ECON 40

if the price of a movie rises by 3 % and a as a result the quantity demanded of video rentals increases 6 % the the cross elasticity of demand is

2

Gasoline Prices increase by 50 % and other things remain the same. As a result, there is

A decrease in the quantity of gasoline demanded

The price elasticity of demand measures

How responsive the quantity demanded is to changes in price

Water bottles announce that next month the price of bottled water will rise by 25 percent , which of the following occurs immediately

The Demand for water bottles increases

The Law of Demand refers to how

The Quantity Demanded changes when the price of a good changes

Market Equilibrium occurs when

The Quantity Demanded equals the quantity supplied

The price elasticity of supply measures

The extent to which the quantity supplied of a good changes when the price of a good changes other things remaining the same

When the price of oranges increase

The quantity of oranges supplied increases

in an oligopoly there are

a few firms and barriers to entry

a cartel is

a group of firms acting together to raise price decrease output and increase economic profit

the benefit that joan gets from eating cherries is an example of

a private benefit

monopoly

a single seller of a product

oligopoly is a market structure in which

a small number of firms compete

common resource

a tuna in the ocean

Duopoly is

a two firm oligopoly

a price ceiling is a government regulation that makes it illegal to charge a price

above some specified level

if a few oil producing countries in the middle east decide to jointly limit the production of oil

they are forming a cartel

Marginal Benefit is

additional benefit we receive from consuming one more unit of a good or service

the tendency for people to enter into agreements in which they can use their private info to their own advantage and to the disadvantage of the less informed party is known as

adverse selection

the prisoners dilemma is

an example of duopoly game

In a market for laptops. which shifts the supply curve from s0 to s2

an increase in the productivity of the workers manufacturing laptops

which is external cost

an oil spil off the coast of south america

herbs inc has a large share of its market and its tempted to collude with the few firms that are in its market. Herbs operates in

an oligopoly

sammys inc competes with a few other firms because there are natural barriers to entry . sammy operates in

an oligopoly

what is the national security argument to support protection from international trade

any firm necessary in war time must be protected

While high -paid american workers fear competition with low paid foreign workers , low paid foreign workers fear completion with high paid american workers? why?

because high wages reflect high worker productivity and the low paid foreign workers are not as productive

an effective price support _______ producers and _____ a deadweight loss

benefits ; creates

if the price of corn increases by 20% and the quantity supplied of corn increases by 30% then the supply is

elastic and the elasticity of supply equals 1.5

signals are believable when the cost of sending a ______ is known ti be

false signal ;high

university of colorado reserves 5000 free tickets to each home football game for students . students must stand in line to receive their ticket . Football tickets are allocated through which method ?

first come first serve

the tool that economists use to analyze the mutual interdependence of oligopolies is

game theory

The U.S. exports

goods and services

the good produced by a monopoly

has no close substitutes

which is correct

in order to price discriminate , a firm must sell a good or service that can not be resold

when a country exports a good, the country's producer surplus _______ consumer surplus____________ and the country ________ from trade

increases ;decreases; gains

An increase in the number of fast food restaurants

increases the supply of fast food meals

setting a price support in the market for sugar beets above the equilibrium price _____ the quantity demanded produced and __________ the quantity bought by consumers

increases; deceases

when producers are hard to monitor and property rights are too costly ________ are an effective method to achieve efficient use of an

individual transferable quotas ; common resource

The Supply of beach front property on st. simons Island is

inelastic

If the percentage change in price is 10% and the demand is elastic, then the percentage change in quantity demanded is

larger than 10 %

when a city licenses only 3 taxi firms to serve the market the city has created a

legal oligopoly

during the winter theme parks close early than in the summer the reason is because marginal revenue from staying open later is ____ the marginal cost

less than

one of the major reasons US exports jet airplanes is because Boeing faces a ______ opportunity cost compared with firms in other nations in the production of such aircraft

lower

monopolistic competition is defined as a type of market structure in which

many firms produce the good

the characteristics that describe a perfectly competitive industry include

many firms selling an identical product

a perfectly competitive firm is a price taker because

many other firms produce the same product

Education has an external benefit. So to achieve the efficient level of education, an education voucher must equal the difference between

marginal (private )benefit and the marginal social benefit

to an economist "value " is the same as

marginal benefit

A competitive market with no externalities is efficient when it is in equilibrium because

marginal benefit equals marginal cost

a market with a large number of sellers

might be a monopolistically competitive or a perfectly competitive market

an industry with a large number of firms differentiated products and free entry and exit is called

monopolistic competition

which market structure; large number of firms , each firm produces a differentiated product, firms are free to enter and exit

monopolistic competition

because of don has health insurance he is more likely to see the doctor when he has a cold this is an example of

moral hazard

there are two bookstores in a college town if another bookstore opened each of the stores would incur an economic loss . This bookstore market is

natural oligopoly

people eat at a restaurant less often when their incomes fall because of a recession. Eating at restaurants must be a

normal good

public goods create a free rider problem because

people can enjoy the good or service no matter whether or not they pay for it

the missing insurance market in health care is the insurance market for

people who have pre existing health care problems

the tragedy of the commons is the absence of incentives to

prevent overuse and depletion of the common resource

pizza producers charge one price for a single pizza and almost give away the second one the is and ex of

price discrimination

firms on monopolistic competition compete on

quality, price, marketing

for a syrup producer in central vermont profit is maximized at the level of out put for which total

revenue exceeds total cost by the largest amount

all games have

rules , strategies and payoffs

a perfectly competitive firm

sells a product that has perfect substitutes

single price monopoly

sets a single price for all consumers

a payment made by the government to private producers of roads and libraries would be an example of

subsidy

a tax on a good that is imposed by the importing country is called a

tariff

an example of someone bearing the burden of a negative production externality would be

taylor living down wind from a smelly feedlot where pigs are raised

people who benefit from a rent ceiling include

tenants who have rent controlled apartment

Asymmetric information means

that either the buyer has information that the seller does not have or the seller has information that the buyer does not have

marginal revenue is

the change in total revenue from a one unit increase in the quantity sold

The idea of the big trade off points out the costs of

transferring income using taxes that decrease efficiency

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11%, the demand for the rye bread is _________________ and the bakery's total revenue _______________________.

unit elastic; does not change

positive externality and hence can be under provided

vaccination

a good or service is excludable if

when you pay for the good or resource, you are guaranteed to be the sole consumer

government bureaucracies over provide public goods and grow larger because of their goal of ____________ with _________ of the voters

budget maximization ; rational ignorance

cap and trade refers to

capping emissions and issuing tradeable emissions permits

a group of firms acting together to limit output , raise price and increase economic profit is called

cartel

a differentiated product has

close but not perfect substitutes

allocating resources by the order of someone in authority is a ________ allocation method

command

screening means that an auto insurance company

creating an incentive for a risky driver to reveal that he or she is risky

when a nation starts importing a good or service, domestic employment in that industry

decreases

pure private good

the new heat pump your neighbor bought for their house

the difference between private cost and social cost is

the private cost only considers the cost of borne producers of the good

A price ceiling in the market for gasoline that is below the equilibrium price will lead to

the quantity demanded of gasoline exceeding the quantity supplied

suppose the equilibrium price of a gallon of milk is $4. If the government imposes a price floor of $5 per gallon of milk

the quantity supplied of milk exceeds the quantity demanded

character of monopoly

there are barriers to enter the markert

in both monopolistic competition and perfect competition

there is easy entry and exit