Econ

If the price of cookies drops by 50 percent to increase demand, the complementary good, milk, will

see an increase in demand.

What characterizes a perfectly competitive market?

Large number of buyers choosing between identical products

What is an effect of a perfectly competitive market?

Low prices and high quantities produced

What is a sign that a firm is producing too much?

Marginal cost exceeds marginal revenue

A monopoly that sets one price for a good or service it produces is called a(n)

Single-price monopoly

What are two ways an economy can spur its own expansion?

Specialization and Trade.

Which of the following will result in a change in supply?

Sudden decrease in the raw material costs for books

What is used to show responsiveness of the quantity supplied of a good or service in relation to a change in its price?

Supply elasticity

What is a producer surplus?

The difference between what the market says consumers will pay and the cost it takes to produce a product

What shape is the supply curve?

Upward sloping

What are the three basic questions that Economists are concerned with answering?

WHAT to produce, HOW to produce and FOR WHOM to produce

What are Diminishing Marginal Returns?

When both Total Output and Marginal Return are continuing to increase but at a decreasing rate with each additional unit of variable input.

What is a surplus?

When the quanity supplied exceeds demand

What do the points on the line of a Production Possibilities Frontier represent?

Where an economy could get if it reached its full potential.

At which point do perfectly competitive firms maximize profits?

Where the marginal cost of producing an item equals the price

Which of the following will result in a change in demand?

Widespread use of e-book readers, resulting in fewer people buying books

Why are Specialization and Trade associated?

Without Specialization, Trade would lose much of its benefit and the quality of products would decline; without Trade, Specialization would be impossible as everyone would be forced to complete all aspects of production by themselves.

What is a 'ghost' item?

an item that could have been made but wasn't

Charitable organizations can

assist needy people in purchasing essential items

Which of the following will result in a change in quantity demanded?

customers willing to pay more books

The main difference between an elastic supply and an inelastic supply is

how quickly a supplier is able to react to changes in pricing.

During times of emergency, some suppliers may practice price gouging because they know their products are​​​​​​

inelastic

If a company must invest in new technology to respond to pricing changes of their products, their supply is most likely

inelastic

When a product sees a price change and that change causes relatively small changes in the quantity demanded, it is considered

inelastic

With products that do not have readily available substitutes, we tend to see a(n)

inelastic demand

One thing that makes it difficult for the allocation of scarce resources to be fair is concept of

inheritance

What is deadweight loss?

is the fall in total surplus (consumer + producer surplus) as a result of market distortions

Checking to see if everyone in the society has an equal opportunity to obtain the resources is a method of assessing the fairness of the allocation of scarce resources used primarily by which type or economy?

market economy

A positive income elasticity mostly affects

normal goods

Which of the following would be considered an inelastic demand?

s utility company is unable to meet the immediate increase in demand for their product

A consumer surplus is

the difference between what the consumer is willing to pay and the actual cost which is lower

What is considered a lost opportunity or economic cost?

the lost chance to utilize the machinery or labor for a different product

What is a price floor?

the lowest legal price (set by the government) a commodity can be sold at

Demand for a product is considered elastic when

the price changes and the demand for that product sees a relative increase or decrease larger than that of the change.

Cross elasticity of demand deals with

the responsiveness of the quantity demanded for a good to the change in the price of another good.

The price or cost of an item is heavily dependent on

the scarcity of the item or the resources needed to produce that item

Which of the following is NOT true when a wide gap exists between value and price?

the supply and demand are in equilibrium

In an efficient economy

there should be a small or even no consumer surplus

When considering Production Functions, Economists tend to think in terms of the ________.

variable inputs

Which one of the following is not generally considered a factor to consider when contemplating purchasing a big ticket item?

whether it is a want or need

What shape is the demand curve?

Downward sloping

What is a Production Possibilities Frontier?

A graphic way of comparing any two products to see how an economy's limited resources can be efficiently divided between the production of both.

Producing fewer units of product can lead to

higher prices

In the graph and table, at what point does Stage 3—Negative Marginal Returns begin?

9 workers

Which of the following will result in a change in quantity demanded?

A 20% discount

What is a Production Function?

A figure that shows how total output, or production, shifts depending on one variable input if all other inputs remain fixed.

What describes an increase in quantity supplied?

A movement along the supply curve to the right

What is a characteristic of a perfectly competitive market in the short run?

A set number of firms in the market

If a particular society is especially environmentally conscious, what method of production are they most likely to choose if they are also thinking economically?

A somewhat efficient and relatively cost productive method which radically reduces pollution.

Which of the following is NOT considered an economy in its own right?

Agrarian

Which of the following is true about Resources?

All of the options

If a company wants to produce 100 pairs of shoes which will require 500 units of rubber, or 50 pairs of sandals which will require 750 units of rubber, but the company only has 1000 units of rubber available, what are some possible solutions for the company?

All of the options.

If a particular society is especially environmentally conscious, what method of production are they most likely to choose if they are also thinking economically?

An expensive and laborious method of production which eliminates pollution entirely.

In the graph and table, at what point does Stage 2—Diminishing Marginal Returns begin and at what point does it end?

Begins at 6 workers and ends at 8 workers.

_________ is the study of how societies in the past have attempted to satisfy seemingly unlimited wants with scarce resources and what societies in the future should do to satisfy their own unlimited needs and wants through the closely studied and carefully considered allocation of scarce resources.

Economics

Market economies usually use what method in the allocation of scarce resources?

First come, first served

Which of the following statements is true about a Traditional Economy?

It is not possible in a large society

What is the equilibrium price?

It is where there is neither a shortage or surplus

Which of the following statements is True regarding value and price in an efficient economic system?

Price and value are equal or very close to equal

Which of the following statements is correct?

Price ceilings are usually set below the equilibrium and price floors are set above it.

Why is a perfectly competitive market efficient in the long run?

Price is equal to marginal costs

What effects do new entrants into a perfectly competitive market have?

Prices decrease while total output increase

What happens to profit in the long run?

Profits decrease to zero

What is the Law of Demand?

Quantity demanded varies inversely with price

What is the Law of Supply?

Quantity demanded varies proportionally with price

__________ is the fundamental economic problem of having only a limited amount of resources and a seemingly unlimited amount of human needs and wants.

Scarcity

In a perfectly competitive market, what describes the supply curve?

The marginal cost curve

What is the same as the short-run supply curve?

The marginal cost curve

Where is the equilibrium point?

The point where the supply curve crosses the demand curve

Which situation describes a highly elastic good?

There is a surplus of CDs when the price is increased

What is the equation or formula used to calculate economic profit?

Total Revenue - explicit costs - implicit costs

What does an accountant or manager NOT determine when calculating accounting profit?

a cost for the time that is spent manufacturing one item vs. the potential profit of a second, different item that may be manufactured instead

Which scenario would lead to the greatest price change?

a good has a supply of elasticity and a high demand elasticity

What is a price ceiling?

a limit on how much producers can charge for a product

What describes an increase in quantity demanded?

a shift of the demand curve to the left

The price we pay for wants as opposed to needs is more suspectible to

advertising

Our buying decisions..

affect and are affected by the economy

What is the risk in not considering economic cost and economic profit?

being unaware of opportunities or possibilities to increase profit

Substitute goods are those that

can be used instead of another good.

Assessing the result of the allocation of resources (is the distribution equal?) is a method used by a

command economy

The philosophy behind a command economy is often related to

controlling wealth distribution with equality as its goal

A company that is able to react quickly to price changes of its products without losing revenue would have a supply that is considered

elastic

If the price of a brand of tea drops by 10 percent, but the increase in demand increases by 50 percent, this product is considered

elastic

A mixed economy has

elements of a market and command economy

In a mixed economy which one is NOT usually controlled or paid for, at least in part, by the government?

essential utilities such as water and power

If mistakes are made in command economies the government may try to

hide their mistakes which leads to a distortion and possible problems of inflation