Exams

The line showing the revenue and profit maximizing proportions of two products as the firm increases or decreases its level of output is referred to as the

expansion path

What are net exports?

exports minus imports

An Indifference Curve identifies all combinations of all goods that gives us the same level of utility.

false

An isoquant is the graphical equivalent in production economics to what the budget line is to consumption economics.

false

As we move upward to the right from the origin from one indifference curve to the next utility decreases.

false

Expanding the size of a firm by adding another firm through its purchase or other means of merger is Internal Growth.

false

Firms in imperfectly competitive markets invite price competition because their demand curves are interdependent

false

Ford and General Motors operate in a purely competitive market

false

The income approach of calculating GDP sums up the value of all purchases or expenditures made by final consumers

false

The market demand curve slopes upward to the right. The firm in pure competition faces a horizontal demand curve; the pure monopolist's demand curve is the market demand curve.

false

The slope of the budget line is less than the slope of the indifference curve at the point where a consumer maximizes their utility.

false

U.S. Gross National Product refers to the total value of goods and services produced only within the United States either by foreign or domestic resources.

false

When a consumer's income increases, they will consume less of Normal goods and more of Inferior goods.

false

When a firm advertises to create a special image about its product in the mind of consumers it is competing through price competition.

false

When money is spent on inputs for production, such as to hire labor, repair machinery, buy seed, fuel, or other inputs for which cash expenditures are made it is referred to as Implicit Cost.

false

A horizontal merger is

merger between two firms in the same industry

Which of the following is not considered one of the four general social goals of the term quality of life? a. peace. b. success c. security d. justice e. freedom

success

Internal Growth is expanding a firm's capital and facilities as the market for that firm's output grows.

true

A conglomerate merger is

A merger between firms that are involved in totally unrelated business activities

Macroeconomic equilibrium occurs at a point where

Aggregate Demand is equal to Aggregate Supply

The income of an Italian citizen working in Canada will be included in the

GDP of Canada

Expansionary monetary policy involves

Increasing money supply and decreasing interest rates

When the price of a good changes and the quantity of that good demanded changes it is called:

a change in quantity demanded

Economic theory suggest which of the following is true regarding comparative advantage and absolute advantage?

a country will be better off by producing those goods for which it has a comparative advantage, and importing goods for which it holds a comparative disadvantage.

A tariff is:

a tax on imported goods

What will result in a shift in the aggregate supply curve?

changes in spending by input prices

Fiscal policy influences economic activity through the government changing

government expenditures and taxes

Which of the following is not true about public policy is: a. all of these. b. it is consistent with the many goals of society. c. it is a group action. d. it is designed to achieve certain aspirations held by members of society. e. it always accomplishes what it is intended to accomplish.

it always accomplishes what it is intended to accomplish

Which of the following is not true regarding International trade? a. it increases a country's welfare or standard of living. b. it only benefits developed countries while exploiting underdeveloped countries. c. the transfer of goods and services between countries. d. it occurs because a country can purchase goods abroad more cheaply than it can produce them at home. e. its underlying proposition is that consumers and producers benefit from exchange of goods and services.

it only benefits developed countries while exploiting underdeveloped countries.

Land retirement programs help agriculture producers by

restricting production by limiting the land input and increasing income of the producers

How many farms were there in Louisiana in 2017?

27,386

The form of resource (input) substitution where larger and larger amounts of a second variable resource (input) are required to replace equal incremental reductions of the first resource (input) while maintaining the same level of output is known as

imperfect substitutes

The sloping segment of the aggregate supply curve is where

increased price levels result in a corresponding increased real output in the economy

In the immediate short run all individual firm's supply curves are

inelastic

The line showing all combinations of inputs that result in the same quantity of an output is referred to as the

isoquant

Minimizing the resource/input cost of producing a commodity is referred to as the

least-cost combination

"In July 2020, the unemployment rate fell to 10.2%, after skyrocketing to 14.7% in April." This statement is an example of

macroeconomics

The area of economics that deals with output, employment, incomes, and other activities in the aggregate is

macroeconomics

The economics area that deals with output, employment, incomes, and other activities for the economy as a whole is

macroeconomics

External Firm Growth occurs through

merger, by purchase or other means of one firm's assets being acquired by another.

Profit is maximized at the level of output where marginal revenue equals marginal cost. Price charged to the consumer is determined from the demand curve

monopolist

The form of resource (input) substitution where two inputs can only be used in production in a fixed ratio and cannot be substituted for one another is known as

perfect complements

The form of resource (input) substitution where one input can be exactly substituted for another in production is known as

perfect substitutes

The form of resource (input) substitution where one input can be exactly substituted for another in production is known as:

perfect substitutes

The full range of combinations of products that can be produced with a given set of resources for a firm is referred to as its:

production possibilities

Product differentiation is non-price competition in an industry when firms compete through:

quality, services, advertising

Contractionary fiscal policy deals with:

reduced government spending and/or increased taxes

The government fixing the price of a commodity at some level below the equilibrium price will result in a:

shortage

What are nominal dollar values?

the values of goods and services at their current market prices

A change in the amount of a good demanded that results from factors other than a change in price of a commodity is known as a shift in the demand curve.

true

A movement along the demand curve is referred to as a change in quantity demanded.

true

An isoquant is a curve that shows all combinations of the two variable inputs that can be used to produce a given quantity of output

true

Because farmers exist in a purely competitive industry and are at the mercy of imperfectly competitive industries like input suppliers and processors Congress passed legislation to help level the playing field by allowing agricultural bargaining groups.

true

Ceteris Paribus is a Latin term which means "all other things remaining equal" or "constant."

true

Demand curves are downward sloping because a consumer receives less additional utility for each additional amount of a good consumed.

true

Market models such as pure competition and pure monopoly are useful in evaluating the economic efficiency of an industry.

true

Market prices are signals that direct production and consumption decisions.

true

Purely competitive firms in equilibrium, with zero economic rent, are economically efficient because the costs of society's goods and services are minimized.

true

Scarcity refers to the condition created when society or an individual has unlimited wants or needs but limited resources to satisfy those wants or needs.

true

The Law of Diminishing Marginal Utility states that the more of a good we have, the less we value an additional unit of it because we receive less satisfaction for each additional unit of a good we consume.

true

The Marginal Rate of Product Substitution measures the differing rates at which either product will substitute for the other along the production possibilities curve.

true

The Marginal Rate of Substitution is constant on all points along an Indifference Curve for perfect substitutes

true

The income of an Guatemalan citizen working in Louisiana will contribute to Guatemalan GNP and U.S. GDP.

true

The isocost curve identifies all the combinations of the two given inputs that can be afforded given a specific expenditure level to produce a given level of output.

true

The length-of-run influences the elasticity of the market supply curve

true

The optimal combination of two products is to produce where the Marginal Rate of Product Substitution is equal to the ratio of the output prices.

true

The point where the Indifference Curve and the Budget line are tangent is where consumers maximize their utility given their budget constraint.

true

The point where the Indifference Curve and the Budget line are tangent represents the point where consumers maximize their utility given their budget constraint.

true

The price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price.

true

When a market or an industry is dominated by a few large firms it is known as an oligopolistic market or industry.

true

When price goes up quantity demanded goes down and and when price goes down the quantity demanded goes up.

true

he conditions necessary for "pure monopoly" are 1) a single seller, 2) a differentiated product, and 3) no freedom of entry or exit in the industry.

true

Subsidies are

when governments provide financial support to an industry

A vertical merger occurs

when two or more firms, operating at different levels within an industry's supply chain, merge operations.

Personal income is equal to

National Income + Transfer Payments - (Payroll Taxes, Corporate Profit Taxes, and Retained Earnings).

For a producer the optimum level of production is reached when

One more unit of the variable input adds to the revenue just what it costs.

Along an indifference curve, which of the following is true? a. All combinations of goods along the indifference curve provide the consumer with the same level of utility. b. The consumer is indifferent between all combinations on the curve, which means they doesn't care whether or not any of the combinations are consumed. c. All combinations of goods represented by the curve cost the consumer the same amount of money. d. In the case of two goods, moving from the northwest to southeast along the curve is associated with an increase in utility.

All combinations of goods along the indifference curve provide the consumer with the same level of utility

The reason we have antitrust laws is because

As wealth in an industry becomes concentrated among a few firms their ability to control the market for selfish purposes increases and the benefits of competition are eroded

Marginal Physical Product is equal to Average Physical Product when

Average Physical Product is at its maximum

The "shut down point" is where

Marginal Cost Intersects Average Variable Cost

The slope of the production possibilities curve is referred to as the

Marginal rate of product substitution

In the context of goods, Economists typically make the following assumption about consumers:

Consumers prefer more to less

When consuming two goods, to increase consumption of Good 1 and maintain the same level of utility (stay on the same indifference curve) a consumer will have to

Decrease the consumption of Good 2

If both population and per capita income in an area increase. What is likely to occur?

Demand for housing will increase, so housing prices will increase

The two-price plan is set up to take advantage of the fact that

Foreign demand for agricultural products is typically more elastic than domestic demand

In the product or commodity market:

Households buy commodities and businesses sell them

The Marginal Rate of Substitution is the slope of

Indifference Curve

The line representing all possible combinations of two products sold that will bring the same total revenue is referred to as the:

Isorevenue Line

The shape of an Indifference curve for two goods which are perfect complements is

L-shaped

The slope of the Isoquant curve is the

Marginal rate of substitution

Which of the following is true? a. Pure monopoly is characterized by one firm in an industry, total product differentiation, and complete freedom to enter and exit the market. Pure monopolies are price setters. b. An oligopoly is the only firm in an industry. c. Pure competition is characterized by many firms in an industry, no product differentiation, and complete freedom to enter and exit the market. Purely competitive firms are price takers. d. Pure competition is characterized by many firms in an industry, no product differentiation, and complete freedom to enter and exit the market. Purely competitive firms are price setters.

Pure competition is characterized by many firms in an industry, no product differentiation, and complete freedom to enter and exit the market. Purely competitive firms are price takers.

If the price of fertilizer, an input in corn production, were to increase. Which of the following would be expected to occur?

The supply of corn would decrease, increasing the price of corn

The Consumer Price Index (CPI) is

a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services

The ability to produce a greater physical output with a given set of resources than a similar set of resources can produce somewhere else

absolute advantage

Which of the following is not a property of an indifference curve? a. Concave to the origin. b. Cannot intersect with other indifference curves. c. Convex to the origin. d. Utility is maximized where the indifference curve is tangent to the budget line. e. Downward sloping to the right.

concave to the origin

The relationship between a variable factor of production and its product is referred to as

factor-product relationship

A pure monopolist is called a price taker

false

A purely competitive firm is called a price searcher

false

An Engel curve shows the relationship between price and quantity demanded.

false

If the demand for a good is price elastic, a one percent change in price results in a less than one percent change in quantity demanded.

false

In an imperfectly competitive industry, the competing firms' demand curves are independent.

false

Opportunity Costs are the costs of taking advantage of opportunities.

false

Ordinal Utility is a quantitative approach to ranking alternatives

false

Positive Economics refers to what ought to be or should be and Normative Economics refers to a scientific analysis of facts relevant to a situation.

false

Stage 2 is considered the irrational stage of production

false

The Isoquant shows all possible combinations of two products that can be produced given the set of resources in the firm's control.

false

The conditions necessary for "pure monopoly" are 1) many firms, 2) a homogeneous product, and 3) complete freedom of entry and exit.

false

The income approach of calculating GDP sums up the value of all purchases or expenditures made by final consumers.

false

Which of the following is not true when the economy is on the vertical segment of the aggregate supply curve? a. price levels (inflation) can rise without increases in real output in the economy. b. substantial growth of real GDP can be produced without any increase in the price level (inflation). c. prices will increase without increases in the output level because the economy is producing at full capacity. d. the economy is at full employment. e. all available labor resources are being used in the most efficient way possible.

substantial growth of real GDP can be produced without any increase in the price level (inflation).

The government fixing the price of a commodity at some level above the equilibrium price will result in a

surplus

When population increases, which of the following is true for a demand curve, ceteris paribus?

the demand curve shifts to the right

What happens when a consumer's income increases and everything remains else unchanged?

the demand curve will shift to the right

Cross-price elasticity of demand measures:

the percent change in the quantity demanded of good two when there is a change in the price of good one.