Econ final review
13. When building a model economists
simplify reality in order to highlight what really matter
14. The production possibility frontier illustrates that
if all resources of an economy are being used efficiently, more of one good can be produced only if less of another food is produced
Strategy tit for tat
in game theory, a strategy that involves playing cooperatively at first, then doing whatever the other player did in the previous period.
3. Microeconomics deals with
individual decision makers in the economy
19. An economy is said to have a comparative advantage in the production of one good if
it has the lowest opportunity costs for producing particular good
84. Reference 15-18 the firm show in the figure may engage in advertising because
its price is greater than marginal cost
In a monopoly to sell more they
lower the price
New York City limits the number of taxi cabs that can legally operate in the city. The most likely result of this practice is that
quantity control (cab fares will be higher)
39. producer surplus is represent by
the area above supply curve and below the price
15. If the economy produces 2 units of consumer foods per period, it also can produce at most ____ units of capital good
24
68. What is the average total cost of producing six purses
50
(Table: Spring Water) The table Spring Water shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. At the profit-maximizing output, profit is:
7.00
(Figure: A Rock Climbing Shoe Monopoly) Look at the figure A Rock Climbing Shoe Monopoly. If the firm acts to maximize profit, the firm will sell ________ pairs of shoes at a price of ________ per pair.
75. The firm will sell Q2 pairs of shoes at a price of P1 per pair
24. Which of the following factors would cause a movement along the demand curve a particular good?
A change in the price of that good
All else equal, if a price floor that is above the equilibrium price is imposed on a market and the government buys the surplus, what will happen to consumer and producer surplus?
Consumer surplus will fall and producer surplus will rise.
9. You are analyzing a trade-off when you compare _____ and _____ of doing something
Costs and Benefits
11. If the united states is more productive than Mexico in all line of production, than the united states cannot benefit from trade with mexico
False
73. Beef industry is perfectly competitive
False
5. In china, which of the following would not be a resource in the production of rice?
Money
62. if you cant recover what u spend-
Sunk cost
1. The study of economics arises because of the necessity for choice, and the necessity for choice arises because of the fundamental problem of scarcity of resources
True
2. A trade off involves weighing the costs and the benefits
True
41. binding minimum wage will generally cause
True
82. Non-cooperative equilibrium of a prisoners dilemma kind of game can be avoided by engaging in strategic behavior
True
29. A good is inferior if which of the following is true?
When income increases demand decreases
Which of the following two statements is a positive statement? Which is a normative statement? X. The federal minimum wage is increasing to $7.50 an hour. Y. The minimum wage should be high enough that families will not live in poverty.
X is positive; Y is normative (should be=normative)
64. a factor of production whose quantity can be changed during the short run is
a variable factor of production
30. The primary difference between a change in supply and a change in the quantity is that
a change in quantity supplied is amovement along the supply while change in supply is a shift
A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system. Therefore, you would expect the demand for:
a home entertainment system to be more price elastic
47. elasticity 15% growth;
affect on total revenue will rise
23. The law of demand state that other things equal
as the price increases, the quantity demanded will decrease
17. Look at the figure guns and butter, this production possibility frontier is
bowed out from the origin because of increasing opportunity costs
The government decides to impose a price ceiling on a good, because it thinks the market-determined price is "too high." If the government imposes the price ceiling below the equilibrium price
consumers will respond to the lower price and therefore wish to purchase more of the good than at the equilibrium price.
the pricing in monopoly prevents some mutually beneficial trades from taking place. the value of these unrealized mutually beneficial trades is called
deadweight loss
27. If goods a and b are substitutes, a decrease in the price of good b will
decrease the demand for good A
28. If goods A and Z are complements an increase in the price of good Z will
decrease the demand for good A
50. yovanka has diabetes
demand for insulin is inelastic
22. The terms decrease in demand and decrease in quantity demanded can be used interchangeably
false
57. tax structure
false
59. administrative costs-
false
85. Tacit collusion-
not something monopolistic competition engages in
48. public transit-
price inelastic
The total producer surplus in the Wisconsin milk market represents ______.?
the sum of the individual producer surpluses in this market
52. suppose the price elasticity for demand for blueberries is 1.5-
total revenue will fall
4. Scarcity in economics means
we do not have sufficient resources to produce all the goods and services we want
35. Consumer surplus
what the consumers willing to pay minus good
80. A nash equiblirium-
occurs when each player pursues a dominant strategy.
61. because resources are scarce the true cost of something is its
opportunity cost
58. to minimize deadweight loss, excise tax-
true
65. the total product curve for the wallmark greeting card company shows how the quantity of output depends on ....
true
70. Long run equilibrium in a perfectly competitive market, all firms will be operating at their lowest possible average totally cost-
true
79. Oligipolgy choose often not to keep on price
true
Cindy's Nail
true
74. In the short run id a perfectly...
true (marginal cost equals marginal revenue)
71. Lawn mowing service, he should close-
false
Critics of the pharmaceutical industry often argue that price ceilings should be imposed on the drug manufacturers. If this happened, the quality of drugs would improve.
false
25. Which of the following statements is correct?
A change in the quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve
Which of the following is (are) true concerning monopoly?
A) monopoly is at the opposite end of the spectrum from a perfectly competitive firm B) a monopoly has no rivals C) Barriers to entry prevent other firms from entering the industry D) all of the statements are true D is correct
16. Look at the figure Guns and butter, on this figure points A, B, E, F
indicate combinations of guns and butter that society can produce using all of its factors efficiently
8. A choice made ______ is a choice whether to do a little more or a little less of something
at the margin
10. In an attempt to reduce shooting deaths, some cities have offered money to people who turn in illegal guns. This program is an example of the government using _____ to influence behavior
incentives
price controls
legal restrictions on the prices that can be charged for goods and services in a market
63. economy profit reflect
opportunity cost
18. Technological improvement will
shift the production possibility frontier outward; (increasing productivity)
If an increase in price for cotton increases total revenue, then the price effect is ________ the quantity effect.
stronger than
26. When the economy suffers a downturn and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for the phenomenon
travel is a normal good and vacation travel by car is an inferior good
21. A competitive market occurs when there are many buyers and sellers of the same good
true
54. lump sum tax-
true
55. progressive tax is based on ability to pay-
true
56. tax system causes loss in efficiency bc taxes distort incentives-
true
6. Opportunity cost is the
value of the best alternative forgone in making any choice
7. You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook the opportunity cost is
your enjoyment of the new CD player