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60 Cards in this Set

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  • Back
For economists, the word "utility" means
pleasure or satisfaction
In economics, the pleasure, happiness, or satisfaction received from a product is called:
utility
According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to
cover." According to economists, "Want" exceeds "Have" because:
productive resources are limited
According to economists, economic self-interest:
is a reality that underlies economic behavior.
Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment. "His friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of
deposit instead of the coins. The economist's analysis in this case incorporates the idea of
opportunity costs
A person should consume more of something when its marginal
benefit exceeds cost
The study of economics is primarily concerned with:
choices that are made in seeking the best use of resources.
The economic perspective entails:
a comparison of marginal benefits and marginal costs in decision making.
The assertion that "There is no free lunch" means that:
all production involves the use of scarce resources and thus the sacrifice of alternative goods.
Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. This is a reflection of:
purposeful behavior.
A market
is an institution that brings together buyers and sellers
Markets, viewed from the perspective of the supply and demand model:
assume many buyers and many sellers of a standardized product.
The law of demand states that, other things equal:
price and quantity demanded are inversely related.
Graphically, the market demand curve is:
the horizontal sum of individual demand curves.
The demand curve shows the relationship between:
price and quantity demanded.
Economists use the term "demand" to refer to:
a schedule of various combinations of market prices and amounts demanded.
The relationship between quantity supplied and price is _____ and the relationship between quantity
demanded and price is ____.
direct, inverse
When the price of a product increases, a consumer is able to buy less of it with a given money income.
This describes the:
income effect.
A demand curve:
indicates the quantity demanded at each price in a series of prices.
In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:
the price of the product itself.
An increase in the price of a product will reduce the amount of it purchased because:
consumers will substitute other products for the one whose price has risen.
The income and substitution effects account for:
the downward sloping demand curve.
Refer to the above diagram. A decrease in supply is depicted by a:
shift from S2 to S1.
In moving along a demand curve which of the following is not held constant?
the price of the product for which the demand curve is relevant.
Refer to the above diagram. A surplus of 160 units would be encountered if the price was:
$1.60.
Refer to the above diagram. The equilibrium price and quantity in this market will be:
$1.00 and 200.
Refer to the above diagram. A surplus of 160 units would be encountered if the price was
$1.60
Refer to the above diagram. A shortage of 160 units would be encountered if price was:
$0.50
Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market:
demand has increased and equilibrium price has decreased.
Refer to the above diagram, in which S1 and D1 represent the original supply and demand curves and S2 and D2 the new curves. In this market the indicated shift in supply may have been caused by:
the development of more efficient machinery for producing this commodity.
The price elasticity of demand coefficient measures:
buyer responsiveness to price changes.
If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will
increase the quantity demanded by about 25 percent
Suppose that as the price of Y falls from $2.00 to $1.90 the quantity of Y demanded increases from 110 to 118. Then the price elasticity of demand is
1.37
Which of the following is not characteristic of the demand for a commodity that is elastic?
The elasticity coefficient is less than one.
If the demand for product X is inelastic, a 4 percent increase in the price of X will
decrease the quantity of X demanded by less than 4 percent.
If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then:
the price elasticity of demand is 2.25
The price elasticity of demand for widgets is 0.80. Assuming no change in the demand curve for widgets, a 16 percent increase in sales implies a:
20 percent reduction in price
Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per
pizza and doing very little business. Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time. We can expect that each successive week:
demand will become less price elastic.
A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent
the:
more inelastic the demand for the product.
The above diagram shows two product demand curves. On the basis of this diagram we can say that
over range P1P2 price elasticity of demand is greater for D1 than for D2.
Suppose we find that the price elasticity of demand for a product is 3.5 when its price is increased by 2
percent. We can conclude that quantity demanded:
decreased by 7 percent.
The price elasticity of demand for beef is about 0.60. Other things equal, this means that a 20 percent
increase in the price of beef will cause the quantity of beef demanded to:
decrease by approximately 12 percent.
If a demand for a product is elastic, the value of the price elasticity coefficient is:
greater than one.
Refer to the above diagram. Between prices of $5.70 and $6.30:
D1 is more elastic than D2.
Refer to the above diagram and assume a single good. If the price of the good decreases from $6.30 to $5.70, consumer expenditure would:
decrease if demand were D2 only.
Market failure is said to occur whenever:
private markets do not allocate resources in the most economically desirable way.
Which of the following is an example of market failure
all of these (negative externalities, positive externalities, public goods)
Demand-side market failures occur when:
the demand and supply curves don't reflect consumers' full willingness to pay for a good or service.
People enjoy outdoor holiday lighting displays, and would be willing to pay to see these displays, but
can't be made to pay. Because those who put up lights are unable to charge others to view them, they
don't put up as many lights as people would like. This is an example of a
demand-side market failure
Supply-side market failures occur when
the demand and supply curves don't reflect the full cost of producing a good or service.
Producer surplus
is the difference between the minimum prices producers are willing to accept for a product and the
higher equilibrium price
“Would you rather die from a lethal injection prescribed by your doctor or because your doctor failed to prescribe you a drug that would have saved your life?”-this question refers to bureaucrats from which U.S. agency as mentioned in chapter 1 of the book ‘The Economics of Public Issues’ by Miller and Benjamin?
U.S. Food and Drug Administration
As mentioned in the chapter 1 of the book ‘economics of public issues’ type 1 error occurs when:
a drug that is unsafe for health and ineffective in curing the disease that it intends to cure
As mentioned in the chapter 1 of the book ‘economics of public issues’ type 2 error occurs when:
a drug should be introduced but it is held back by FDA regulation
As indicated in chapter 2 of ‘Economics of Public Issues’ , importing more oil from overseas is politically unpopular because:
We don’t like to be “held hostage” by the foreign oil exporting countries
According to chapter 2 of the book ‘Economics of public issues’ total Oil spill into the Gulf of Mexico due to BP – Deep Water Horizon disaster was amounted to be
500,000 metric tons
According to chapter 2 of the book ‘Economics of public issues’, efficient amount of pollution occurs when
marginal benefit from pollution is greater than marginal cost of pollution
Ethanol cam be produced from corn or sugarcane. Use of more and more corn and sugarcane to produce more and more ethanol will most likely:
increase the price of corn breads and sugar syrups
According to Miller, Benjamin and North (chapter 3), what are the three reasons Americans are experiencing surge in poundage.
decline in physical activity, decrease in per capita caloric energy expenditures, and higher caloric intake;
According to Benjamin-Miller-North (chapter 3), since 1960s, following four technological innovations have occurred in the food processing industry:
vacuum packing, flash freezing, improved preservation and flavorings, microwave.