Economics

Substitution effect

The portion of a change in quantity demanded that is due to a change in the relative price of the giod

Total revenue

Total amount earned by a firm from the sale of its products; average price of a good sold times the quantity sold

Total product

Total output or production by a firm

____ average price of a unit sold times the quantity sold

Total revenue

Raw materials

Unprocessed material; basic material that is used to produce goods

Over which of these does a producer have the most direct control ? A fixed cost B variable cost C average revenue D marginal revenuw

B

T or f To estimate elasticity, add the direction of a price change to the direction of the change in total revenue, or total expenditures

F

Quantity supplied

Specific amount offered for sale at a given price; point on the supply curve

A change in quantity demanded is represented by _____ A movement along the demand curve B a shift of the demand curve C substitution D complements

A

Prices for common vegetable tend to be elastic. Why? A because other vegetables are available B because consumers must eat C because vegetables cannot be substituted D because vegetables are inexpensive

A

Which of the following replaces a costly item with a less costly one? A substitution effect B income effect C change in demand D consumer taste

A

Which of these best describes the influence of high prices on the behavior of producers? A they have an incentive for producers to produce more B they are an incentive for producers to buy less C they encourage producers to modify their supply schedules D they have no significant overall effect on producer behavior

A

Which of these is an example of variable cost? A raw materials B interest fees on bond C state and local property taxes D payments on leased prop

A

Which term describe costs that are incurred regardless of a firms rate of production? A fixed costs and overhead B fixed costs and total costs C variable costs and overhead D variable costs and total costs

A

Why is a demand curve downward sloping? A because quantity demanded increases as price decreases B because of the natural elasticity of the market C because it shows how increasing incentives changes demand D because it reflects the desire, ability, & willingness of consumers

A

Supply curve

A graph that shows the quantities supplied at each and every possible price in the market

Demand is the desire, _____, & willingness to buy a product or service

Ability

Marginal utility

Additional satisfaction or usefulness obtainsd from aquiring or consuming one more unit of a product

Supply

Amount of a product a producer or seller would be willing to offer for sale at all possible prices in a market at a given point in time

____ the mean price of a unit of output

Average revenue

An economist performs a total expenditures test and finds that a change in price and a change in revenue move in opposite directions and concludes that the test shows ___ A demand is Inelastic B demand is elastic C demand is unit elastic D there's not enough demand

B

When the price of something increases, the quantity demanded _____ A. Increases B. Decreases C. Remains unchanged D. Reverses

B

Which of these could a firm accomplish during a short run production period? A relocation of factories B hiring & firing of workers C purchase and development of land D development of new manufacturing technology

B

Which of these is true of both an individual supply curve and a market supply curve? A change in Quantity supplied takes place when a change in demand occurs B takes place only when there is a change in price C takes place only when the price remains constant D takes place only when a change in demand is projected

B

Which of these names the way in which producers regard taxes? A as an investment in technology B as part of the cost of production C as an entry in their supply schedule D as an encouragement to productivity

B

Which of these results from the repeal of an items subsidies? A a decrease in the price of that item B a leftward shift of that items supply curve C rightward shift of that items supply curve D increase in reliance upon government regulation

B

Which term refers to a changing price that causes a proportional change in total revenue A elastic B unit elastic C Inelastic D total expenditures

B

_____ level of production needed for a firm to recover its costs

Break-even point

A demand is best described as ____ A. A graph B. An incentive C. Data D. A time line

C

For which product is demand likely to be the most elastic? A product w no substitutes B product w inadequate substitutes C product w many adequate substitutes D impossible to tell

C

In the short run, the amount of capital available for manufacturing is an example of which of these? A marginal product B diminishing return C fixed factor of production D variable factor of production

C

To determine elasticity, which question would an economist ask? A can the consumer afford the purchase? B is the product highly valued by the consumer? C what portion of the consumers income is required for the purchase? D are there complementary products the consumer might also purchase?

C

What is the main cause of a change in quantity demanded? A substitution B changes in revenue C change in price D income effect

C

When is a firms rate of hiring likely to be highest? A during a phase of negative marginal returns B during a phase of uncertain marginal returns C during a phase of increasing marginal returns D during a phase of decreasing marginal returns

C

Which is a likely complement to a tablet computer? A DVDs B movie tickets C apps D pencils

C

Which of these can be illustrated with a production function? A effect of consumer demand on total input B effect of factory reorganization on total input C effect of an increase in work hours on total output D effect of capital and wage adjustments on total output

C

Which of these is an example of a fixed cost? A labor B delivery charges for output C depreciation of capital goods D charges for a factory's electrical use

C

Which of these is the best description of a normal supply curve? A slope is completely horizontal B slope goes up when the diagram is read from right to left C slope goes up when the diagram is read from left to right D slope is mostly horizontal, with occasional vertical fluctuations

C

Why is the law of demand called a "law"? A because it is legally required B because there are no exceptions to it C because it has been demonstrated repeatedly D because it is an economic term

C

Inelastic

Case of demand elasticity where the percentage change in the independent variable(usually price) causes a less than proportionate change in the dependent variable

Different amounts demanded at every price, causing the demand curve to shift to the left or the right

Change in demand

Movement along the demand curve showing that a different quantity is purchased in response to a change in price

Change in quantity demanded

Products related in such a way that an increase in the price of one reduces the demand for the other

Complements

Theory of production

Converting inputs to outputs

Fixed costs

Costs of production that do not change when output changes

Consider the term marginal utility. Which word is the best synonym for marginal? A useful B satisfactory C borderline D additional

D

Labor in a factory is an example of which of these? A marginal product B diminishing return C fixed factor of production D variable factor of production

D

What is the relationship between income and demand? A a decrease in income increased demand B a decrease in price decreases income C a increase in price increases income D increase in income increases demand

D

What risk does a firm take by neglecting to do periodic marginal analyses? A may lose track of its fixed costs B may Lose track of its total revenue C may lose track of its breakeven point D may lose track of its profit maximizing quantity of Output

D

Change in supply

Different amounts of a product are demanded at every price, causing the demand curve to shift to the left or to the right

As people use more and more of a product they encounter ______

Diminishing marginal utility

Unit elastic

Elasticity where a change in the independent variable (usually price) generates a proportional change of the dependent variable

Marginal cost

Extra cost of producing one additional unit of production

T or f A producers "marginal product" and "total product" are generally the same amount

F

T or f Demand is elastic when a given change in price causes a relatively smaller change in quantity demanded

F

T or f The sole determinate of elasticity is the answer to this question: can the purchase be delayed?

F

T or f The third stage of production is distinguished by an increase in output

F

Subsidy

Government payment to encourage or protect a certain economic activity

Demand curve

Graph showing the quantity demanded at each and every possible price that might prevail in the market at a given time

Prices act as a motivations influence, or ______, that causes an individual to take action

Incentive

Portion of a change in quantity demanded caused by a change in a consumers income when the price of a product changes

Income effect

Quantity supplied increases when the price ______

Increases

The law of the demand states that the quantity demanded of a product varies _____ with its price

Inversely

_____ Additional expense of producing one additional unit

Marginal cost

_____ Additinal revenue generated from the sale of a single unit

Marginal revenue

A graph that shows the quantities supplied at each and every possible price in the _____ is called a supply curve

Market

The stages of production

Phases of production that consist of increasing, decreasing, & negative returns

Law of supply

Principle that more will be offered for sale at higher prices than at lower prices

Variable cost

Production cost that varied as output changes; labor, energy, raw materials

Break-even point

Production level where total cost equals total revenue; production needed if the firm is to recover its costs

Short run

Production period so short that only variable inputs(usually price) can be changed

Complement goods

Products that increase the use of other products; products related in such a way that an increase in the price of one reduces the demand for both

The market demand curve that shows the ______ by everyone who is interested in purchasing a product at all possible prices

Quantities demanded

Movement along the supply curve measures a change in _____ supplied

Quantity

Supply elasticity

Responsiveness of quantity supplied to a change in price

Law of demand

Rule stating that more will be demanded at lower prices and less at higher prices; an inverse relationship between price and quantity demanded

A _____ is a payment to an individual, business, or other group to encourage or protect a certain type of economic activity

Subsidy

Products related in such a way that an increase in the price of one increases the demand for the other

Substitutes

Total cost

Sum of variable cost plus fixed cost; all costs associated with production

_____ refers to the amount of a product offered for sale at all possible prices in market

Supply schedule

T or F Demand elasticity is the extent to which a change in price causes a change in the quantity demanded

T

T or F Demand is unit elastic when a given change in price causes a proportional change in quantity demanded

T

T or f Changes to variable and fixed input are easiest during a long run production period

T

T or f The stages of production are distinguished by their marginal products

T

T or f The stages of production measure the effects of workforce size on marginal product

T