Ec 110 Final

Front 1

If the supply of a product decreases, then we would expect equilibrium price to ? and equilibrium quantity to ?

Back 1

Increase and quantity to decrease

Front 2

An increase in the price of a good will ?

Back 2

increase quantity supplied

Front 3

Which markets are represented in the simple circular flow diagram?

Back 3

markets for goods and services and markets for factors of production

Front 4

Lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of

Back 4

crystal to increase

Front 5

Comparative advantage is related most closely to what?

Back 5

opportunity cost

Front 6

Mark is refinishing a cabinet that he spent $180 on to restore it. He expects to be able to sell the cabinet for $360. He discovers that he must do an additional $200 of work on it to make it worth $360 to potential buyers. He could sell the cabinet now, without doing any work and make $100. What should he do?

Back 6

He should complete the work and sell the cabinet for $360.

Front 7

At equilibrium price, the quantity of the good that the buyers are willing and able to buy

Back 7

exactly equals the quantity that sellers are willing and able to sell

Front 8

If the price of apple pies rose to $100 per pie, consumers would purchase fewer pies than if the price were $5 per pie. If the price of ice cream fell to $0.30 per scoop, consumers would purchase more ice cream than if the price were $5 per scoop. These relationships illustrate the

Back 8

law of demand

Front 9

Pizza is a normal good if the demand for pizza

Back 9

rises when income rises

Front 10

The opportunity cost of obtaining more on one good is shown on the production possibilities frontier as the

Back 10

amount of the other good that must be given up

Front 11

Production is efficient if the economy is producing at a point

Back 11

on the production possibilities frontier

Front 12

When a society is cannot produce all the goods and services people wish to have, it is said that the economy is experiencing

Back 12

scarcity

Front 13

When computing the opportunity cost of attending a concert you should include

Back 13

the price you pay for the ticket and the value of your time

Front 14

If muffins and bagels are substitutes, a higher price for bagels would result in a

Back 14

increase in the demand for muffins

Front 15

When quantity demanded decreases at every possible price, the demand curve has

Back 15

shifted to the left

Front 16

A university's football stadium is never more than half full during football games. This indicates the ticket price is

Back 16

above the equilibrium price

Front 17

A decrease in the price of a good will

Back 17

increase quantity demanded

Front 18

An increase in demand is represented by a

Back 18

rightward shift of a demand curve

Front 19

Making rational decisions "at the margin" means that people

Back 19

compare the marginal costs and marginal benefits of each decision

Front 20

Which of the following is not an example of a positive, as opposed to normative, statement? Equality if more important than efficiency or higher gasoline prices will reduce gasoline consumption?

Back 20

Equality if more important than efficiency.

Front 21

For an economist, the idea of making assumptions is regarded generally as a

Back 21

good idea, since doings so helps to simplify the complex world and make it easier to understand

Front 22

Suppose that consumer incomes rise and the demand for cocoa beans rises. This implies that cocoa beans are a ? good and the new price in the market will be ?

Back 22

normal; higher

Front 23

Suppose that US general surgeon general reports that the consumption of chocolate reduces the incidence of cancer, so that individuals live, on average, three years longer. This will cause the ? to shift out. The new equilibrium price would be ?

Back 23

demand; higher

Front 24

A new harvesting system for cocoa beans has been developed, resulting in less damage to the beans and a much faster harvest. As a result of this new technology, the ? curve shifts out and the new equilibrium quantity will be ?

Back 24

supply; larger

Front 25

A serious cocoa blight occurs. This affects the ? side of the market. The new equilibrium price would be ? and the new quantity would ?

Back 25

supply; higher; smaller

Front 26

The US is suffering through a colder winter than usual, so that more people consume hot chocolate to warm themselves. This will do what?

Back 26

cause a shift in the demand curve and result in a increase in quantity supplied

Front 27

If the price of milk drops, then the demand curve for cocoa beans would shift ? and the new equilibrium price would be ?

Back 27

out; higher

Front 28

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Back 28

increase, and quantity sold in the market will increase

Front 29

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of a demand for the good is

Back 29

positive; and the good is a normal good

Front 30

If a country allows trade and, for a certain good, the domestic price without trade is higher than the world price,

Back 30

the country will be an importer of that good

Front 31

What happens to the total surplus in a market when the government imposes a tax?

Back 31

total surplus decreases

Front 32

Suppose sellers of a perfume are required to send $1 to the government for every bottle of perfume they sell. Further, suppose this tax causes the price paid by buyers of perfume to rise by $.60 per bottle. What would be an accurate statement to make?

Back 32

The effective price received by sellers is $.40 per bottle less than it was before the tax.

Front 33

Measures the benefit buyers receive from participating in a market.

Back 33

Consumer surplus

Front 34

The decrease in total surplus that results from a market distortion, such as a tax, is called

Back 34

deadweight loss

Front 35

For which pairs of goods is the cross-price elasticity most likely positive?

Back 35

Substitutes, such as pens and pencils

Front 36

A perfectly inelastic demand implies that buyers

Back 36

purchase the same amount as before when the price rises or falls

Front 37

If the price of natural gas rises, when is the price elasticity of demand likely to be the highest?

Back 37

one year after the price increase

Front 38

The price elasticity of demand measures

Back 38

buyers' responsiveness to a change in the price of a good

Front 39

If the price elasticty of demand for a good is -0.2, then a 3 percent decrease in the price results in a

Back 39

0.6 percent increase in the quantity demanded

Front 40

If the price of walnuts rises, many people would switch from walnuts to pecans. But of the price of salt rises, people would have difficulty purchasing something to use in its place. These examples illustrate the importance of

Back 40

the availability of close substitutes in determining the price elasticity of demand

Front 41

A city wants to raise revenues to build a new pool new year. The mayor suggests that the coty raise the price of admission to the current pool this year to raise revenues. The city manager suggests that the city lower the price admission to raise revenues. Who is correct?

Back 41

The answer depends on the price elasticity of demand

Front 42

Donald produces nails at a cost of $200 per ton. If he sells the nails for $350 per ton, his producer surplus per ton is

Back 42

$150

Front 43

Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then the

Back 43

buyers will bear a greater burden of the tax than the sellers

Front 44

If a price ceiling is not binding, then

Back 44

the equilibrium price is below the price ceiling

Front 45

Price ceilings cause ? and price floors cause

Back 45

shortages; surpluses

Front 46

A $3.50 tax per gallon of paint is placed on the sellers and will shift the supply curve

Back 46

upward by exactly $3.50

Front 47

The marginal product of labor can be defined as the change in

Back 47

output divided by the change in in labor

Front 48

If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will

Back 48

exactly triple

Front 49

the property whereby long-run average total cost falls as the quantity of output increase

Back 49

economics of scale

Front 50

the property whereby long-run average total cost rises as the quantity of output increases

Back 50

diseconomcis of scale

Front 51

Economists normally assume that the goal of a firm is to

Back 51

maximize its profit

Front 52

A firm that temporarily shuts down has to pay

Back 52

its fixed costs but not its variable costs

Front 53

A difference between explicit and implicit costs is that

Back 53

implicit costs do not require a direct monetary outlay by the firm, whereas explicit costs do

Front 54

Mrs. Smith operates a buisness in a competetive market. The current market price is $8.50. At her profit-maximizing level of production, the average variable cost id $8, and the average total cost is $8.25. What should she do?

Back 54

Continue to operate in both the short and long run

Front 55

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

Back 55

a one-unit increase in output will increase the firm's profit

Front 56

The cost of producing an additional unit of output is the firm's

Back 56

marginal cost

Front 57

Sam sells soybeans to a broker in New York. Because the market for soybeans in generally considered to be competitive, Sam maximizes his profit by choosing

Back 57

the quantity at which market price is equal to Sam's marginal cost of production

Front 58

John is in college and has a 1.5 GPA. His GPA will fall even further next semester if he performs worse than

Back 58

His cumulative GPA, he ever has performed before, but not worse than he did last semester.

Front 59

Economics of scale occur when a firm's

Back 59

long-run average total costs are decreasing as output increases

Front 60

Suppose that a doggie day care firm uses only two inputs: hourly workers (labor) and a building (capital) In the short run, the firm most likely considers

Back 60

labor to be variable and capital to be fixed

Front 61

When the marginal product of an input declines as the quantity of that input increases. the production function exhibits

Back 61

diminishing marginal product

Front 62

The difference between accounting and economic profit is

Back 62

implicit costs

Front 63

The short-run supply curve for a firm in a perfectly competitive market is

Back 63

the portion of its marginal cost curve that lies above its average variable cost

Front 64

A firm's opportunity costs of production are equal to its

Back 64

explicit costs+implicit costs

Front 65

Suppose that a firm operating in a perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct?

Back 65

Marginal revenue equals $5. Average revenue equals $5. Price equals $5.

Front 66

What is NOT true about a competitive market?

Back 66

Price exceeds marginal revenue

Front 67

What normally happens in the market in the long run that is making a profit?

Back 67

The market price will fall as new firms enter the market because of increased output

Front 68

Reasons a business would shut down

Back 68

1. total revenue is less than variable cost
2. Price is less than average variable cost

Front 69

Suppose a firm in a perfectly competitive market produces and sells 8 units of output and has a marginal revenue of $8. What would be the firm's total revenue if it produced and sold 4 units of output?

Back 69

4x$8=$32

Front 70

For a monopoly, when does marginal revenue exceed demand?

Back 70

Never

Front 71

When there is a surplus in a market there is a ? pressure on the ?

Back 71

downward; price

Front 72

The long run is a time period that is

Back 72

long enough to change the size of the firm's plant

Front 73

Consumer surplus is the

Back 73

amount the consumer is willing to pay less than the amount the consumer paid

Front 74

A firm that is a price taker faces a perfectly

Back 74

elastic demand curve

Front 75

New firms will exit a perfectly competitive market when

Back 75

price is less than the average total costs in the long run

Front 76

A drop in the price of cd's shifts the demand curve for tapes leftward so cds and tapes are

Back 76

complements

Front 77

What happens to the demand of a good if a complement's price increase?

Back 77

The demand decreases and the demand curve shifts leftward

Front 78

If a monopolist faces a downward sloping market demand curve. its

Back 78

marginal revenue is always less than the price of the units it sells

Front 79

Producer surplus is the

Back 79

difference between than the market price and the marginal cost of producing the good

Front 80

A higher price for ski lift tickets would

Back 80

decrease the number of skis sold

Front 81

Economic growth is shown on the production possibility frontier as

Back 81

an outward shift in the PPF

Front 82

When oligopolistic firms interacting with one another each choose their best strategy given the strategies chosen by other firms in the market, we have

Back 82

the Nash equilibrium

Front 83

The exit of firms out a competitive market causes the supply curve to

Back 83

shift leftward

Front 84

In the production of goods and services, tradeoffs exist because

Back 84

society has only a limited amount of productive resources

Front 85

In contrast to perfectly competitive markets, monopolists

Back 85

can earn an economic profit indefinitely

Front 86

Characteristic of monopolistic competition

Back 86

when firms are free to enter and exit the market

Front 87

The prisoner's dilemma provides insights into the

Back 87

difficultly of maintaining cooperation

Front 88

Profit-maximizing monopolist

Back 88

P>MR=MC