micro theory - Assignment Essays

question

the equilibrium price after a specific tax

answer

will be the same whether the tax is collected from consumers or producers

question

when N=1

answer

supply is unit elastic

question

when N > 1

answer

supply is considered elastic

question

when N is between 0 and 1

answer

supply is inelastic

question

change in equilibrium price from specific tax

answer

(N/N-E) x change in T

question

share of tax on consumers

answer

change in p/ change in t

question

a set of all bundles of goods that a consumer views as being equally desireable

answer

indifference curve

question

a complete set of indifference curves that summarize a consumers tastes

answer

indifference map

question

how to find the marginal rate of substitution

answer

the slope of the indifference curve

question

utility

answer

a set of numerical values that reflect the relative rankings of various bundles of goods

question

utility function

answer

relationship between utility values and every possible bundle of goods

question

marginal rate of transformation

answer

slope of the budget line

question

optimal bundle

answer

must lie on consumers budget constraint and be on an indifference curve that does not cross it

question

salience

answer

something that is striking or obvious

question

price consumption curve

answer

a line through optimal bundles

question

engel curve

answer

the relationship between the quantity demanded of a single good and income

question

normal good

answer

a commodity in which demand increases as income increases

question

inferior good

answer

a commodity of which less is demanded as income rises

question

When does the income effect reinforce the substitution effect?

answer

for a normal good

question

when does the income effect offset the substitution effect

answer

for an inferior good

question

the income effect more than offsets the substitution effect for a ______ good

answer

a giffen good

question

consumers willingness to trade one good for another can be explained by

answer

marginal rate of substitution and indifference curve

question

What variable is held constant when tracing out an income consumption curve

answer

the price of good X

question

in tracing out the price consumption curve for a good what variable is held constant?

answer

consumer income

question

when a bunde MRS=MRT

answer

reaches the highest possible indifference curve someone can afford

question

in the relevant price range a demand curve for a giffen good would be

answer

upward sloping

question

if the marginal utility of pizza equals 10 and the marginal utility of salad equals 2, then

answer

you would give up 5 salads for one pizza

question

owned by shareholders in proportion to the number of shares that they own

answer

corporations

question

a condition that states the personal assets of the owners of the corporation cannot be taken to pay corporations debts if it defaults

answer

limited liability

question

the difference between revenues and costs

answer

profit

question

a situation in which the current level of outputs cannot be achieved with fewer inputs, given existing knowledge and technology

answer

technological efficiency

question

relationship between the quantities of inputs used and the maximium quantity of output that can be produced

answer

production function

question

short run

answer

a period of time so brief that at least one factor of production cannot be varied

question

long run

answer

a lengthy enough period of time that all inputs can be varied

question

short run production

answer

assume that capital is fixed in put and labor is variable; the only way to change capital is to increase or decrease labor

question

the value of the best alternative use of a resource

answer

opportunity cost

question

a cruve that shows the efficient combinations of labor and capital that can produce a single level of output

answer

isoquant

question

shape of isoquant for inputs that are perfect substitutes

answer

straight line

question

shape of isoquant if inputs cannot be substituted at all

answer

right angle

question

marginal rate of technical substitution

answer

the number of etra units needed of one input to replace a different input that enables the firm to maintain their level of output

question

property of production function whereby when all inputs are increased by a certain percentage, output increases by same percentage

answer

constant return to scale

question

isocost line

answer

all the combinations of input that require the same total cost

question

the cost minimizing combination of labor and capital for each output level

answer

expansion path

question

the marginal cost curve crosses the average cost curve at_________

answer

the lowest point on the average cost curve

question

economic efficiency entails

answer

producing a given amount of output with the cheapest mix of inputs

question

what is the main difference between implicit and explicit costs

answer

explicit costs must be paid for directly, while implicit costs usually represent forgone opportunitites

question

the distinction between short run and long run is made in terms of ______

answer

the ability to change the factors of production

question

Efficient production is:

answer

a necessary but not sufficient condition for profit maximization

question

the average product of labor is ____

answer

the ratio of output to the number of workers

question

the production function for a firm that uses only labor and capital shows _____

answer

the maximum amount of output that can be produced from given levels of labor and capital

question

economic costs of an input include

answer

both implicit and explicit costs

1 of 51

question

the equilibrium price after a specific tax

answer

will be the same whether the tax is collected from consumers or producers

question

when N=1

answer

supply is unit elastic

question

when N > 1

answer

supply is considered elastic

question

when N is between 0 and 1

answer

supply is inelastic

question

change in equilibrium price from specific tax

answer

(N/N-E) x change in T

question

share of tax on consumers

answer

change in p/ change in t

question

a set of all bundles of goods that a consumer views as being equally desireable

answer

indifference curve

question

a complete set of indifference curves that summarize a consumers tastes

answer

indifference map

question

how to find the marginal rate of substitution

answer

the slope of the indifference curve

question

utility

answer

a set of numerical values that reflect the relative rankings of various bundles of goods

question

utility function

answer

relationship between utility values and every possible bundle of goods

question

marginal rate of transformation

answer

slope of the budget line

question

optimal bundle

answer

must lie on consumers budget constraint and be on an indifference curve that does not cross it

question

salience

answer

something that is striking or obvious

question

price consumption curve

answer

a line through optimal bundles

question

engel curve

answer

the relationship between the quantity demanded of a single good and income

question

normal good

answer

a commodity in which demand increases as income increases

question

inferior good

answer

a commodity of which less is demanded as income rises

question

When does the income effect reinforce the substitution effect?

answer

for a normal good

question

when does the income effect offset the substitution effect

answer

for an inferior good

question

the income effect more than offsets the substitution effect for a ______ good

answer

a giffen good

question

consumers willingness to trade one good for another can be explained by

answer

marginal rate of substitution and indifference curve

question

What variable is held constant when tracing out an income consumption curve

answer

the price of good X

question

in tracing out the price consumption curve for a good what variable is held constant?

answer

consumer income

question

when a bunde MRS=MRT

answer

reaches the highest possible indifference curve someone can afford

question

in the relevant price range a demand curve for a giffen good would be

answer

upward sloping

question

if the marginal utility of pizza equals 10 and the marginal utility of salad equals 2, then

answer

you would give up 5 salads for one pizza

question

owned by shareholders in proportion to the number of shares that they own

answer

corporations

question

a condition that states the personal assets of the owners of the corporation cannot be taken to pay corporations debts if it defaults

answer

limited liability

question

the difference between revenues and costs

answer

profit

question

a situation in which the current level of outputs cannot be achieved with fewer inputs, given existing knowledge and technology

answer

technological efficiency

question

relationship between the quantities of inputs used and the maximium quantity of output that can be produced

answer

production function

question

short run

answer

a period of time so brief that at least one factor of production cannot be varied

question

long run

answer

a lengthy enough period of time that all inputs can be varied

question

short run production

answer

assume that capital is fixed in put and labor is variable; the only way to change capital is to increase or decrease labor

question

the value of the best alternative use of a resource

answer

opportunity cost

question

a cruve that shows the efficient combinations of labor and capital that can produce a single level of output

answer

isoquant

question

shape of isoquant for inputs that are perfect substitutes

answer

straight line

question

shape of isoquant if inputs cannot be substituted at all

answer

right angle

question

marginal rate of technical substitution

answer

the number of etra units needed of one input to replace a different input that enables the firm to maintain their level of output

question

property of production function whereby when all inputs are increased by a certain percentage, output increases by same percentage

answer

constant return to scale

question

isocost line

answer

all the combinations of input that require the same total cost

question

the cost minimizing combination of labor and capital for each output level

answer

expansion path

question

the marginal cost curve crosses the average cost curve at_________

answer

the lowest point on the average cost curve

question

economic efficiency entails

answer

producing a given amount of output with the cheapest mix of inputs

question

what is the main difference between implicit and explicit costs

answer

explicit costs must be paid for directly, while implicit costs usually represent forgone opportunitites

question

the distinction between short run and long run is made in terms of ______

answer

the ability to change the factors of production

question

Efficient production is:

answer

a necessary but not sufficient condition for profit maximization

question

the average product of labor is ____

answer

the ratio of output to the number of workers

question

the production function for a firm that uses only labor and capital shows _____

answer

the maximum amount of output that can be produced from given levels of labor and capital

question

economic costs of an input include

answer

both implicit and explicit costs

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