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89 Cards in this Set
- Front
- Back
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What is utility?
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The satisfaction obtained from consuming a good or service
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What is opportunity cost?
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The value of a good/service/time to obtain something else
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What is marginal cost?
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the additional cost of producing one more unit
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Explain aggregation
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a collection of specific economic units treated as if they were one unit
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What are the our economic resources?
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1. land
2. labor 3. capital 4. entrepreneurial possibilities |
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Production Possibilities Model-
Name all four assumptions and be able to explain what they mean |
A. employment- the economy is employing all its available resources
B. fixed resources- the quantity and quality of the factors C. two goods- 1 symbolizes consumer and 1 symbolizes the capital D. fixed technology- technology is constant |
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True or False-
Optimal Choice is where Marginal Cost is equal to Marginal Demand |
False
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Command System is to Socialism as ___________
A. Market System is to communism B. Economic System is to Reductionism C. Market System is to Capitalism D. Economic System is Protectionism |
C. Market System is to Capitalism
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The relationship between quantity supplied and price is ____ and the relationship between quantity demanded and price is ____.
A. inverse, direct B. direct, direct C. direct, inverse D. inverse, inverse **Note- this will probably be on the test |
C. direct, inverse
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The demand curve is ____ and the supply curve is ____.
A. negatively sloped, positively sloped B. positively sloped, negatively sloped C. both are actually undefined |
A. Negatively sloped, positively sloped
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What are the 5 determinants of Demand?
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1. income
2. consumer's taste and preferences 3. number of consumers 4. expected prices 5. prices of related goods |
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Give an example of the following related to income:
Normal Good- ___________ Inferior Good- ___________ |
Normal Good- Gucci, Juicy
Inferior Good- Knock off brands |
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Give an example of the following related to price of related goods:
Substitute- __________ Complement- ___________ |
Substitute- hot dogs and hamburgers
Complement- pb and j |
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What are the 6 determinants of supply?
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1. resource prices
2. technology 3. taxes and subsidies 4. prices of other goods 5. expected prices 6. number of sellers |
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Market Equilibrium is where Supply meets Demand-
A. is more than B. has a longer line C. meets D. none of the above |
c. meets
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If the government implements a price ceiling then there will be a:
A. surplus B. nothing will happen C. shortage D. scalping |
c. shortage
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If the government implements a price floor then there will be a:
A. surplus B. nothing will happen C. shortage D. scalping |
a. surplus
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If the Price Elasticity Demanded is greater than 1 then:
A. inelastic B. unit elastic C. elastic |
c. elastic
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If the Price Elasticity Demanded is less than 1 then:
A. inelastic B. unit elastic C. elastic |
B. unit elastic
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Total Revenue is Equal to:
A. D=S B. MB>MC C. PxQ D. Qd=Qs |
PxQ
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Progressive Taxes: _____ tax percentage for higher incomes
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higher
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Regressive Taxes: _____ tax percentage for higher incomes
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lower
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Proportional Taxes: _____ tax percentage for all incomes
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constant
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Which is not an example of a plant?
A. farm B. firm C. factory D. store |
b. firm
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A firms _______ are the monetary payments a firm must make to an outsider to obtain a resource
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explicit
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A firms _______ are the opportunity costs of using its self-owned, self-employed resources
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implicit
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Which is not a characteristic of pure monopoly?
A. single seller B. price taker C. no close substitutes D. blocked entry |
b. price taker
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What is an example of a pure monopoly?
A. public utilities B. Coca-Cola C. cell phone companies D. kodak |
a. public utilities
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Which is not a characteristic of a monopolistic competition
A. small market shares B. no collusion C. services defensive D. independent action |
c. services defensive
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What is the difference between pure competition and pure monopoly completion's demand curve?
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Pure monopoly- negatively sloped
Pure competition- perfectly elastic |
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The oligopolistic game theory suggests that collusion is
A. two firms both have low prices B. two firms both have high prices C. two firms, one has a higher price than the other |
B. two firms both have high prices
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An explicit cost is-
A. omitted when accounting profits are calculated B. always in excess of a resources's opportunity cost C. an implicit cost to the resource owner who receives that payment D. a money payment made for resources not owned by the firms itself |
D. a money payment made for resources not owned by the firms itself
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In the long run,
A. all costs are fixed B. all costs equal expenses C. fixed cost is usually greater than variable costs D. all costs are variable costs |
D. all costs are variable costs
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An example of a fixed cost is _______, while an example of variable cost is _______.
A. fuel, wages B. rent, electricity C. car payments, insurance |
B. rent, electricity
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What are the four market models, and explain each thoroughly.
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Pure Competition-
. very large number of firms . products are identical to other producers (ex. cotton balls) . new firms can enter or exit easily Monopolistic Competition- . relatively large number of sellers . produces differentiated products (clothing, furniture) . entry and exit is easy Oligopoly- . few sellers . identical or differentiated products . each firm is affected by the decisions of it's rivals Pure monopoly- . sole seller of a product . no substitutes available (local electric utility) . product differentiation is not an issue |
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The oligopolistic game theory suggests that collusion is
A. two firms both have low prices B. two firms both have high prices C. two firms, one has a higher price than the other |
B. two firms both have high prices
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An explicit cost is-
A. omitted when accounting profits are calculated B. always in excess of a resources's opportunity cost C. an implicit cost to the resource owner who receives that payment D. a money payment made for resources not owned by the firms itself |
D. a money payment made for resources not owned by the firms itself
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In the long run,
A. all costs are fixed B. all costs equal expenses C. fixed cost is usually greater than variable costs D. all costs are variable costs |
D. all costs are variable costs
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An example of a fixed cost is _______, while an example of variable cost is _______.
A. fuel, wages B. rent, electricity C. car payments, insurance |
B. rent, electricity
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What are the four market models, and explain each thoroughly.
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Pure Competition-
. very large number of firms . products are identical to other producers (ex. cotton balls) . new firms can enter or exit easily Monopolistic Competition- . relatively large number of sellers . produces differentiated products (clothing, furniture) . entry and exit is easy Oligopoly- . few sellers . identical or differentiated products . each firm is affected by the decisions of it's rivals Pure monopoly- . sole seller of a product . no substitutes available (local electric utility) . product differentiation is not an issue |
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Which is not a characteristic of pure competition?
A. price takers B. free entry and exit C. heterogeneous product D. larger number of firms |
c. heterogeneous product
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In pure competition which of the following holds true
A. D=TR=AR B. D=P C. TR=AR=P D. D=MR=AR |
d. D=MR=AR
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When referring to labor market:
A. if demand increases, price increases, labor demand increases B. if demand increases, price decreases, labor increases C. if demand increases, wages increase D. if demand increases, price increases, labor wages decrease |
a. if demand increases, price increases, labor demand increases
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What is the elasticity of labor demand equation?
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c.i. % Q (L.D.)
E(L)= ------------------------------- c.i. % wage |
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Which of the following is correct about monopsony?
A. there is only one buyer B. there is only one seller C. there is only one resource D. there is only one demand |
a. there is only one buyer
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Which would be considered the highest human capital?
A. high school diploma B. trade school diploma C. Bachelors degree D. Masters/ Ph.D |
D. Masters/Ph.D
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Name 5 of the 7 income inequalities
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1. ability
2. education and training 3. preferences and risks 4. discrimination 5. unequal distribution of wealth 6. market power 7. luck, connections, and misfortunes |
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The U.S. has a trade ______ in goods and a trade ______ in services.
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deficit, surplus
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True or False-
The depreciation of a currency means it takes fewer units of it to buy a single unit of some other currency. |
False
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Which is not a characteristic of pure competition?
A. price takers B. free entry and exit C. heterogeneous product D. larger number of firms |
c. heterogeneous product
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In pure competition which of the following holds true
A. D=TR=AR B. D=P C. TR=AR=P D. D=MR=AR |
d. D=MR=AR
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When referring to labor market:
A. if demand increases, price increases, labor demand increases B. if demand increases, price decreases, labor increases C. if demand increases, wages increase D. if demand increases, price increases, labor wages decrease |
a. if demand increases, price increases, labor demand increases
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What is the elasticity of labor demand equation?
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c.i. % Q (L.D.)
E(L)= ------------------------------- c.i. % wage |
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Which of the following is correct about monopsony?
A. there is only one buyer B. there is only one seller C. there is only one resource D. there is only one demand |
a. there is only one buyer
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Which would be considered the highest human capital?
A. high school diploma B. trade school diploma C. Bachelors degree D. Masters/ Ph.D |
D. Masters/Ph.D
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Name 5 of the 7 income inequalities
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1. ability
2. education and training 3. preferences and risks 4. discrimination 5. unequal distribution of wealth 6. market power 7. luck, connections, and misfortunes |
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The U.S. has a trade ______ in goods and a trade ______ in services.
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deficit, surplus
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True or False-
The depreciation of a currency means it takes fewer units of it to buy a single unit of some other currency. |
False
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What is the economic meaning of the expression that "there is no such thing as a free lunch"?
A. it refers to "free-riders", who do not pay for the cost of a product, but who receive the benefit from it B. it means that economic freedom is limited by the amount of income available to the consumer C. it means that there is an opportunity cost when resources are used to provide "free" products D. it indicates that products only have value because people are willing to pay for them |
C. it means that there is an opportunity cost when resources are used to provide "free" products
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Which would not be characteristic of a capitalist economy?
A. government ownership of the factors of production B. competition and unrestricted markets C. reliance on the market system D. free enterprise and choice |
A. government ownership of the factors of production
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An economic system in which money is not used is a:
A. planned economy B. market economy C. mixed economy D. barter economy |
D. barter economy
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Which of the following will not cause the demand for product K to change?
A. a change in the price of close-substitute product J B. an increase in consumer incomes C. a change in the price of K D. a change in consumer tastes |
C. a change in consumer tastes
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If the price elasticity of demand for a good is . 75, the demand for the good can be described as
A. normal B. elastic C. inferior D. inelastic |
D. inelastic
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What is the law of supply?
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as P increases, Qsupplied increases
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Assume that there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is associated with
A. rival goods B. complementary goods C. public goods D. capital good |
C. public goods
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What are the characteristics of private goods?
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rivalry and exclusibility
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What are the characteristics of public goods?
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non-rivalry and non-exclusibility
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What are capital goods described as being?
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machines
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To the economist. total cost includes:
A. explicit and implicit costs, including a normal profit B. neither implicit nor explicit costs C. implicit, but not explicit costs D. explicit, not not implicit costs |
A. explicit and implicit costs, including normal profit
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The short run is characterized by-
A. plenty of time for firms to either enter of leave the industry B. increasing, but not diminishing returns C. at least one fixed resource D. zero fixed costs |
C. at least one resource
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True or False-
Long runs do not have any fixed costs |
true
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True or False-
In the short run, industries have time to enter and leave the industry |
false
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Which of the following is more likely to be a variable cost?
A. fuel and power payments B. interest on business loans C. rental payments on IBM equipment D. real estate taxes |
A. fuel and power payments
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True or False-
Variable cost is changing as output changes |
true
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Which market model has the least number of firms?
A. Monopolistic competition B. Pure competition C. Pure monopoly D. Oligopoly |
C. Pure monopoly
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Which characteristic would best be associated with pure competition?
A. few sellers B. price taker C. nonprice competition D. product differentiation |
B. price taker
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Sam owns a firm that produces tomatoes in a purely competitive market. The firm's demand curve is:
A. a vertical line B. a horizontal line C. upsloping to the right D. downsloping to the right |
a horizontal line
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In a typical graph for a purely competitive firm, the intersection of the total cost and total revenue curves would be:
A. a point of maximum economic profit B. a point of minimum economic loss C. a point where MR=MC D. a break-even point |
D. a break even point
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One defining characteristic of pure monopoly is that:
A. The monopolist is a price taker B. The monopolist uses advertising C. The monopolist produces a product with no close substitutes D. There is relatively easy entry into the industry, but exit is difficult |
C. The monopolist produces a product with no close substitutes
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A barrier to entry that significantly contributes to the establishment of a monopoly would be:
A. patents B. X-inefficiency C. price-taking D. diseconomies of scale |
A. patents
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Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:
A. Marginal cost= demand B. Marginal revenue= demand C. Average total cost= demand D. Marginal cost= marginal revenue |
D. Marginal cost= marginal revenue
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Allocative inefficiency due to unregulated monopoly is characterized by the condition:
A. P=MC B. P=MR C. P>MC D. P>AVC |
C. P>MC
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Compared to pure competition, monopolistic competition:
A. provides greater product differentiation at the cost of some excess capacity B. offers less product differentiation but attains equal productive efficiency C. provides greater product differentiation and achieves greater productive efficiency D. offers less product differentiation and lower productive efficiency |
A. provides greater product differentiation at the cost of some excess capacity
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Which would be most characteristic of oligopoly?
A. easy entry into the industry B. many large producers C. product standardization D. mutual interdependence |
D. mutual interdependence
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The demand for labor will decrease in response to-
A. Increased productivity B. Better training of all laborers C. A decrease in the supply of labor D. Decreased demand in markets for consumer goods and services |
D. decreased demand in markets for consumer goods and services
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Two resource inputs, capital and labor. are complementary and used in fixed proportions. An increase in the price of capital will-
A. increase the demand for labor B. decrease the demand for labor C. decrease the quantity demanded for labor D. have no effect because the relationship is fixed |
B. decrease the demand for labor
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A Lorenz curve showing perfect equality in the distribution of income-
A. coincides with the horizontal axis B. coincides with the vertical axis C. is a straight line with a 45-degree angle D. is a curve bowed to the southwest |
C. is a straight line with a 45-degree angle
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Complete income equality using the Gini ratio would be reflected by a value of-
A. 3 B. 2 C. 1 D. 0 |
D. 0
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Nation X has a comparative advantage in the production of a product compared to Nation Y when:
A. it imposes a tariff on the import of the product B. The trading possibilities line shifts outward C. it is achieving full employment of resources D. It has the lower domestic opportunity cost of the two countries |
D. it has the lower domestic opportunity cost of the two countries
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