Micro Econ Exam 2

Front 1

The reason the demand curve slopes downward can be explained by.

Back 1

Diminishing Marginal utility

Front 2

overall satisfaction a customer gets from a product is

Back 2

Total utility

Front 3

extra or additional satisfaction a customer gets is

Back 3

marginal utility

Front 4

In deriving consumer's demand for a particular product, the two factors that are held constant. (besides preferences and tastes)

Back 4

Income of the consumer and Prices of other priducts

Front 5

Fall in price increases a consumers real income and increase in price decreases real income

Back 5

income effect

Front 6

summing the marginal utilities of each unit consumed will determine

Back 6

total utility

Front 7

A decrease of price of product Z will

Back 7

increase the marginal utility per dollar spent on Z

Front 8

The reason the substitution effect works to encourage a consumer to buy more of a product when its price decreases because

Back 8

the price is relatively less expensive than it was

Front 9

water is less than diamonds because

Back 9

the marginal utility of a diamond is greater than that of water

Front 10

The full price of a product to a consumer is

Back 10

its market price plus the value of its consumption time

Front 11

noncash gifts are preferred

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less because they decrease total utility

Front 12

When a consumer's income increases the buget line shifts what direction?

Back 12

right

Front 13

A set of indifference curves reflects different levels of total utility and is called an (blank)

Back 13

indifference map

Front 14

farther from the indifference curfe total utility obtained is

Back 14

greater

Front 15

utility is cardinal or numerically measured

Back 15

Marginal utility approach to consumer behavior

Front 16

utility is ordinal and preferences are ranked

Back 16

indifference-curve approach

Front 17

the slope of an indifference curve measures

Back 17

marginal rate of substitution

Front 18

marginal rate of substitution

Back 18

falls as you move downward along indifference curve

Front 19

indifference curve analysis the

Back 19

consumers preferences are held constant

Front 20

midpoint formula

Back 20

change in quantity/sum of quantities/2
/
change in price/sum of prices/2

Front 21

small change

Back 21

inelastic

Front 22

large change

Back 22

elastic

Front 23

four most important determinants of price elasticity of demand

Back 23

number of good substitute products, importnance of the product in th budget of the buyer, good is necesity or luxury, period of time of which demand is being considered.

Front 24

most important factor affecting price elasticity of supply is

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time

Front 25

The measure of the sensitivity of the consumption of a product given a change in the price of another product is the

Back 25

cross elasticity of demand

Front 26

measures of the responsiveness of consumer purchases to changes in income is the

Back 26

income elasticity of demand

Front 27

producer using best techniques and combos to make best possible product

Back 27

product efficiency

Front 28

when optimal amount of produc tis being produced relative to the other goods

Back 28

allocative efficiency

Front 29

upper left portions of demand curves tend to be

Back 29

elastic

Front 30

when a business increases prices while demand is inelastic total revenues will

Back 30

increase

Front 31

spending remains the same even when price of product falls means that demand for that product is

Back 31

unit price elastic

Front 32

chief determinant of price elasticity of supply of a product is

Back 32

the length of time the sellers have to adjust to a change in price

Front 33

economic profit

Back 33

economic profit = total revenue-economic cost

Front 34

short run

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capacity is fixed but can vary its output

Front 35

marginal product

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marginal product= change in total product/change in labor or resource input

Front 36

average product or labor productivity

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average product=total product/units of labor

Front 37

total cost

Back 37

total cost=total fixed cost+total variable cost

Front 38

average fixed cost

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average fixed cost=total fixed cost/ output or Q

Front 39

Average variable cost

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average variable cost=total variable cost/ output or Q

Front 40

Average total cost

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average total cost= total cost/Q=tfc/Q + tvc/Q=AFC+AVC

Front 41

Marginal cost

Back 41

MC=change in TC / change in Q

Front 42

marginal cost and average variable cost are equal at the output at which

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average product is a maximum

Front 43

AVC may be either increasing or decreasing when

Back 43

AFC is decreasing

Front 44

If price of labor or some other variable resource increased

Back 44

the MC curve would shift upward

Front 45

if a long run average total cost curve i downsloping then that indicates

Back 45

that there are economies of scale

Front 46

economies of scale

Back 46

explain downsloping part of atc curve, as plant size increases factors for a time being will lead to lower average costs of production

Front 47

factors that contribute to economies of scale

Back 47

labor specialization, managerial specialization, Efficient capital

Front 48

average variable cost

Back 48

average variable cost= total cost / Q

Front 49

Pure competition

Back 49

very large number producing standardized product, free to leave

Front 50

pure monopoly

Back 50

one firm producing standardized product

Front 51

monopolistic competition

Back 51

large number of sellers producing different products

Front 52

oligopoly

Back 52

few sellers of a standardized product

Front 53

pure competition characteristics

Back 53

very large number, staandardized product, price takers, price taker, free entry and exit

Front 54

demand schedule curve confronted by the individual purely competetive market is

Back 54

perrfectly elastic

Front 55

in pure competition product price is

Back 55

equal to marginal revenue

Front 56

barriers of entry into a monopoly

Back 56

economies of scale, legal barriers, ownership or control of essential resources, pricing

Front 57

demand curve for a pure monopoly is

Back 57

downsloping

Front 58

this is true regarding demand data for a monopolist

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marginal revenue decreases as average revenue increases

Front 59

supply curve for a pure monopolist

Back 59

does not exist

Front 60

price that achieves allocative efficiency is called

Back 60

socially optimal price