question
To think at the margin means to consider
answer
How a small change in one variable affects another variable
question
At the optimal level of an activity, it's marginal benefits must...
answer
Equal the marginal cost
question
The money payment made to owners of land, labor, capital and entrepreneurial ability are...
answer
Rent, wages, interest, and profits respectively
question
The simple circular flow model shows that...
answer
Households are on the supply side of the resource market and the demand side of the product market.
question
Does voluntary exchange create wealth (value)?
answer
Yes
question
If a country has an economic system that can be described as one with government ownership of non-labor factors of production, government allocation of resources, centralized decision making and a major role for government in economic activities. Which of the following best describes this economic system?
answer
A command economy
question
According to the law of increasing opportunity costs...
answer
The opportunity cost of producing a good increases as more of the good is produced
question
Economics is best defined as...
answer
The study of choices made by people faced with scarcity
question
Increasing opportunity costs while moving along a production possibility frontier is due to....
answer
the fact that resources are not equally productive in alternative uses
question
If an economy is fully utilizing its resources, it can produce more of one product only if it...
answer
Produces less of a product
question
An arrangement/institution that allows buyers and sellers to exchange things is called...
answer
A market
question
If an economy is operating to a point inside the production possibilities curve...
answer
Its resources are being wasted
question
The 3 key economic questions include all of the following except...
answer
Where should these products be produced
question
Customarily Economists classify resources into these major groups...
answer
Land, labor, capital and entrepreneurship
question
When economists assume that people are rational and respond to incentives they mean...
answer
People act in their own self interest
question
Suppose that you own a house. What is the opportunity cost of living in the house...
answer
The opportunity cost is the rent you could have received from a tenant if you didn't live there.
question
The______ the opportunity cost of doing something, the ____ likely it will be done
answer
Higher, less
question
The "coincidence of wants" problem associated with barter refers to the fact that...
answer
For exchange to occur each transactor must have a product which the other transactor wants
question
Which of the following is a way of directly controlling the quantity of a particular product?
answer
Production quotas
question
The continuation of a 6-year drought in Australia has reduced the amount of water available to irrigate Australia's rice crop, leading to a sharp increase in the price of rice. Australian Rice farmers are experimenting with different rice varieties and growing techniques that require less water. If these techniques are successful and increase the size of the rice harvest, the price of rice will____ and the quantity of rice will_____, everything else constant
answer
Decrease; increase
question
A binding minimum wage law can be expected to...
answer
Cause unemployment for some unskilled workers
question
The difference between the maximum amount that a customer and then the price that is paid for the product describes...
answer
Consumer surplus
question
If the equilibrium price of a good decreases and the equilibrium quantity of the good decreases, we can conclude...
answer
Demand decreased
question
Price floors...
answer
All the above (cause surpluses when they are binding, are binding when they are above the equilibrium price, cause fewer exchanges to be made)
question
Producer surplus is...
answer
The price a producer receives for a product minus the cost of production
question
A ban on imports will____ the price domestic customers pay for the good, and____ the amount of the good consumed....
answer
Increase; decrease
question
As price falls along a particular demand curve, consumer surplus...
answer
Increases
question
Suppose that the supply of gasoline increases. Price will____ and consumer surplus will____...
answer
Decrease; increase
question
A tariff on a product...
answer
Makes domestic sellers better off and domestic buyers worse off
question
A demand curve is defined as the relationship between...
answer
The price of the good and the quantity of that good that consumers are willing to sell.
question
The government sometimes creates a shortage for a product by setting a maximum price at which a product may be sold to consumers. This is sometimes called a...
answer
Price ceiling
question
In the last few years thousands of honeybee colonies have vanished a result of bee colony collapse disorder, roughly 1/3 of the US food supply, including a wide variety of fruits, vegetables and nuts depends on pollination from bees. The decline of honeybees threatens 15 billion worth of crops in the united states. Based on this the decline in honey bee colonies and its subsequent effect on the ingredients used in the production of ice cream has led to a ____ the price and a _____ the quantity of ice cream sold...
answer
Increase; decrease
question
Which of the following factors is associated with product with a highly price elastic demand...
answer
Many very close substitutes
question
When economists look at the percentage change in quantity demanded generated by a change in income, they are looking at....
answer
Income elastic demand
question
The primary goal of a firm in a capitalistic market is to...
answer
Maximize profits
question
Price elasticity of demand is defined as the ratio of the...
answer
Percentage change in quantity demanded to the percentage change in price all else equal
question
The responsiveness of suppliers to changing prices is called the...
answer
Supply elasticity
question
If the percentage change in the quantity demanded of a good is less than the percentage change in price, price elasticity of demand is...
answer
Inelastic
question
If a demand in the price of theater tickets increases the total revenue earned by the theater this is evidence that demand is...
answer
Price elastic
question
The president of Tucker motors says, "lowering the price won't sell a single additional Tucker car" the president believes that the price elasticity of demand is...
answer
Perfectly inelastic
question
A___ demand curve has a price elasticity of demand that is perfectly inelastic...
answer
Horizontal
question
Governments can use price elasticity of demand to estimate how changes in excise tax rates will affect...
answer
Tax revenues
question
Suppose that the pleasant corporation cuts the price of its American girl dolls by 10 percent and as a result the quantity of the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is...
answer
-2.5
question
If the cross elasticity of demand for two goods is positive the is means that the goods are...
answer
Substitutes
question
If an excise tax is placed on a product that has a perfectly inelastic demand, then...
answer
The entire tax will be paid by the consumer
question
In part a solution to the principal-agent problem is to...
answer
Devise compensation rules to induce agents to act in the best interest of principals
question
If the federal government placed a 50 cent per pack excise tax on cigarette manufacturers, and if as a result the price per pack to consumers went up 40 cents, the...
answer
Actual burden of the tax falls mostly on the consumers
question
A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of...
answer
Shifting the supply curve to the left
question
Economic profits for firm is defined as the total revenue of the firm minus its...
answer
Explicit and implicit costs of production
question
Titanic state university raises tuition for the purpose of increasing its revenue so that more faculty can be hired, TSU is assuming the demand for education at TSU is...
answer
Relatively inelastic
question
The demand for emergency medical care (within a range of prices the person can afford) is probably...
answer
Perfectly inelastic
question
Price discrimination is the business practice of...
answer
Selling the same good to different people for a different price
question
A monopoly...
answer
Can set the price it charges for its outputs but faces a downward sloping demand curve so it cannot earn unlimited profits
question
Price discrimination is related to elasticity because...
answer
The firm can increase revenues by charging customers with elastic demands higher prices and charging customers with inelastic demands lower prices
question
A monopolist's profits with the price discrimination will be...
answer
Higher than if the firm charged just one price because the firm will capture more consumer surplus
question
When existing firms in a competitive market are profitable an incentive exists for...
answer
New firms to enter the market, even without government subsides
question
If there is a decrease in market demand in a perfectly competitive market, then in the short run prices will...
answer
Fall
question
The monopolist's marginal revenue curve is...
answer
Downward sloping and twice as steep
question
A firm that has market power has the ability...
answer
To affect the price of its own product
question
The firm may earn positive economic profits in the long run if...
answer
All the above (there are barriers to entry, it produces a unique product, it is the only firm that produces the product)
question
Which of the following conditions would prevent price discrimination...
answer
the inability to identify those customers willing to pay more
question
For a firm to discriminate...
answer
It must have some market power
question
A monopoly market is characterized by...
answer
A product with no close substitutes
question
If the long run average cost curve for a firm is downward sloping, then it indicates that there...
answer
Are diseconomies of scale
question
When barriers to entry are governmental restrictions that legally prohibit competition, barriers to entry are...
answer
Artificial barriers
question
You notice the price for butter, a competitive industry, rises then falls. This indicates that...
answer
Demand for butter increased causing prices to rise, which attracted other firms to enter the market causing supply to increase, causing price to fall
question
A monopolist maximizes profits by...
answer
Both A&B are correct (charging a price equal to marginal revenue and marginal cost, charging a price where marginal cost equals average total cost
question
Compared to perfectly competitive firm monopolist...
answer
Produces a lower output
question
During the short-run period of the production process, a firm will be...
answer
Able to vary some of its factors of production
question
If marginal cost is rising...
answer
Marginal product must be falling
question
A firm has market power if it can...
answer
Influence the market price of the good it sells
question
A production function describes...
answer
How a firm turns input into output
question
A perfectly competitive firm's short-run supply curve is the...
answer
Marginal cost above the average variable cost curve
question
At the profit-maximizing level of output for a competitive firm...
answer
Price equals marginal cost
question
Competitive markets are characterized by...
answer
Homogenous products
question
If a firm is currently equating MR and MC and product price= $24, AVC= $22, and ATC= $26, then in the short run this firm....
answer
Will continue to operate at a loss
question
The average cost curve intersects...
answer
Marginal cost at the minimum of average total cost
question
When total revenue minus total cost is equal to zero, the firm is...
answer
Earning a normal rate of return or normal profits
question
In the long run, total fixed cost...
answer
Does not exist
question
The perfectly competitive firm produces at the output level where...
answer
Price equals marginal cost
question
In the short run, if a perfectly competitive firm is producing at a price above average cost its economic profit must be..
answer
Positive
question
In the short run, a firm will continue to operate as long as...
answer
Price exceeds average variable cost
question
Profit is defined as...
answer
Total revenue minus total cost
question
Average total cost tells us...
answer
Cost of a typical unit of output, if total cost is divided evenly over all the units produced
question
Constant returns to scale occur when a firm's...
answer
long-run average total costs do not vary as output increases
question
If demand for a product increases, everything else constant, the equilibrium...
answer
Price increases
question
The law of supply states:
answer
There is a positive relationship between price and quantity supplied, ceteris paribus
question
The price of oranges has risen dramatically. Which of the following is likely to happen?
answer
The quantity supplied will increase
question
When the price of apples go up...
answer
The quantity demanded for apples will decrease
question
Emilio demands more prime rib as his income increases. From this, we can conclude that, or Emilio prime rib is a...
answer
Normal good
question
A demand curve is defined as the relationship between
answer
The price of a good and the quantity of that good that consumers are willing to buy
question
Jimbo has a comparative advantage over Ned in producing a good if...
answer
Jimbo has a lower opportunity cost of producing the good than does Ned
question
Specialization and trade exploit difference in productivity across workers and
answer
Make everyone better off
question
The general relationship between economic freedom and per capita income is...
answer
Positive- higher economic freedom leads to a higher per capita income
question
The general relationship of economic freedom and the share of income of the poorest 10% of a country's citizens is
answer
Consistent- the poorest 10% receive the same share of income regardless of the level of economic freedom
question
If the equilibrium price and the equilibrium quantity sold of a good decreases, we can conclude that...
answer
Demand decreased
question
The ability of one person or nation to produce a good at a lower opportunity cost than another is called an
answer
Comparative advantage
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
