Microeconomics Mid-Term - Assignment Essays %

question

A change in demand is

answer

The shift of the demand curve

question

An inferior good is defined as

answer

A good for which demand increases and consumer income decreases (ramen noodles)

question

The result of a shift in the demand curve to the left

answer

A price decrease

question

According to the law of supply which of the following happens based on the price of a good?

answer

As price increases, the quantity supplied increases

question

Other things being equal, a decrease in the cost of producing a good will case what?

answer

A rightward shift in the supply curve

question

The production possibilities curve

answer

Can help explain opportunity costs & the supply curve

question

Equilibrium is

answer

A point of rest

question

The law of demand asserts that

answer

The quantity of a good that people will buy is inversely related to the product's price

question

Based on widespread reaction to the threat of the H1N1 virus, the likely effect on the demand curve for hand sanitizers would be

answer

A shift of the demand curve to the right

question

The price of peanut butter falls & as a result the demand for jelly increases. We can conclude that:

answer

They are complements

question

Which of the following would be most likely to cause a reduction in the supply of Nintendo video games?

answer

An increase in the price of computer chips used to make Nintendo games

question

Assume that coffee & tea are substitutes of each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, the most probably:

answer

The demand for tea will increase

question

Suppose the equilibrium price of bread is 2.00 per loaf. If the government sets a price ceiling of 1.50 per loaf:

answer

There will be a shortage of bread

question

Are markets always in equilibrium?

answer

No, but if there is no outside interference, they tend to move towards equilibrium

question

When the price of a product increases, a consumer is able to buy less of it without given money income. This describes:

answer

The income effect

question

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:

answer

A change in buyer tastes

question

An economist for a bicycle company predicts that other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that:

answer

Bicycles are normal goods

question

College students living off-campus frequently consume large amounts of ramen noodles & boxed mac & cheese. Ramen noodles & mac & cheese are:

answer

Inferior goods

question

The law of demand states that:

answer

Price & quantity demanded are inversely related

question

An increase in the price of a product will reduce the amount of it purchased because:

answer

Consumers will substitute other products for the one whose price has risen

question

The price elasticity of demand coefficient measures:

answer

Buyer responsiveness to price changes

question

A perfectly inelastic demand schedule:

answer

Can be represented by a line parallel to the vertical axis

question

The price elasticity of demand is:

answer

Negative, but the minus sign is ignored

question

Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:

answer

Relatively inelastic

question

We would expect that:

answer

The demand for coca-cola to be more elastic than the demand for soft drinks in general.

question

Constraints on opportunities exist because of:

answer

Scarcity

question

If an increase in the price of a good leads to no change in the quantity demanded, then the demand for this good is what?

answer

Perfectly inelastic

question

One economist mentioned in the text is:

answer

Fred Marshall

question

The assumption that people intend to make choices that best serve their objectives even when they do not have full information is known as (a):

answer

Bounded rationality

question

The costs of finding someone to trade with, and enforcing agreements are examples of:

answer

Transaction costs

question

Noise pollution from an airport near your house s an example of a(n):

answer

Externality

question

According to the diagram, showing the market for MP3 players, between points A and B the demand for players:

answer

Is unit elastic

question

Example of positive externality:

answer

Education with taxes when a person is on social security.

question

If bagels and cream cheese are complements, their cross price elasticity will be:

answer

Negative

question

An inferior good necessarily has:

answer

A negative income elasticity of demand

question

If an increase in income from $53,000 to $55,000 a year leads to an increase in the demand for beef from 79 to 89 pounds per capita, what do we conclude?

answer

Beef is a normal good

question

Other things being equal, the fewer substitutes a good has, but more its demand will tend to be:

answer

Inelastic

question

A good that cannot be provided for one person without being provided to others, and is not used up when one person benefits from it, is know as a(n):

answer

Public good

question

Insufficient competition may lead to market failure because:

answer

Lack of competition allows the price to be set above opportunity cost.

question

Excess burden of a tax

answer

takes the form of the consumer and producer surpluses that would be realized from the sale of the additional quantity that would have been sold without the tax. This is shown by the area of the triangle between the supply and demand curves.

question

Scarcity

answer

Any situation in which there is not enough of something to fill everyone's wants.

question

Economics

answer

The social science that seeks to understand the choices people make in using scarce resources to meet their wants.

question

Microeconomics

answer

The branch of economics that studies the choices of individual units-including households, business firms, and government agencies.

question

Macroeconomics

answer

The branch of economics that studies large-scale economic phenomena, particularly inflation, unemployment, and economic growth.

question

Factors of Production

answer

The basic inputs of labor, capital, and natural resources used in producing all goods and services.

question

labor

answer

The contributions to production made by people working with their minds and their hands.

question

Captial

answer

All means of production that are created by people- including tools, industrial equipment, and structures.

question

Natural Resources

answer

Anything that people can use as a productive input in its natural state, such as farmland, building sites, forests, and mineral deposits.

question

Opportunity Cost

answer

The cost of a good or service measured in terms of the forgone opportunity to pursue the best possible alternative activity with the same time or resources.

question

Economic Efficency

answer

A state of affairs in which it is impossible to make any changes that satisfies one person's wants more fully without causing some other person's wants to be satisfied less fully.

question

Efficency in Production

answer

A situation in which it is not possible, given available knowledge and productive resources, to produce more of one good without forgoing the opportunity to produce some of another good.

question

Investment

answer

The act of increasing the economy's stock of capital, that is, its supply of means of production made by people.

question

Enterpreneurship

answer

The process of looking for new possibilities- making use of new ways of doing things, being alert to new opportunities, and overcoming old limits.

question

Comparative Advantage

answer

The ability to produce a good or service at a relatively lower opportunity cost than someone else.

question

Efficiency in distribution

answer

A situation in which it is not possible, by redistributing existing supplies of goods, to satisfy one person's wants more fully without causing some other person's wants to be less fully satisfied.

question

Hiearchy

answer

A way of achieving coordination in which individual actions are guided by instructions from a central authority.

question

Spontaneous Order

answer

A way of achieving coordination in which individuals adjust their actions in response to cues from their immediate environment.

question

Market

answer

Any arrangement people have for trading with one another.

question

Theory

answer

A representation of the relationships among facts.

question

Model

answer

A synonym for theory; in economics, often applied to theories that take the form of graphs or equations.

question

Production Possibility Frontier

answer

A graph that shows possible combinations of goods that an economy can produce given available technology and factors of production.

question

Based on experience or observation:

answer

Empirical

question

The statistical analysis of empirical economic data:

answer

Econometrics

question

A prediction of future economic events in the form "If A, then B, other things being equal":

answer

Conditional Forecast

question

Slope

answer

For a straight line, the ratio of the change in y value to the change in the x value between any two points on the line.

question

Direct Relationship

answer

A relationship between two variable in which an increase in the value of one variable is associated with an increase in the value of the other.

question

Inverse Relationship

answer

A relationship between two variable in which an increase in the value of one variable is associated with a decrease in the value of the other.

question

Tangent

answer

A straight line that touches a curve at a given point without intersecting it.

question

Supply

answer

The willingness and ability of sellers to provide goods for sale in a market.

question

Demand

answer

The willingness and ability of buyers to purchase goods.

question

Law of Demand

answer

The principle that an inverse relationship exists between the price of a good and the quantity of that good that buyers demand.

question

Demand Curve

answer

A graphical representation of the relationship between the price of a good and the quantity of that good that buyers demand.

question

Change in Quantity Demanded

answer

A change in the quantity of a good that buyers are willing and able to purchase that results from a change in the good's price, shown by a movement from one point to another along a demand curve.

question

Change in Demand

answer

A change in the quantity of a good that buyers are willing and able to purchase that is caused by a changed in some condition other than the price of that good; a shift in the demand curve.

question

Substitute Goods

answer

A pair of goods for which an increase in the price of one causes an increase in demand for the other.

question

Complementary Goods

answer

A pair of goods for which an increase in the price of one causes a decrease in demand for the other.

question

Normal Goods

answer

A good for which an increase in consumer income results in an increase in demand.

question

Inferior Goods

answer

A good for which an increase in consumer incomes results in a decrease in demand.

question

Supply Curve

answer

A graphical representation of the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

question

Change in Quantity Supplied

answer

A change in the quantity of a good that suppliers are willing and able to sell that results from a change in some condition other than the good's price, shown by a shift in the supply curve.

question

Change in Supply

answer

A change in the quantity of a good that suppliers are willing and able to sell that results from a change in the good's price, shown by a movement along a supply curve.

question

Equilibrium

answer

A condition in which buyers' and sellers' plans exactly mesh in the marketplace, so that the quantity supplied exactly equals the quantity demanded at a give price.

question

Excess Quantity Demanded (Shortage)

answer

A condition in which the quantity of a good demanded at a given price exceeds the quantity supplied.

question

Inventory

answer

A stock of a good awaiting sale or use.

question

Excess Quantity Supplied (Surplus)

answer

A condition in which the quantity of a good supplied at a given price exceeds the quantity demanded.

question

Elasticity

answer

A measure of the response of one variable to a change in another, stated as a ratio of the percentage change in one variable to the associated percentage change in another.

question

Price Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in its price.

question

Revenue

answer

Price multiplied by quantity sold.

question

Elastic Demand

answer

A situation in which quantity demanded changes by a larger percentage than price, so that total revenue increases a price decreases.

question

Inelastic Demand

answer

A situation in which quantity demanded changes by a smaller percentage than price, so that total revenue decreases as price decreases.

question

Unit Elastic Demand

answer

A situation in which price and quantity demanded change by the same percentage so that total revenue remain unchanged as price changes.

question

Perfectly Inelastic Demand

answer

A situation in which the demand curve is a vertical line.

question

Perfectly Elastic Demand

answer

A situation in which the demand curve is a horizontal line.

question

Income Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in consumer incomes.

question

Cross-Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in the price of some other good.

question

Price Elasticity of Supply

answer

The ratio of the percentage change in the quantity of a good supplied to a given percentage change in it's price.

question

Objectives

answer

Anything people want to achieve.

question

Property Rights

answer

Legal rules that establish what things people may use or control, and the conditions under which they may exercise control.

question

Rationality

answer

Acting purposefully to achieve an objective, given constraints on the opportunities that are available.

question

Full Rationality

answer

The assumption that people make full use of all available information in calculating how best to meet their objectives.

question

Bounded-Rationality

answer

The assumption that people intend to make choices that best serve their objectives, but have limited ability to acquire and process information.

question

Self-Regarding Preferences

answer

A set of objectives that depend only on the material welfare of the decision maker.

question

Other-Regarding Preferences

answer

A set of objectives that includes not only the decision maker but also the material welfare of others and their attitudes.

question

Market Performance

answer

The degree to which markets work efficiently in providing arrangements for mutually beneficial trade.

question

Transaction Costs

answer

The costs, other than production costs, of carrying out a transaction.

question

Market Failure

answer

A situation in which a market fails to coordinate choices in a way that achieves efficient use of resources.

question

Externalities

answer

The effects of producing or consuming a good whose impact on third parties other than buyers and sellers of the good is not reflected in the good's price.

question

Public Goods

answer

Goods that cannot be provided for one person without also being provided for others; and when provided for one person can be provided for others at zero additional cost.

question

Monopoly

answer

A situation in which there is only a singe seller of a good or service.

question

Public Choice Theory

answer

The branch of economics that studies how people use the institutions of government pursuit of their own interests.

question

Political Rent Seeking

answer

The process of seeking and defending economic rents through the political process.

question

Government Failure

answer

A situation in which a government policy causes inefficient use of resources.

1 of 112

question

A change in demand is

answer

The shift of the demand curve

question

An inferior good is defined as

answer

A good for which demand increases and consumer income decreases (ramen noodles)

question

The result of a shift in the demand curve to the left

answer

A price decrease

question

According to the law of supply which of the following happens based on the price of a good?

answer

As price increases, the quantity supplied increases

question

Other things being equal, a decrease in the cost of producing a good will case what?

answer

A rightward shift in the supply curve

question

The production possibilities curve

answer

Can help explain opportunity costs & the supply curve

question

Equilibrium is

answer

A point of rest

question

The law of demand asserts that

answer

The quantity of a good that people will buy is inversely related to the product's price

question

Based on widespread reaction to the threat of the H1N1 virus, the likely effect on the demand curve for hand sanitizers would be

answer

A shift of the demand curve to the right

question

The price of peanut butter falls & as a result the demand for jelly increases. We can conclude that:

answer

They are complements

question

Which of the following would be most likely to cause a reduction in the supply of Nintendo video games?

answer

An increase in the price of computer chips used to make Nintendo games

question

Assume that coffee & tea are substitutes of each other. If weather conditions cause a substantial portion of the available coffee crop to be destroyed, the most probably:

answer

The demand for tea will increase

question

Suppose the equilibrium price of bread is 2.00 per loaf. If the government sets a price ceiling of 1.50 per loaf:

answer

There will be a shortage of bread

question

Are markets always in equilibrium?

answer

No, but if there is no outside interference, they tend to move towards equilibrium

question

When the price of a product increases, a consumer is able to buy less of it without given money income. This describes:

answer

The income effect

question

In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:

answer

A change in buyer tastes

question

An economist for a bicycle company predicts that other things equal, a rise in consumer incomes will increase the demand for bicycles. This prediction is based on the assumption that:

answer

Bicycles are normal goods

question

College students living off-campus frequently consume large amounts of ramen noodles & boxed mac & cheese. Ramen noodles & mac & cheese are:

answer

Inferior goods

question

The law of demand states that:

answer

Price & quantity demanded are inversely related

question

An increase in the price of a product will reduce the amount of it purchased because:

answer

Consumers will substitute other products for the one whose price has risen

question

The price elasticity of demand coefficient measures:

answer

Buyer responsiveness to price changes

question

A perfectly inelastic demand schedule:

answer

Can be represented by a line parallel to the vertical axis

question

The price elasticity of demand is:

answer

Negative, but the minus sign is ignored

question

Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired. GSU is assuming that the demand for education at GSU is:

answer

Relatively inelastic

question

We would expect that:

answer

The demand for coca-cola to be more elastic than the demand for soft drinks in general.

question

Constraints on opportunities exist because of:

answer

Scarcity

question

If an increase in the price of a good leads to no change in the quantity demanded, then the demand for this good is what?

answer

Perfectly inelastic

question

One economist mentioned in the text is:

answer

Fred Marshall

question

The assumption that people intend to make choices that best serve their objectives even when they do not have full information is known as (a):

answer

Bounded rationality

question

The costs of finding someone to trade with, and enforcing agreements are examples of:

answer

Transaction costs

question

Noise pollution from an airport near your house s an example of a(n):

answer

Externality

question

According to the diagram, showing the market for MP3 players, between points A and B the demand for players:

answer

Is unit elastic

question

Example of positive externality:

answer

Education with taxes when a person is on social security.

question

If bagels and cream cheese are complements, their cross price elasticity will be:

answer

Negative

question

An inferior good necessarily has:

answer

A negative income elasticity of demand

question

If an increase in income from $53,000 to $55,000 a year leads to an increase in the demand for beef from 79 to 89 pounds per capita, what do we conclude?

answer

Beef is a normal good

question

Other things being equal, the fewer substitutes a good has, but more its demand will tend to be:

answer

Inelastic

question

A good that cannot be provided for one person without being provided to others, and is not used up when one person benefits from it, is know as a(n):

answer

Public good

question

Insufficient competition may lead to market failure because:

answer

Lack of competition allows the price to be set above opportunity cost.

question

Excess burden of a tax

answer

question

Scarcity

answer

Any situation in which there is not enough of something to fill everyone's wants.

question

Economics

answer

The social science that seeks to understand the choices people make in using scarce resources to meet their wants.

question

Microeconomics

answer

The branch of economics that studies the choices of individual units-including households, business firms, and government agencies.

question

Macroeconomics

answer

The branch of economics that studies large-scale economic phenomena, particularly inflation, unemployment, and economic growth.

question

Factors of Production

answer

The basic inputs of labor, capital, and natural resources used in producing all goods and services.

question

labor

answer

The contributions to production made by people working with their minds and their hands.

question

Captial

answer

All means of production that are created by people- including tools, industrial equipment, and structures.

question

Natural Resources

answer

Anything that people can use as a productive input in its natural state, such as farmland, building sites, forests, and mineral deposits.

question

Opportunity Cost

answer

The cost of a good or service measured in terms of the forgone opportunity to pursue the best possible alternative activity with the same time or resources.

question

Economic Efficency

answer

A state of affairs in which it is impossible to make any changes that satisfies one person's wants more fully without causing some other person's wants to be satisfied less fully.

question

Efficency in Production

answer

A situation in which it is not possible, given available knowledge and productive resources, to produce more of one good without forgoing the opportunity to produce some of another good.

question

Investment

answer

The act of increasing the economy's stock of capital, that is, its supply of means of production made by people.

question

Enterpreneurship

answer

The process of looking for new possibilities- making use of new ways of doing things, being alert to new opportunities, and overcoming old limits.

question

Comparative Advantage

answer

The ability to produce a good or service at a relatively lower opportunity cost than someone else.

question

Efficiency in distribution

answer

A situation in which it is not possible, by redistributing existing supplies of goods, to satisfy one person's wants more fully without causing some other person's wants to be less fully satisfied.

question

Hiearchy

answer

A way of achieving coordination in which individual actions are guided by instructions from a central authority.

question

Spontaneous Order

answer

A way of achieving coordination in which individuals adjust their actions in response to cues from their immediate environment.

question

Market

answer

Any arrangement people have for trading with one another.

question

Theory

answer

A representation of the relationships among facts.

question

Model

answer

A synonym for theory; in economics, often applied to theories that take the form of graphs or equations.

question

Production Possibility Frontier

answer

A graph that shows possible combinations of goods that an economy can produce given available technology and factors of production.

question

Based on experience or observation:

answer

Empirical

question

The statistical analysis of empirical economic data:

answer

Econometrics

question

A prediction of future economic events in the form "If A, then B, other things being equal":

answer

Conditional Forecast

question

Slope

answer

For a straight line, the ratio of the change in y value to the change in the x value between any two points on the line.

question

Direct Relationship

answer

A relationship between two variable in which an increase in the value of one variable is associated with an increase in the value of the other.

question

Inverse Relationship

answer

A relationship between two variable in which an increase in the value of one variable is associated with a decrease in the value of the other.

question

Tangent

answer

A straight line that touches a curve at a given point without intersecting it.

question

Supply

answer

The willingness and ability of sellers to provide goods for sale in a market.

question

Demand

answer

The willingness and ability of buyers to purchase goods.

question

Law of Demand

answer

The principle that an inverse relationship exists between the price of a good and the quantity of that good that buyers demand.

question

Demand Curve

answer

A graphical representation of the relationship between the price of a good and the quantity of that good that buyers demand.

question

Change in Quantity Demanded

answer

A change in the quantity of a good that buyers are willing and able to purchase that results from a change in the good's price, shown by a movement from one point to another along a demand curve.

question

Change in Demand

answer

A change in the quantity of a good that buyers are willing and able to purchase that is caused by a changed in some condition other than the price of that good; a shift in the demand curve.

question

Substitute Goods

answer

A pair of goods for which an increase in the price of one causes an increase in demand for the other.

question

Complementary Goods

answer

A pair of goods for which an increase in the price of one causes a decrease in demand for the other.

question

Normal Goods

answer

A good for which an increase in consumer income results in an increase in demand.

question

Inferior Goods

answer

A good for which an increase in consumer incomes results in a decrease in demand.

question

Supply Curve

answer

A graphical representation of the relationship between the price of a good and the quantity of that good that sellers are willing to supply.

question

Change in Quantity Supplied

answer

A change in the quantity of a good that suppliers are willing and able to sell that results from a change in some condition other than the good's price, shown by a shift in the supply curve.

question

Change in Supply

answer

A change in the quantity of a good that suppliers are willing and able to sell that results from a change in the good's price, shown by a movement along a supply curve.

question

Equilibrium

answer

A condition in which buyers' and sellers' plans exactly mesh in the marketplace, so that the quantity supplied exactly equals the quantity demanded at a give price.

question

Excess Quantity Demanded (Shortage)

answer

A condition in which the quantity of a good demanded at a given price exceeds the quantity supplied.

question

Inventory

answer

A stock of a good awaiting sale or use.

question

Excess Quantity Supplied (Surplus)

answer

A condition in which the quantity of a good supplied at a given price exceeds the quantity demanded.

question

Elasticity

answer

A measure of the response of one variable to a change in another, stated as a ratio of the percentage change in one variable to the associated percentage change in another.

question

Price Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in its price.

question

Revenue

answer

Price multiplied by quantity sold.

question

Elastic Demand

answer

A situation in which quantity demanded changes by a larger percentage than price, so that total revenue increases a price decreases.

question

Inelastic Demand

answer

A situation in which quantity demanded changes by a smaller percentage than price, so that total revenue decreases as price decreases.

question

Unit Elastic Demand

answer

A situation in which price and quantity demanded change by the same percentage so that total revenue remain unchanged as price changes.

question

Perfectly Inelastic Demand

answer

A situation in which the demand curve is a vertical line.

question

Perfectly Elastic Demand

answer

A situation in which the demand curve is a horizontal line.

question

Income Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in consumer incomes.

question

Cross-Elasticity of Demand

answer

The ratio of the percentage change in the quantity of a good demanded to a given percentage change in the price of some other good.

question

Price Elasticity of Supply

answer

The ratio of the percentage change in the quantity of a good supplied to a given percentage change in it's price.

question

Objectives

answer

Anything people want to achieve.

question

Property Rights

answer

Legal rules that establish what things people may use or control, and the conditions under which they may exercise control.

question

Rationality

answer

Acting purposefully to achieve an objective, given constraints on the opportunities that are available.

question

Full Rationality

answer

The assumption that people make full use of all available information in calculating how best to meet their objectives.

question

Bounded-Rationality

answer

The assumption that people intend to make choices that best serve their objectives, but have limited ability to acquire and process information.

question

Self-Regarding Preferences

answer

A set of objectives that depend only on the material welfare of the decision maker.

question

Other-Regarding Preferences

answer

A set of objectives that includes not only the decision maker but also the material welfare of others and their attitudes.

question

Market Performance

answer

The degree to which markets work efficiently in providing arrangements for mutually beneficial trade.

question

Transaction Costs

answer

The costs, other than production costs, of carrying out a transaction.

question

Market Failure

answer

A situation in which a market fails to coordinate choices in a way that achieves efficient use of resources.

question

Externalities

answer

The effects of producing or consuming a good whose impact on third parties other than buyers and sellers of the good is not reflected in the good's price.

question

Public Goods

answer

Goods that cannot be provided for one person without also being provided for others; and when provided for one person can be provided for others at zero additional cost.

question

Monopoly

answer

A situation in which there is only a singe seller of a good or service.

question

Public Choice Theory

answer

The branch of economics that studies how people use the institutions of government pursuit of their own interests.

question

Political Rent Seeking

answer

The process of seeking and defending economic rents through the political process.

question

Government Failure

answer

A situation in which a government policy causes inefficient use of resources.

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