Econ202 Mid-Term

Front 1

A(n) is an issue of securities to the general public on a first come, first served basis

Back 1

A general cash offereing

Front 2

A ______ permits the investor to exchange the bond for shares of the issuing firm’s common stock

Back 2

Convertible bond

Front 3

A market where new securities are bought and sold for the first time is known as a _____ market.

Back 3

Primary

Front 4

A firm’s first offering of stock to the general public is known as:

Back 4

An initial public offering

Front 5

Acting on the belief that members of a certain group are inferior solely because of a factor such as race, gender, or religion is referred to as

Back 5

discrimination

Front 6

In a modern, developed economy, financial capital often moves _________ through electronic transfers between one bank account and another.

Back 6

invisibly

Front 7

Kind of union security, in which organizations can hire current union members is classified as

Back 7

closed shop

Front 8

Collective bargaining is defined under the

Back 8

National Labor Relations Act

Front 9

The __________________ shows the quantity of labor employers wish to hire at various salary or wage rates, under the ceteris paribus assumption.

Back 9

demand curve for labor

Front 10

A combined refusal to use or buy product of employers, by members of union or all employees is classified as

Back 10

boycott

Front 11

When the interest earned is added to the principal at regular intervals, it is known as:

Back 11

compounding

Front 12

Corporations borrow for the short term by issuing:

Back 12

commercial paper

Front 13

Moral hazard

Back 13

results from the chance that an individual may have an incentive to act in such a way as to put that individual at a greater risk

Front 14

A(n) __________ is the expected cash dividend that is normally paid to shareholders.

Back 14

regular dividend

Front 15

The venture capital used to build a prototype would most likely be:

Back 15

first stage financing

Front 16

Which of the following types of assets is least risky?

Back 16

short-term corporate bonds

Front 17

If a firm's revenues just cover all its opportunity costs, then:

Back 17

economic profit is zero.

Front 18

The short run is a time period in which:

Back 18

some resources are fixed and others are variable.

Front 19

Implicit costs are:

Back 19

"payments" for self-employed resources.

Front 20

Which of the following is correct about break even point of a company?

Back 20

Revenue = Variable expenses + Fixed expenses

Front 21

Linda spends $5 a week on apples and oranges. If the price of both goods is $1 per unit, how many apples and oranges, respectively, does she purchase per week if she wants to maximize her utility?

Back 21

1 apples and 4 oranges

Front 22

A consumption point inside the budget line

Back 22

is possible to afford but has some unspent income

Front 23

The reason the marginal cost curve eventually increases as output increases for the typical firm is because:

Back 23

of the law of diminishing returns.

Front 24

Economic profit is…

Back 24

the difference between total revenue and the opportunity cost of all the resources used in production.

Front 25

Marginal utility is the

Back 25

change in total utility that results from increasing the amount of a good consumed by one unit.

Front 26

To maximize utility, a consumer with a fixed budget will purchase quantities of goods so that the ratios of the marginal utility of each good to its

Back 26

prices are equal

Front 27

The substitution effect occurs when a price changes and consumers have an incentive to consume ______ of the good with a relatively _______ price and more of the good with a relatively _______ price.

Back 27

less; higher; lower

Front 28

A consumption point inside the budget line

Back 28

is possible to afford but has some unspent income

Front 29

How does the law of diminishing marginal utility explain why a demand curve is downward sloping?

Back 29

as the quantity consumed increases, marginal utility received from each successive unit decreases, so the price the consumer is willing to pay for higher quantities will fall

Front 30

An increase in the wage rate will increase desired hours of work if:

Back 30

the substitution effect dominates the income effect

Front 31

Marginal utility is positive, but declining, when total utility is positive and

Back 31

rising at a decreasing rate

Front 32

If the income elasticity of a demand for a good is negative, then the good is:

Back 32

an inferior good

Front 33

You are the sales manager for a sandwich shop and have been informed that the price elasticity of demand for your customer's favorite product is greater than 1. To increase total revenues you should

Back 33

decrease the price

Front 34

Price elasticity of demand measures:

Back 34

the responsiveness of demand to a change in the price of the good

Front 35

If college enrollments drop by 10% when textbook prices double; textbooks and enrollments are __________ goods and their cross price elasticity is __________.

Back 35

complementary; -0.1

Front 36

If supply is inelastic and demand decreases, the total revenue of sellers will

Back 36

decrease

Front 37

If the cross elasticity of demand between two goods is positive, then the two goods are:

Back 37

substitutes

Front 38

The cross price elasticity between two products is found to be -1/2. From this you know that the two products are:

Back 38

complements

Front 39

When an increase in price leads to an increase in total revenue, demand is said to be:

Back 39

inelastic

Front 40

A monopolist learns that the own price elasticity of a product it manufactures is 0.5. What would be the correct action for this firm to take if it wishes to increase its profits?

Back 40

Raise the price because demand for the product is inelastic.

Front 41

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:

Back 41

there are more substitutes for Cheerios than for cereals as a whole.

Front 42

The loss of the highest-valued alternative defines the concept of

Back 42

opportunity cost

Front 43

Revenue - Expenses > 0 = ______________

Back 43

Profit

Front 44

The most fundamental economic problem is

Back 44

scarcity

Front 45

What is an example of opportunity cost?

Back 45

waking up an hour earlier to go for a run instead of baking muffins for breakfast

Front 46

There is little or no government control in a ___________ economy.

Back 46

free market

Front 47

In the circular flow diagram, which of the following is true in the product market?

Back 47

Business firms sell goods and services to households.

Front 48

What is economics?

Back 48

the study of the choices we make because of scarcity

Front 49

Incentives matter

Back 49

to all human beings regardless of environment

Front 50

The law of diminishing marginal utility implies that the more of a commodity you consume, the

Back 50

less you value additional units of output.

Front 51

The analysis of the behavior of individual decision-making units is the definition of

Back 51

microeconomics