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Micro Final Exam
| Term | Definition |
|---|---|
| If the Price elasticity of supply is 2.5, we know that that it is | relatively inelastic |
| a good that is a rival and excludable is defined as a a _____ good | private |
| which of the following statements is true about the price elasticities of demand and supply | the fewer the number of substitutes for a good the greater the inelasticity of demand for that good |
| a tax on the producers of a good would shift the ____ curve up and cause the price received by producers to ______. | supply ; decrease |
| the benefit to society from the imposition of a tax is the | tax revenue |
| the tragedy of the commons occurs when | a common-resource good becomes depleted |
| postive externalities have ____ for third parties | external benefits |
| when demand is perfectly inelastic, the demand curve is | vertical |
| which of the following is an accurate statement about the consequence of a binding price floor | binding price floors encourage the formation of an illegal market |
| externalities are minimized if | private properties rights are well established |
| consider a market where production of a good generates a negative externality in the market equilibrium | too much of a good is being produced |
| price gouging laws | restrict entrepreneurial behavior and consumer choice |
| Roland is president of the United States. in an attempt to make prescription drug prices cheaper, he has imposed a binding price ceiling on drugs. what would he expect critics to say | the binding price ceiling will increase the likelihood that consumers will obtain needed drugs on the black market |
| an internal cost is best defined as the cost of an activity paid for by | the individual who is engaged in the activity |
| which of the following is an example of consumer surplus | the difference between what you would be willing to pay for a pair of shoes and the price charged by the store |
| the incidence of a tax reflects | who bears the burden of the tax |
| air quality often becomes poor because | no one owns the air |
| the costs or benefits of a market activity that affect a third part are called | externalities |
| a birthday cake can be divided among a group of people. why is nonetheless a rival good | any slice consumed by one person cannot be consumed by another |
| when pollution ( a negative externality) is created by firms, which of the following is NOT a valid way for the government to restore the social optimum | offer a subsidy to firms to reduce their production costs |
| the price elasticity of supply | the percentage change in the quantity supplied divided by the percentage change in price |
| why does a surplus exist sundering a binding price floor | A price floor makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market |
| which activity will most likely result in the creation of a postive externality | a person receives their annual flu shot |
| if a store sells a good at the market price, even though the government authorities have set the maximum price that can be charged for it the store is selling the good in a | illegal market for a market price that is higher |
| The incidence of a tax is determined by | the relative elastics of supply and demand |
| a binding price ceiling will have which of the following consequences | the quantity demanded will always exceed the quantity supplied |
| ____ is a real life example of a price floor | a minimum wage law |
| Assume the price of a particular fountain pen is $43.50. Jaime purchases the pen for $43.50 but was willing to pay $50 in purchases the pin for $43.50 but would have gone as high as $65. What is the total consumer surplus for Jamie and inez | $28 |
| A tax on consumers would cause the _____ curve to shift to the | demand ; left |
| oligopoly | Is a form of market structure that exist from a small number of firms sell a differentiated product in a market with high barriers to entry |
| Statutory tax incidence | (legal responsibility) is who the law says must pay the tax. It’s the official assignment on paper (for example, “the seller pays the sales tax” or “the employer pays payroll tax”). |
| Actual tax incidence | (real economic burden) is who really bears the economic burden of the tax after prices and behavior adjust. This depends on supply and demand—taxes can be passed on to others through higher prices or lower wages. |
| what are two characteristics of a public good | Non-excludable, and Non-rivalrous |
| on which of the following concepts do economist focus their studies when explaining how humans behave | incentives |
| one has an absolute advantage in producing something when | one can produce more of it than someone else using the same quantity of resources |
| if the number of buyers in a market increases from 50-100 you would expect the equilibrium price to ___ and the equilibrium quantity to ___ holding all else constant | increase; increase |
| the us federal government has , at times, offered a tax credit for buyers of high fuel- efficiency cars and alternative- fuel cars. The tax credit serves as a ____ incentive to buy an environment friendly vehicle | direct |
| the important act of holding all other variables constant while examining a particular variable is known as | ceteris paribus |
| when supply shifts to the right and demand stays constant, the equilibrium price ____ and the equilibrium quantity ___ | decreases ; decreases |
| at full employment and with efficient use of all resources, a society produces | on its PPF |
| more advocados are grown in California than in Montana because Californias warm climate provides a _____ advantage in growing avocados | comparative |
| the us government has at times considered no longer minting pennies because they are rarely used for purchases anymore. How could an economist best explain this consumer behavior | prices have increased over time, and the opportunity cost of carrying around large quantities of pennies has become too great |
| economics is the study of how individuals and societies | allocate scarce resources to satisfy virtually unlimited wants and needs |
| coastal regions have stronger commercial fishing economies because they have a(n). in the production of seafood | comparative advantage |
| microeconomics is the branch of economics that focuses on the | choices and decision making of individuals and firms |
| the demand curve for a good will shift to the right if, holding all else constant | consumers expect future prices to increase |
| what are the five foundations of economics | incentives, trade offs, opportunity cost, marginal thinking , and the principle that trade creates value |
| which of the following a positive statement | when inflation is high, raising taxes tends to Lower it |
| taxes on producers cause the equilibrium price of a good to | increase |
| rational decision making under conditions of scarcity requires individuals | place a monetary value on everything |
| which of the following would not lead to an outward shift of a future production possibilities frontier (PPF) | a widespread drought |
| when the price falls, what happens | there is an increase in the quantity demanded |
| economic growth can be depicted on a production possibilities frontier (PPF) as a | outward shift of the PPF |
| what is an example of a direct negative incentive to buckle up when driving | the possibility that If your car catches fire a seatbelt may slow your escape |
| what could be an opportunity cost of attending a four year college following high school graduation. | not being able to earn money at a full time job right away |
Created by:
Orrin_Douglas