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econ 201
| Question | Answer |
|---|---|
| An decrease in product price will cause | quantity supplied to decrease. |
| The rationing function of prices refers to the | ability of a competitive market to equalize quantity demanded and quantity supplied. |
| Suppose product Y is an input in the production of product Z. Product Z in turn is a substitute for product X. A decrease in the price of Y can be expected to | decrease the demand for X. |
| A market | is an institution that brings together buyers and sellers. |
| Other things equal, removing a subsidy from a product will | decrease its supply. |
| The term "market-clearing price" refers to the | all of these choices are correct. |
| Haagen-Dazs ice cream and Ben & Jerry's ice cream are | substitute goods. |
| The law of demand states that, other things equal, | price and quantity demanded are inversely related. |
| The term "quantity demanded" | refers to the amount of a product that will be purchased at some specific price. |
| A leftward shift of a product supply curve might be caused by | some firms leaving an industry. |
| Allocative efficiency is concerned with | producing the combination of goods most desired by society. |
| Productive efficiency refers to | the use of the least-cost method of production. |
| The supply curve shows the relationship between | price and quantity supplied. |
| In this market, a surplus of 21 units would exist at a price of | 55 |
| Assume that the supply curve for product G is upsloping. If the price of G falls from $10 to $8, | a smaller quantity of G will be supplied. |
| Which of the following would not shift the supply curve for beef? | an effective advertising campaign by pork producers |
| Because of unseasonably cold weather, the supply of oranges has substantially decreased. This statement indicates the | amount of oranges that will be available at various prices has declined. |
| College classes and textbooks are | complementary goods. |
| In moving along a supply curve, which of the following is not held constant? | the price of the product itself |
| Price floors and price ceilings both | interfere with the rationing function of prices. |
| When the price of Wilson tennis balls decreased, Roger purchased Wilson tennis balls instead of Dunlop tennis balls whose prices had remained the same. Which of the following best explains Roger's decision to buy more Wilson tennis balls? | the substitution effect |
| Market failure is said to occur whenever | competitive markets fail to achieve economic efficiency. |
| An efficiency loss (or deadweight loss) | is measured as the combined loss of consumer surplus and producer surplus from over- or underproducing. |
| A positive externality or spillover benefit occurs when | the benefits associated with a product exceed those accruing to people who consume it. |
| Madison buys a lamp for $30, for which she was willing to pay $42. The minimum acceptable price to the seller, Maxwell, was $30. Madison experiences a | a consumer surplus of $12, and Maxwell experiences a producer surplus of $0. |
| Pigovian taxes | are used by governments to reduce the level of CO2 emissions. |
| Demand curves represent | marginal benefit curves. |
| If a good that generates positive externalities was produced and priced to take into account these spillover benefits, then its | price and output would increase. |
| Consumer surplus | is the difference between the maximum prices consumers are willing to pay for a product and the lower equilibrium price. |
| 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. |
| Supply curves represent | sellers’ minimum-acceptable-price curves. |
| Allocative efficiency occurs only at that output where | the combined amounts of consumer surplus and producer surplus are maximized. |
| Productive efficiency | is realized as competition forces producers to use the best technologies and combinations of resources available. |
| A producer's minimum acceptable price for a particular unit of a good | equals the marginal cost of producing that particular unit. |
| The marginal benefit to society of reducing pollution declines with increases in pollution abatement because of the law of | diminishing marginal utility. |
| 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. |
| A negative externality or spillover cost occurs when | the total cost of producing a good exceeds the costs borne by the producer. |
| Deadweight losses | occur as a result of either overproduction or underproduction. |
| Mia buys a piece of costume jewelry for $30, for which she was willing to pay $35. The minimum acceptable price to the seller, Nate, was $15. Mia experiences a | consumer surplus of $5, and Nate experiences a producer surplus of $15. |
| 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 market outcome will be efficient. |
| Producer surplus is the difference between | the minimum prices producers are willing to accept for a product and the higher equilibrium price. |
| Other things equal, an increase in the market price caused by a change in supply will | decrease consumer surplus. |
Created by:
willwagg339