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Econ Final
study! study! study!
| Question | Answer |
|---|---|
| Decisions should reflect the _____ costs, rather than just the _____ costs | opportunity; financial |
| The opportunity costs of attending college include the: | potential income that could be earned working |
| The __________ suggests, decisions about quantities are best made incrementally. | marginal principle |
| Joshua is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal | benefit of purchasing one more coffee equals the marginal cost |
| According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item | equal to |
| The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle | interdependence |
| How is the economic surplus generated by a decision calculated? | It is the total benefits minus total costs arising from the decision |
| Kevin goes to coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. price latte is $4. The cost to the coffee shop to produce the latte is $2. How much economic surplus does Kevin gain when he purchases the latte? | $2 |
| Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? | The opportunity cost principle |
| The __________ suggests, decisions about quantities are best made incrementally | The marginal principle |
| As per law of demand, demand and price of a good are ............. related | Inversely |
| Law of supply states that supply and price of a good are ............related | Positively |
| Shift in demand is caused by changes in the........... | non-price factors |
| Shift and movement in demand are.......... | Different |
| Movement in supply is caused by changes in............ | Price of good alone |
| What is quantity supplied? | It is the amount of an item that a seller is willing to sell at a particular price |
| A case of increase in demand, supply remaining unchanged, the equilibrium price_____ | Rises |
| A case of decrease in supply, demand remaining unchanged, the equilibrium price____ | Rises |
| As price____, quantity demanded decreases and quantity supplies increases | Increases |
| Market____ is derived by adding up all the individual demand | Demand |
| Which of the following shows the inverse relationship between the price of a good and the amount of the good that consumers want at that price? | Demand curve |
| An individual demand curve is a graph | that plots the quantity of an item that someone plans to buy, at each price |
| A normal good is | a good for which higher income causes an increase in demand |
| Paint and paintbrushes are complements. If the price of paint rises, we can expect | the demand for paintbrushes to decrease |
| #25 on exam review | answer is C |
| In a market economy | supply and demand determine prices and prices, in turn, allocate the economy’s scarce resources |
| Price Elasticity of Demand. It measures by | what percent the quantity demanded will Change in response to a 1% price change |
| A percentage change in quantity demanded divided by a percentage change in price is called | Price elasticity of demand |
| A percentage change in quantity demanded divided by a percentage change in income is called | Income elasticity of demand |
| A percentage change in quantity demanded for one commodity divided by a percentage change in price of another commodity is called | Cross Elasticity of demand |
| Normal goods have .........income elasticity of demand | Positive |
| Inferior goods have .... income elasticity of demand | Negative |
| Cross elasticity of demand is positive for ..........goods | Substitute |
| Cross elasticity of demand is.........for complementary goods | Negative |
| When the price elasticity of demand is........it means demand is perfectly elastic | Infinite |
| When the price elasticity of demand is greater than unity; it implies that the demand is........ | Relatively elastic |
| Cross elasticity of demand is.........for unrelated goods | Zero |
| When demand is perfectly inelastic, demand curve will be_______. | Vertical |
| For product X, the price elasticity of demand has an absolute value of 2. This means that quantity demanded will increase by | 2 percent for each 1 percent decrease in price |
| #40 exam sheet | Answer is A |
| If the demand curve for product A moves on the right, and the price of product B decreases, it can be concluded that | A and B are complementary goods |
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Knjcooks