in moving along a stable supply curve which of the following is not held constant | the price of the product for which the supply curve is relevant |
| other things equal, if the price of a key resource used to produce product x falls, the | product supply curve of x will shift to the right |
| an increase in the excise tax on cigarettes raises the price of cigarettes by shifting the | supply curve for cigarettes leftward |
| A government subsidy to the producers of a product | increases product supply |
| the price elasticity of demand coefficient measures | buyer responsiveness to price changes |
| the basic formula for the price elasticity of demand coefficient is | percentage change in quantity demanded/percentage change in price |
| the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will | increase the quantity demanded by about 25 percent |
| which of the following is not characteristic of the demand for a commodity that is elastic | the elasticity coefficient is less than one |
| if the demand for product x is inelastic, a 4 percent increase in the price of x will | decrease the quantity of x demanded by less than 4 percent |
| a perfectly inelastic demand schedule | can be represented by a line parallel to the vertical axis |
| the price elasticity of demand of a straight-line demand curve is | elastic in high-price ranges and inelastic on low-price ranges |
| a leftward shift in the supply curve of product x will increase equilibrium price to a greater extent the | more inelastic the demand for the product |
| if the demand for bacon is relatively elastic, a 10 percent decline in the price of bacon will | increase the amount demanded by more than 10 percent. |
| the price elasticity of demand is | negative, but the minus sign is ignored |
| he price elasticity of demand for beef is about 0.60. other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to | decrease by approximately 12 percent |
| if a demand for a product is elastic, the value of the price elasticity coefficient is | Greater than one |
| if the price of hand calculators falls from $10 to $9 and, as a result, the quantity demanded increases from 100 to 125, then | demand is elastic |
| moving upward on a downward-sloping straight-line demand curve, we find that price elasticity | increases continuously |
| if the price elasticity of demand for gasoline is 0.20 | a 10 percent rise in the price of gasoline will decrease the amount purchased by 2 percent. |
| when the percentage change in price is greater than the resulting percentage change in quantity demanded | an increase in price will increase total revenue |
| which of the following instances will total revenue decline | price rises and demand is elastic |
| if a price reduction reduces a firm's total revenue: | the demand for the product is inelastic in this price range |
| the demands for such products as salt, bread, and electricity tend to be | relatively price inelastic |
| the price elasticity of supply measures how | responsive the quantity supplied of x is to changes in the price of x. |
| the main determinant of elasticity of supply is the | amount of time the producer has to adjust inputs in response to a price change |
| suppose the supply of product x is perfectly inelastic. if there is an increase in the demand for this product, equilibrium price | will increase but equilibrium quantity will be unchanged |
| the supply of known monet paintings is | perfectly inelastic |
| the formula for cross elasticity of demand is percentage change in | quantity demanded of x/percentage change in price of y |
| the larger the positive cross elasticity coefficient of demand between products x and y, the | greater their substitutability |
| we would expect the cross elasticity of demand between dress shirts and ties to be | negative, indicating complementary goods |
| consumer surplus | is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price |
| Market failure is said to occur whenever | private markets do not allocate resources in the most economically desirable way. |
| Which of the following is an example of market failure | negative externalities, positive externalities, public goods |
| People enjoy outdoor holiday lighting displays, but can't be made to pay. Because those who put up lights are unable to charge others to view them, they don't put up as many lights as people would like. This is an example of a | demand-side market failure |
| What two conditions must hold for a competitive market to produce efficient outcomes | Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay |
| If the demand curve reflects consumers' full willingness to pay, and the supply curve reflects all costs of production, then which of the following is true | The benefit surpluses shared between consumers and producers will be maximized |
| Consumer surplus | is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price |
| Producer surplus | is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price |
| Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences | a consumer surplus of $9 and Nathan experiences a producer surplus of $3 |
| Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle | under the demand curve and above the actual price |
| Refer to the above diagram. Assuming equilibrium price P1, consumer surplus is represented by areas | a + b |
| producer surplus is represented by areas | c + d |
| If actual production and consumption occur at Q1 | an efficiency loss (or deadweight loss) of b + d occurs |
| Allocative efficiency occurs only at that output where | the combined amounts of consumer surplus and producer surplus are maximized |
| An efficiency loss (or deadweight loss) | is measured as the combined loss of consumer surplus and producer surplus |
| The two main characteristics of a public good are | nonrivalry and nonexcludability |
| Which of the following is an example of a public good | a weather warning system |
| A public good | is available to all and cannot be denied to anyone |
| Which of the following statements is not true | Public goods are only provided by governmen |
| Because of the free-rider problem | the market demand for a public good is nonexistent or understated |
| A positive externality or spillover benefit occurs when | the benefits associated with a product exceed those accruing to people who consume it. |
| A negative externality or spillover cost occurs when | the total cost of producing a good exceeds the costs borne by the producer |
| S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will reach | an overallocation of resources to this product |
| S is supply curve and S1 is a supply curve comprising all external costs. Assume that the number of people affected by these external costs is large. If the government wishes to establish an optimal allocation of resources in this market, it should | tax producers so that the market supply curve shifts leftward (upward) |
| One major means that government uses to deal with market imperfections caused by monopoly is to | regulate the firm through anti trust laws to foster competition |
| To redistribute income from high-income to low income households, government might | have a progressive tax code, increase transfer payments, have more legal interventions in the market |
| Quasi-public goods include | Education, Preventive Medicine, Sewage Disposal |
| The government promotes macroeconomic stabilization of the economy | by controlling inflation and reducing unemployment during phases of the business cycles |
| Graphically, producer surplus is measured as the area | above the supply curve and below the actual price. |
| A progressive tax code is one where people | with higher incomes pay a larger percentage of their income in taxes than people do with lower incomes |
Created by:
Kelsie_Collins5