Econ111

Front 1

True, False or Uncertain: When considering the cost of post-secondary education, the salary of unskilled labourers is immaterial.

Back 1

False. Immaterial is defined as unimportant under the circumstances. Since post-secondary school is a pathway for people to get the skills they need for the careers they desire. The alternative to post-secondary and its associated skilled job is being an unskilled laborer.

Front 2

True, False or Uncertain: If the production possibilities boundary shifts outward (away from the origin) fewer goods of every type can be produced.

Back 2

False. When there is growth in the economy, this will cause the production possibilities boundary to shift outward. This means there is increasing amounts of goods and services being produced due to increasing consumer demand. In other words, great amounts of goods can be produced.

Front 3

True, False or Uncertain: The following statement is a purely positive economic statement: "Everyone should be able to find employment"

Back 3

False. Positive statements are about what actually is (was or will be) as opposed to what ought to be. This statement implies a value judgement and not a statement of fact.

Front 4

What is the law of marginal diminishing returns?

Back 4

In a production process, as one input variable is increased, there will be a point where the marginal (or incremental) per unit unit output will start to decrease (keeping all factors constant). Parabola curves will represent diminishing marginal returns of output for part of the function when one increases the variable.

Front 5

What is a linear demand curve?

Front 6

What is a positive statement?

Back 6

A statement about what actually is (was or will be) as opposed to what ought to be.

Front 7

What is a normative statement?

Back 7

A statement about what ought to be as opposed to what actually is.

Front 8

What is a endogenous variable?

Back 8

A variable that is explained within a theory. Sometimes called an induced variable or a dependent variable.

Front 9

What is a exogenous variable?

Back 9

A variable that is determined outside the theory. Sometimes called an autonomous variable or an independent variable.

Front 10

What is a demand curve?

Back 10

The graphical representation of the relationship between quantity demanded and the price of a commodity, other things being equal.

Front 11

What is elastic demand?

Back 11

Following a given percentage change in price, there is a greater percentage change in quantity demanded; elasticity greater than 1.

Front 12

What is inelastic demand?

Back 12

Following a given percent change in price, there is a smaller percentage change in quantity demanded; elasticity less than 1.

Front 13

When does a linear demand curve have constant elasticity?

Back 13

When is it vertical or horizontal in which case is has 0 elasticity and infinite elasticity, respectively.

Front 14

What happens to the supply curve when there is an increase in the cost of inputs?

Back 14

Shifts to the left because this means an increase in the cost of production. An increase in production cost means a decrease in supply.

Front 15

What happens to the demand curve when there is an increase in demand?

Back 15

It will shift to the right.

Front 16

What happens when there is a per unit sales tax?

Back 16

An price increase of a product.

Front 17

What does it mean when the demand curve is less elastic?

Back 17

It is less responsive to price changes.

Front 18

With a per unit sales tax, will producers or consumers bear more of the burden when the demand curve for the product is less elastic?

Back 18

Consumers will bear more of the burden because the demand curve is less responsive to price changes or, in other words, consumers will still pay for the item even will an increase in cost.

Front 19

Is there always gains from trade?

Back 19

Yes.

Front 20

What is the income effect?

Back 20

The income effect of a price change is the change in consumption that results from a change in the real income of the consumer, while keeping relative prices fixed.

Front 21

What is the substitution effect?

Back 21

The substitution effect of a price change is the change in quantity demanded that results from a move along the indifference curve to a point where the MRS equals the slope of the new budget line.