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84 Cards in this Set
- Front
- Back
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An increase in the price of pork will lead to....
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a movement up along the demand Curve
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An increase in consumer incomes will lead to...
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a rightward shift of the demand curve for plasma T.V.'s
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Holding all other factors constant, consumers demand more of a good the.....
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Lower its price
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As the price of a good increases, the change in the quantity demanded can be shown by....
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moving up along the same demand curve
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if the price of automobiles were to increase substantially, the demand curve for gasoline would most likely....
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shift leftward
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If the price of automobiles, were to decrease substantially, the demand curve for automobiles would most likely....
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remain unchanged
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If the price of automobiles were to decrease substantially, the demand curve for public transportation would most likely...
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Shift leftward
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To determine the total demand for all consumers, sum the quantity each consumer demands.....
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At a given price
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Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase. This increase in the price of the good results in...
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an increase in quantity supplied
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Supply curves.....
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Can have many shapes
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Technological innovations for alternative fuels will lead to lower price for alternative fuels which in turn will lead to....
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A leftward shift of the demand curve for regular gasoline
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If the demand curve is perfectly inelastic, a rightward shift of the supply curve will lead to...
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A decrease in the market price
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An indifference curve shows....
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Starting from any bundle on the curve, all other bundles that the consumer thinks equally desirable
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After a specific sales tax is imposed in a market, if we observe that the majority of the tax burden goes on the sellers, then what can be true....?
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The Buyers are more elastic
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If the price of public transportation were to decrease substantially, the demand curve for personal automobiles would most likely...
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Shift leftward
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If the price of automobiles were to increase substantially, the demand curve for gasoline would most likely...
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Shift leftward
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The Law of Diminishing MRS implies that you...
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Give up more "x" to get an extra "y" the less "y" you have
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Suppose the supply curve is perfectly inelastic and the demand curve is downward sloping. The price sellers receive after a specific tax is imposed on buyers...
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Is less than before the tax
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Suppose the supply curve for a good shifts rightward, causing the equilibrium price to decrease. This decrease in the price of the good results in...
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An increase in quantity demanded
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The Marginal Product of Labor is...
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The change in total product resulting from an extra unit of labor, holding other factors constant
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A firm's marginal cost can always be thought of as the change in total cost if...
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The firm produces one more unity of output
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A change in relative input prices may not lead to...
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using the same input combination as before
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A production function is...
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The maximum level of output generated from given levels of inputs
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The slope of an isoquant tells us...
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The rate of substitution between labor and capital at the margin while producing the same output level
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If the supply curve of a product changes so that sellers are now willing to sell 2 additional units at any given price, the supply curve will....
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Shift rightward by 2 units
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The market supply curve is found by
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Horizontally summing all individual supply curves
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Technological innovation in the production of computers has led to...
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A rightward shift of the supply curve for computers
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Equilibrium is defined as a situation in which...
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Neither buyers nor sellers want to change their behavior
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Once an equilibrium is achieved, it can persist indefinitely because...
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In the absence of supply/demand shocks no one applies pressure to change the price
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If price is initially above the equilibrium level...
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excess supply will exists
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EQ: A rightward shift of the demand curve would cause....
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An increase in both price and quantity
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EQ: A rightward shift of the supply curve would cause...
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Decrease in price but an increase in quantity
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A vertical demand curve results in...
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No change in quantity when the supply curve shifts
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A vertical demand curve for a particular good implies that consumers are...
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not sensitive to changes in the price of that good
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The percentage change in the quantity demanded is response to a percentage change in the price is known as the..
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Price elasticity of demand
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If the price elasticity of demand for a good is greater than one in absolute terms, we say that demand is...
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Elastic
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If the price elasticity of demand for a good is less than one in absolute terms, we say consumers of this good...
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Are not very sensitive to price
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A horizontal demand curve for a good could arise because consumers...
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Are sensitive to price changes as there is an identical substitute good.
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A specific tax on sellers will...
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Shift the supply curve to the left
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If a government wants to maximize revenues from a tax it should...
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Choose a good with a relatively inelastic demand
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If the demand curve for a good is downward sloping and the supply curve is perfectly elastic, a $1 specific tax imposed on the sellers of this good will....
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Shift the supply curve up vertically by $1
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Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. At the market EQ, if demand is more elastic than supply in absolute value, a $1 specific tax will...
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Raise the price to consumers by less than 50 cents
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Suppose the demand curve is percfectly inelastic and the supply curve is upward sloping. The price sellers receive after a specific tax is imposed on sellers....
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Is unchanged
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The tax incidence of a specific tax is influenced by...
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The price elasticities of supply and demand
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An indifference curve represents bundles of good that a consumer...
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Views as equally desirable
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Economists assume consumers select a bundle of good that...
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Gives the highest level of satisfaction among all the affordable combinations of the goods
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Efficient production occurs if a firm...
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Cannot produce its current level of output with fewer inputs
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The short run is best defined as a time period...
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In which at least one input is fixed
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In the long run, all factors of production are...
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Variable
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Joey cuts grass during the summer. He owns one lawn mower. For him, the short run is equal to...
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The amount of time it takes to buy another lawn mower
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The Average Product of Labor is...
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The ratio of output to the number of workers used to produce that output
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Total Product is...
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The amount of output that can be produced by a give amount of labor
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The Marginal Product of Labor is...
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The change in total product resulting from an extra unit of labor, holding other factors constant
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An isoquant represents levels of capital and labor that...
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Yield the same level of output
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Returns to scale refers to the change in output when...
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All inputs increase proportionally.
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Returns to scale is a concept that applies.....
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Only in the long run
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Economic costs of an input includes...
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Both implicit and explicit costs
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A firm's marginal cost can always be thought of as the change in total cost if...
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The firm produces one more unit of output
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Fixed costs are...
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A production expense that does not vary with output
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Variable costs are....
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A production expense that changes with the quantity of the output produced.
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The slope of the isocost line tells the firm how much...
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Capital must be reduced to keep total cost constant when hiring one more unit of labor
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If the wage increases the isocost line will...
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Rotate inward around the point where only capital is employed in production
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Economists define a market to be competitive when the firms...
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Are price takers
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firms that exhibit price-taking behavior...
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Have outputs that are too small to influence market price and thus take it as given
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In a perfectly competitive market...
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Firms can freely enter and exit
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If a profit-maximizing firm finds that, at its current level of production, MR>MC, it will...
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Increase output
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If a profit-maximizing firm finds that, at its current level of production, MR<MC, it will...
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Decrease output
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A firm should always shutdown if its revenue is...
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Less than its avoidable costs
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A firm will shut down in the short run if....
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Total revenue from operating would not cover variable costs
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The competitive firm's supply curve is equal to...
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The portion of its marginal cost curve that lies above AVC
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In deciding whether to operate in the short run, the firm must be concerned with the relationship between the price of the output and...
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Average variable cost
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Producer surplus is equal to...
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The difference between price and marginal cost for all units sold
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For a monopoly, marginal revenue is less than price because...
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The firm must lower price if it wishes to sell more output
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For a monopoly, marginal revenue is less than price because...
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The demand for the firm's output is downward sloping
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The monopoly maximizes profits by setting...
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Marginal revenue equal to marginal cost
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Why do firms engage in price discrimination?
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The increase profits
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When firms price discriminate they turn _____ into _____
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Consumer surplus into profit
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A perfect price discriminator...
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Charges each buyer her marginal willingness to pay for different units she buys
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The deadweight loss generated by a perfect-price-discriminating monopoly...
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equals 0
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Perfect price discrimination is....
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Mostly a theoretical possibility
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If a market is controlled by a perfect-price-discriminating monopoly, then...
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There is no consumer surplus
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A monopoly will not be able to perfectly price discriminate if...
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Obtaining information about each buyer's willingness to pay is too costly or impossible.
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If a monopoly charges higher prices to consumers who buy smaller quantities than to consumers who buy larger quantities, then....
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The monopoly's profits are larger than under single-price monopoly
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Many theme parks charge and entrance fee and a per-ride fee. This is an example of...
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a two-part tariff
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