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econ 202
| Question | Answer |
|---|---|
| If two goods are substitute goods | an increase in the price of one will cause an increase in the demand for the other |
| If Cassandra bought 16 cotton blouses last year when her income was $40,000 and she BUYS 14 cotton blouses this year her when income is $35,000, then blouses are | a normal good |
| Suppose a producer decides that if the price of his or her product is $10, the quantity supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100. The supply of the good is | unit elastic |
| If the demand for a good is inelastic and the PRICE of the good decreases | total revenue decreases. |
| Price elasticity of demand is equal to | the percentage change in quantity demanded divided by the percentage change in price. |
| Cross elasticity of demand measures the responsiveness in | quantity demanded of one good to changes in the price of another good. |
| COLLEGES AND UNIVERSITIESuse such things as grade point averages and standardized test scores as | non-price rationing devices |
| When the PRICE of a good rises, the price is transmitting information indicating that the good is relatively | scarcer. |
| Price ceilings set below the equilibrium price cause | shortages |
| Jake is an excellent barber. However, all customers who come to him for a haircut must BUY a bottle of shampoo. This type of arrangement is known as | a tie-in sale |
| A synonym for utility is | Satisfaction |
| In an interview an economist states, "This problem should be of greater concern to the federal government." We can explicitly put this statement in the category of | normative economics |
| What does it mean if a person makes a "decision at the margin"? | The person compares additional benefits and additional costs when deciding what to do. |
| Productive efficiency implies that | it is impossible to obtain gains in one area without losses in another. |
| Total utility is defined as the | sum of the amounts of satisfaction a person receives from consuming a good. |
| In ORDER for an individual to achieve consumer equilibrium through the consumption of two goods, A and B, that individual must fulfill the condition | MUA/PA = MUB/PB. |
| A person is in consumer equilibrium, and then the price rises for one of the goods she PURCHASES. If she wants to restore herself to consumer equilibrium, she will (most likely) | buy less of the good whose price has risen and more of the relatively lower priced goods. |
| An indifference curve shows | the bundles of two goods that give an individual equal total utility. |
| If a person's income falls, his or her budget constraint moves | inward toward the origin, and its slope remains the same. |
| Given two goods, X and Y, and their prices, PX and PY a consumer will maximize utility by allocating expenditures such that | MUX/PX = MUY /PY. |
| If the MU/P RATIO for two goods is the same, then | the slope of the budget constraint between the two goods is equal to the marginal RATE of substitution (MRS) between the two goods. |
| An indifference curve SHOWS ALL | combinations of two products that will yield the same utility to a consumer. |
| The budget constraint cuts the horizontal axis at 12 units of good X and it cuts the vertical axis at 20 units of good Y. If the PRICE of good X is $20 and the price of good Y is $12, then what does income equal? | $240 |
| A cost that is incurred when an actual monetary PAYMENT is made is a(n) __________ cost. | explicet |
| "As additional units of a variable input are added to a fixed input, eventually the marginal physical product of the variable input will decline." This is a statement of the | law of diminishing marginal returns. |
| The marginal physical product (MPP) of a variable input is | the change in total output that results from changing the variable input by one unit. |
| Minimum efficient scale refers to the | lowest output level at which average total costs are minimized. |
| The SHORT run is | a period of time in which some inputs are fixed |
| Diseconomies of scale are present when the __________ average total cost curve is __________. | long-run;rising |
| John purchases a baseball card for $10 that turns out to be so rare that a collector offers to BUY it from him for $2,000. Instead, John decides to give the card to his sister as a birthday present. The opportunity cost of John's generosity is | $2,000, the amount OFFERED by the collector. |
| The vertical distance between the AVC and ATC curves is equal to | average fixed cost. |
| Which of the following is true of average fixed costs in the long run? | Average fixed costs are equal to zero since there are no fixed costs in the long run. |
| At 200 units of output, total cost is $48,000 and total variable cost is $30,000. What does total fixed cost equal at 200 units? | 18,000 |
| The main difference between the SHORT run and the long run is that | in the short run, one or more inputs are fixed. |
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