Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
93 Cards in this Set
- Front
- Back
Which economic question depends on the incomes that people earn and the prices they pay for goods and services? |
For Whom |
|
Computers and insurance coverage produced in the US and sold to people in other nations are categorized as |
US exports of goods and services |
|
Economics classify energy and water as part of which factor of production? |
Land |
|
A circular flow model shows the interrelationship between the ______ market and the _______markets. |
goods; factor |
|
Scarcity results from the fact that |
people's wants exceed the resources available to satisfy them. |
|
All economic questions and problems arise from |
a society's wants exceeding what scarce resources they can produce. |
|
Which of the following is NOT considered one of the factors of productions? |
Technology |
|
If Wendy can produce more of all goods than Tommy in an hour then, |
Wendy has an absolute advantage in all goods. |
|
Which of the following are key ideas in the economic way of thinking? |
*People act rationally when making choices. *Choices involve trade-offs. |
|
A change in the demand for apples could result form any of the following except |
a change in the price of an apple |
|
If the demand for used cars decreases after the price of a new car falls, used cares and new cars are |
Substitute goods |
|
Other things remaining the same, the quantity of a good or service demanded will increase if the price of the good or service |
falls |
|
Which of the following increase the supply of the product? |
lower prices for the resources used to produce the product |
|
Which of the following increases the supply of gasoline? |
a decrease in the price of a resource used to produce gasoline, such as crude oil |
|
Changes in which the following factors do NOT shift the demand curve? |
The price of the good |
|
Assume market is in equilibrium. There is an increase in supply, but no change in demand. As a result, the equilibrium price_______ and the equilibrium quantity________ |
falls; increase |
|
The phrase "a change in demand" most directly implies a |
shift of the demand curve |
|
Assume a competitive market is in equilibrium. There is an increase in demand, but no change in supply. As a result the equilibrium price____. and the equilibrium quantity_____ |
rises;increase |
|
Which of the following would increase the Equilibrium Price? |
*A hurricane wiped out the banana crop in South America. *Medical research that demonstrates the cancer fighting ability of banana |
|
Monopolistic Competition is a market structure in which |
a large number of firms compete |
|
Firms in monopolistic competition determine the profit-maximizing level of output by producing |
where marginal revenue equals marginal cost |
|
Advertising is a ______cost that is incurred by_____. |
fixed;monopolist competitive firms |
|
How do advertising and other selling cost affect a firm? |
They shift the average total cost curve upward. |
|
The Players in a game theory situation often DO NOT act in their joint ;interest because of which of the following? |
It is not in each player's self interest to cooperate.
|
|
What is the conclusion in the prisoners' dilemma? |
Two prisoners acting in their own best interest harm their joint interest. |
|
When a motel is engaged in monopolistic competition with other motels, the equilibrium price is met at |
on the demand curve as a point. |
|
Which of the following statements are true of Monopolist Competition? |
* firms receive zero economic profits in the long-run *market prices are higher and output is lower than under perfect cimpetition |
|
In a monopolist competition, each firm supplies a small part of the market. This occurs because |
there are a large number of firms |
|
If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if |
its marginal revenue is less than $3.56 |
|
In which of the following ways do advertising and other selling cost affect a firm's cost curves? |
1. Advertising expenditures increase total fixed cost 2. Selling cost increase total fixed cost 3. Advertising and other selling cost per unit of output decrease as output increases |
|
A firm faces a small number of competitors. This firm is competing in an |
oligopoly |
|
If an industry has an HHI of 2,500, the market structure is that of |
an oligopoly |
|
The fact that firms in oligopoly are interdependent means that |
one firm's profit are affected by other firms' actions |
|
For a single-price monopoly, price is |
greater than marginal revenue |
|
Which of the following must a firm be able to do to successfully price discriminate? |
1. divide buyers into different groups according to there willingness to pay 2. Prevent resale of goods and services 3. Identify into which group(highest willingness to pay and lowest willingness to pay) a buyer falls |
|
To maximize it profit, a perfectly competitive firm produce so that______and a single-price monopoly produces so that____. |
MR=MC; MR=MC |
|
In contrast to competitive firms, single-price monopolies |
can make an economic profit indefinitely |
|
Once a monopoly has determined how much it produces, it will charge a price that |
is determined by its demand curve |
|
We define monopoly as a market with |
one supplier with barriers to entry |
|
Which of the following are characteristics of monopoly? |
1. Firm produces a unique product 2. There are barriers to entry in the market. |
|
Which of the following describes a barrier to entry? |
anything that protects a firm from the arrival of new competition |
|
A price-discriminating monopoly is a monopoly that |
sells different units of a good or service at different prices |
|
Which of the following is an example of price discrimination? |
Albert pays 25 percent less on prescription drugs because he is a senior citizen |
|
Last week, "Dreamz" baby products company produced 50 cribs and 200 crib mattresses. This week, they produced 55 cribs and 250 mattresses. If the current week's production lies on the company's PPF and production possibilities have not changed over the last two weeks, then we can assume that: |
The production during last week was inside the company's PPF and therefore, inefficient |
|
Last week, "Dreamz" baby products company produced 55 cribs and 250 crib mattresses. This week, they produced 40 cribs and 400 mattresses. and thought this combination was more suitable to their business. If both production levels lie on the company's PPF and production possibilities have not changed over the last two weeks, than we can assume that
|
The company made a trade-off in production to better adapt to their business performance. |
|
Which of the following describes the reason why scarcity exist? |
Wants exceed the resources available to satisfy them |
|
Economics is the social science that studies____. |
The choices made to cope with scarcity, how incentives influence those choices and how the choices are coordinated |
|
What are the key ideas of the economic way of thinking? |
1. People make rational choices by comparing cost and benefits 2. A rational choice is made at the margin. 3. choices respond to incentives |
|
A rational choice___. |
is made by comparing marginal benefit and marginal cost |
|
The following best illustrates the marginal benefit of studying... |
What you are willing to give up to study for one additional hour |
|
The following is a positive statement |
Competition among cell phone providers across the borders of Canada, Mexico and the US has driven roaming rates down. |
|
Today most stores use computers to keep their inventory records, whereas 20 years ago most stores used paper records. Answers what kind of question is this? |
How question |
|
Health-care professionals and drug companies recommend that Medicaid drug rebates be available to anyone in need. Answers what kind of question is this? |
For Whom question |
|
A doubling of the gas tax might lead to a better public transit system. Answers what kind of question? |
What and For Whom question |
|
For a syrup producer in central Vermont, profit is maximized at the level of output for which total |
revenue exceeds total cost by the largest amount |
|
Marginal revenue is |
the change in total revenue from a one-unit increase in the quantity sold
|
|
A firm maximizes its profit by producing the amount of output such that |
marginal revenue equals marginal cost
|
|
The long-run average cost curve is U-shaped because of the following? |
economies and diseconomies of scale |
|
A perfect competitive firm maximizes it profit by producing at the point where |
marginal revenue is equal to the marginal cost |
|
If it does not shut down, a perfectly competitive firm produces where MC is = to MR... |
always to maximize profits |
|
In a perfectly competitive market, if the market price is $40 a unit, to maximize it profit(or minimize loss) the firm should |
produce 40 units |
|
Which of the following statements is true for a perfectly competitive firm in the long-run? |
1.The firm will produce the quantity where MC is = to MR 2. The firm's average costs will be at their minimum level 3. the firm makes zero economic profit |
|
The long run average cost curve_____ |
shows the lowest average cost facing a firm as it increases output changing both its plant and labor forces |
|
The following are examples of explicit cost of production_______ |
1. wages paid to workers 2. the electric bill 3. Purchases of raw material |
|
Which of the following are correct statement about implicit and explicit cost? |
1. Normal profit is an implicit cost 2. Wages are an explicit cost |
|
A normal profit is defined as |
The return to entrepreneurship |
|
Jennifer owns a pig farm near Salina, Kansas. Last year she earned $39,000 in total revenue while incurring $38,000 in explicit cost. She could have earned $27,000 as a teacher in Salina. These are all her revenue and cost. Therefore Jennifer earned an |
accounting profit of $1000 but incurred an economic loss of $26,000 |
|
Suppose a firm's total revenue is $1,000,000. The firm has incurred explicit costs of $750,000. There is also $50,000 of forgone wages by the owner, $10,000 of forgone interest by the owner, $3000 worth of economic depreciation and $20,000 worth of normal profit. What is the firm's economic profit? |
$167,000
|
|
Economies of scale are a result of _____, ______. |
1. Specialization of labor 2. Specialization of capital |
|
Samantha has a budget of $40 and buys beef jerky and fried pork rinds. Her budget does not change and the price of both beef jerky and fried pork rines increases. As a result_____> |
Samantha's consumption possibilities have decreased. |
|
Nadir and Nina consume the same goods. If Nadir has more income than Nina, then Nina's budget line will___. |
lie to the left of Nadir's budget line. |
|
The fact that diamonds have a much higher price than water_______ |
does not violate the rules of utility maximization because water's marginal utility is low. |
|
The solution to the paradox of value os found by looking at what______ |
the difference between marginal utility and total utility. |
|
Billy has $20 budget to spend on yogurt and cereal. Yogurt cost $2 each and cereal cost $4 each. Suppose that the quantity of yogurt is on the vertical axis and the quantity of cereal is on the horizontal axis. The budget line's vertical intercept equals what_____ |
10 yogurts |
|
To resolve the paradox of value, you must____ |
distinguish between marginal and total utility. |
|
One reason why the price of diamonds is so high because of the _______. |
Marginal utility of diamonds is high. |
|
Why does the paradox of value between diamonds and water arise? |
Because water has a low price and a low marginal utility, while diamonds have a high price and a high marginal utility. |
|
Related to the paradox of value-The following statement is correct_____. |
The marginal utility of water is small but the total utility is enormous. |
|
The paradox of value with respect to water and diamonds can be explained using consumer surplus because_______ |
Water is cheap but provides a large consumer surplus, while diamonds are expensive with a small consumer surplus. |
|
The paradox of value refers to the______. |
fact that water is vital but cheap while diamonds are relatively useless but expensive. |
|
________ in consumer surplus occurs when the price of a good_______. |
An increase; decreases and consumers can buy more of the good at the lower price. |
|
A budget line does what______ |
1. Shifts outward with no change in its slope if the budget increase and prices don't change. 2. Has a slope equal to the opportunity cost. |
|
Externalites can________. |
either be benefits or costs |
|
For a product with an external cost, the supply curve____ |
Is the same as the marginal private cost curve. |
|
For a firm, its labor cost are________ |
A private cost |
|
A marginal external cost of a product is equal to ____ |
the cost someone other than the producer incurs when another unit is produced. |
|
What is the equation for marginal social cost? |
MSC=MC+marginal external cost |
|
If the marginal social cost of generating a kilowatt of electricity is $0.10 and the marginal private cost $0.08, what is the marginal external cost? |
$0.02 |
|
When a person receives a flue vaccination, the ____is the additional benefit the person receives from getting the shot. |
Marginal private benefit |
|
If the marginal private benefit of attending college for Shelly is $40,000 and the marginal external benefit is $15,000, she will attend college of the cost of attendance is ore than___. |
$40,000 |
|
If the government action is designed to achieve efficiency, the the action must have the market produce the amount of output so that the___ |
marginal social cost equals marginal social benefit. |
|
if all education in the united States were provided by private, tuition-charging schools then____ |
Too little education would be consumed |
|
A good or service with a positive externality are the following: |
1. the MSB exceeds MPB 2. There will be underproduction of the good. |