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44 Cards in this Set

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  • Back
The markets examined in this chapter
d
are highly competitive
A schedule that shows the various amounts of a product consumers are willing and able to purchase at each price in a series of possible prices during a specified period of time is called
b
demand
The reason for the law of demand can best be exlained in term of
d
diminishing marginal utility
(depleting nextstep benefits)
Assume that the price of video game players falls. What will most likely happen to the equilibrium price and quantity of video games, assuming this market is competitive?
d
Price will increase; quantity will increase.
The income of a consumer decreases and the consumer's demand for a particular good increases, It can be concluded that the good is
b
inferior (cheap goods)
Which of the following could cause a decrease in consumer demand for product X
a
a decrease in consumer income
If two goods are substitutes for each other, an increase in lthe price of one will necessarily
b
increase the demand for the other.
If two products, A and B, are complements,(move in opposite directions) then,
a
an increase in the price of A will decrease the demand for B
If two products, X and Y, are independent goods, then
c
and increase in the price of Y will have no significant effect on the demand for X
The law of supply states that, other things being constant, as price increases
c
quantity supplied increases
A decrease in the supply of a product would most likely be caused by
a
an increase in business taxes
If the quantity supplied of a product is greater than the quantity demanded for a product, then
b
there is a surplus of the product
If the price of a product is below the equilibrium price, the result will be
b
a shortage of the good.
A decrease in supply and a decrease in demand will
d
affect price in and indeterminate way and decrease the quantity exchanged.
An increase in demand and a decrease in supply will
c
increase price and the effect upon quantity exchanged will be indeterminate
An increase in supply and an increase in demand will
d
affect price in an indeterminate way and increase the quantity exchanged
A cold spell in Glorida devastates the orange crop. As a result, California oranges command a higher price. Which of the following statements best explains the situation.
b
the supply of Florida oranges decreases, causing their price to increase and the demand for California oranges to increase.
Assume that the market is initially in equilibrium where D1 and S1 intersect. If there is an increase in the number of buyers, then the new equilibrium would most likely be at point
c
Y
Assume that the euilibrium lprice and quantity in the marker are P2 and Q2. Which factor would cause the equilibrium price and quantity to shift to P1 and Q3?
c
and increase in supply
What would cause a shift in the equilibrium price and quantity from point Z to point X?
c
an increase in production costs and decrease in consumer incomes.
Assume that the market is initially in equilibrium where D1 and S1 intersect. If consumer incomes increased and the technology for making the product improved, then new equilibrium would most likely be at
c
P1 and Q3
The demand curve and its inverse relationship between price and quantity demanded is based on the assumption of
a
other things equal
Which is one of the main characteristics of the market system?
c
the right to own provate property
In the market system, freedom of enterprise means that
a
businesses are free to produce products that consumers want
The maximization of profit tends to be the driving force in the economic decision making of
a
entrepreneurs
How do consumers typically pxpress self-interest?
c
by seeking the lowest price for a product
Which is a characteristic of completition as economists see it
b
the widespread diffusion of economic power
To decide how to use its scarce resources to satisfy economic wants, capitlaism relies on
c
markets and prices
The market system is a method of
a
communicating and coordinating the decisions of consumers, producers, and resource suppliers
What is roundabout production
b
the production and use of capital goods to help make consumer goods
When workers specialize in verious tasks to produce a commodity, the situation is referred to as
d
division of labor
In what way does human specialization contribute to an economy's output
d
it fosters learning by doing
In the market system, the role of government is bost described as
d
limited
Which best defines economic costs
b
total payments made to secure and retrain needed resources
If a business's total economic cost of producing 10,000 units of a product is $750,000 and this output is sold to cnsumers for $1,000,000 then the firm would earn
c
and economic profit of $250,000
If less-than-normal profits are being earned by the firms in an industry, the consequences wil be that
c
firms will leave the industry, causing the price of the industry's product to rise
Which would necessarily result, sooner or later, from a decrease in consumer demand for a product
a
a decrease in lthe profits of firms in the industry
The demand for resources is
c
derived from the demand for the products made with the resources
Which technique is economically most efficient in producing product X
b
B
IF the price of product X is $1, the firm will realize
a
an economic profit of $28
Now assume that the price of labor falls to $3 and the price of camital rises to $5. Which technique is economically most efficient in producing product X.
d
D
Which is the primary factor determining the share of the total output of the economy received by a household
c
the prices at whcih the household sells its resources
In the market system, if one firm introduces a new and better method of production that enhances the firm's economic profits, other firms will be forced to adopt the new method to
c
avoid economic losses or bankruptcy
The chief economic virtue of the competitive market system is that it
b
efficiently allocates resources (least cost)