econ chapter 4/5 test review

-executive salaries -interest charges on bonds -depreciation -rent -state/local property taxes

give examples of fixed costs

downward sloping

the demand curve is always?

multiplying the price of a product by the quantity demanded

total expenditures are determined by?

butter and margarine

which of the following is an example of substitutes?

right

indicate the prediction for each statement a hair dye is successfully advertised in the media. its demand curve will shift?

the same amount

indicate the prediction for each statement the price of salt doubles. shoppers will by?

more

indicate the prediction for each statement the prices of computers go down. people will by ________ software?

diminishing marginal utility

buying only one drink instead of two drinks at lunch time describes what concept?

marginal analysis

cost benefit decision making that compares the extra benefits to the extra costs of an action is called?

inelastic

describes demand when a given change in price causes a relatively smaller change in the quantity demanded

determinant of supply, change in input prices

indicate the specific determinant of supply or demand the price of oil has increased and the supply of gasoline has decreased

determinant of supply, change in technology

indicate the specific determinant of supply or demand the use of 360-degree, zero-turn mowers allows lawn-service providers to mow twice as many lawns in a given day. the supply of lawn service has increased.

total costs

sum of fixed and variable costs

decreasing the price of the product

which of the following would cause a change in the quantity demanded for a product?

ice cream cones

which product is likely to have the most elastic supply curve?

Law of Demand

the demand for an economic product varies inversely with its price

more will be purchased at low prices than at high ones

the law of demand states that?

the quantity supplied varies directly with its price

the law of supply states that?

upward sloping

the supply curve is?

the market demand curve to shift

a change in the number of consumers can cause?

inelastic

a company decreases the price of a gallon of milk by 10 percent and the company's revenue falls, what term describes the demand for milk?

demand curve

graph showing the quantity demanded at each and every price at a given time

substitutes

products that can be used in place of other products

the short run

the period of production that allows producers to change only the amount of the variable input is ?

fixed costs

cost that a business incurs even if there is little or no activity

variable costs

cost that changes when the business's rate of operation or output changes

the curve shifts right

how does the demand curve show an increase in demand?

change in quantity demanded

illustrated by movement along the demand curve

an increase in the price of a good usually leads to a decrease in the demand for its complement

how does the change in the price of a good affect its complement?

operate longer hours than a firm whose fixed costs are small relative to variable costs

if a business's fixed costs are large relative to its variable costs, it is likely to?

inelastic

if a consumer cannot postpone the purchase of a product, demand tends to be ?

increase in supply due to a change in technology

indicate change in supply/demand and why swimming pool service providers can service more pools this year than last because of an advanced sweeper that automatically adjusts chemicals in the water while sweeping the pool. how will this affect the market for pool-cleaning services?

increase in supply due to a change in input prices

indicate change in supply/demand and why the price of computer chips decreases significantly, enabling manufactures of hard drives to produce more hard drives. how will this affect the market for hard drives?

increase in supply due to a change in taxes or subsidies

indicate change in supply/demand and why to encourage energy conservation, the government will give companies a $10 credit on each residential solar panel that they produce. companies can deduct the credit from their taxes. how will this affect the market for solar panels?

more

indicate the prediction for each statement the price of beef falls. people will buy _______ beef

total revenue

the number of units sold multiplied by the average price per unit

only the market demand curve shows demand for everyone in the market

what is the main difference between the individual demand curve and the market demand curve?

output decreases

when the number of workers hired is so great that workers begin to get in each other's way...?

a decrease in the cost of inputs

which of the following can cause an increase in supply?

purchasing fresh vegetables in the summer

which of the following illustrates elastic demand?

complements

products that increase the use of other products

unit elastic

describes demand when a given change in price causes a proportional change in the quantity demanded

elastic

describes demand when a given change in price causes a relatively larger change in the quantity demanded

-electricity -wage earning employees (labor) -raw materials/capital goods -shipping

give examples of variable costs

increasing returns, diminishing returns and negative returns

in what order do the three stages of production occur?

shift to the left

increased government regulations can cause the supply curve to ?

increase in demand due to a change in numbers of buyers in the market

indicate change in supply/demand and why a news report recently announced that baby boomers planned to sell their homes in the suburbs and buy condos in the city sometime in the next three years. how will this affect the demand for condos in the city?

increase in demand due to change of prices of related goods

indicate change in supply/demand and why the price of movie tickets has increased significantly. how will this affect the market for DVD rentals?

left

indicate the prediction for each statement people get tired of iPods. the demand curve for iPods will shift?

supply

the amount of a product that could be bought at all possible prices that could prevail in the market

demand

the desire, ability and willingness to buy a product

marginal cost

the extra cost incurred when one additional unit of a product is produced

marginal utility

the extra usefulness or satisfaction a person gets from acquiring or using one more unit of a product

the long run

the period of production that allows producers to change the amounts of all inputs is ?

inverse

the relationship between the change in price and total expenditures for an elastic demand curve is ?

the way marginal product changes as variable inputs are added

the stages of production are based on ?

decrease in demand due to a change in consumer tastes and preferences

indicate change in supply/demand and why a popular late night show host discusses the health benefits of not smoking and has several celebrities promote this idea. this has convinced people to quit smoking. how will this affect the market for cigarettes?

determinant of demand, change in consumer tastes and preferences

indicate the specific determinant of supply or demand if a report states that a particular product causes cancer, consumers' tastes and preferences for the product will change and the demand for that product will decrease. however, if a report states that a particular product reduces the risk of caner, consumers' tastes and preferences for the product will change, and the demand for that product will increase.

determinant of supply, change in technology

indicate the specific determinant of supply or demand if an oven is developed that allows cookie producers to bake cookies in half the time, the cookie supply will increase.

equal to marginal revenue

profit is maximized when marginal cost is ?

subsidy

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

supply curve

a graph showing the various quantities supplied at each and every price that might prevail in the market

quantity supplied

amount that producers bring to the market at any given price

elastic demand

indicate elastic or inelastic demand when the price of Good C increased from $5 to $6, the quantity consumers purchased decreased from 1,000 to 600. the revenue decreased.

inelastic demand

indicate elastic or inelastic demand when the price of Good D increased from $2 to $4, the quantity consumers purchased decreased from 1,200 to 700. the revenue increased.

elastic demand

indicate elastic or inelastic demand if price goes up and total revenue goes down if price goes down and total revenue goes up

inelastic demand

indicate elastic or inelastic demand if price goes up and total revenue goes up if price goes down and total revenue goes down

change in consumer income change in consumer tastes and preferences change in number of buyers in the market change in the prices of related goods change in consumer expectations

indicate the determinants of demand

change in number of sellers change in taxes or subsidies change in input prices change in technology change in expectations

indicate the determinants of supply

fall

indicate the prediction for each statement strawberries are in season. the demand for frozen strawberries will?

similar

indicate the prediction for each statement the cost of casting materials triples. a _____ ratio of patients with broken bones will get casts

increase

indicate the prediction for each statement the price of butter goes up. the demand for margarine will?

the same amount

indicate the prediction for each statement the price of insulin goes down. diabetics will use ____________?

increase

indicate the prediction for each statement the price of new automobiles goes up. the demand for used cars will?

determinant of supply, change in expectations

indicate the specific determinant of supply or demand an expected increase in corn prices might cause some farmers to plant corn rather than soybeans, thus increasing corn supply

determinant of demand, change in number of buyers in the market

indicate the specific determinant of supply or demand as the birth rate decreases, the number of people in the market for diapers and other baby items decreases so the demand for these products decreases.

determinant of demand, change in number of buyers in the market

indicate the specific determinant of supply or demand as the population ages, the number of people in the market for nursing home care increases and the demand for nursing home care increases

determinant of supply, change in expectations

indicate the specific determinant of supply or demand banana producers obviously might not be able to stockpile their bananas, but producers of medical equipment might be able to withhold their equipment from the market if they think prices will increase in the future. in this case, a short term decrease in the supply of medical equipment occurs.

determinant of supply, change in input prices (also known as factors of production)

indicate the specific determinant of supply or demand buddy toys inc notices that the plastic piping for its production of hula-hoops has almost doubled in price. therefore, it decreases its production of hula hoops

determinant of supply, change in expectations

indicate the specific determinant of supply or demand cattle ranchers anticipate that prices for beef will fall because a highly influential celebrity makes public statements questioning the practice of eating beef. cattle ranchers hurry to sell their cattle, which increases the beef supply.

determinant of demand, change in price of related goods

indicate the specific determinant of supply or demand complements are goods that "work" together. an increase in the price of one of these goods causes a decrease in the quantity demanded for that good. as a result there will be a decrease in demand for the complementary good.

determinant of demand, change in consumer income

indicate the specific determinant of supply or demand for inferior goods, an increase in income will cause a decrease in demand, shifting the demand curve to the left. inferior goods include products that consumers purchase less of as their income increases. for example, as your income increases you might purchase more steaks but fewer bologna sandwiches, or more SUV's and fewer subcompact cars or more MP3 players but less CD players. in these examples, the bologna sandwiches, subcompact cars and CD players are inferior goods because an increase in consumers' income would cause the demand for those goods to decrease. at all prices at which those goods are offered for sale, fewer would be demanded as a result of an increase in consumer incomes.

determinant of demand, change in consumer income

indicate the specific determinant of supply or demand for most goods, referred to as "normal goods", an increase in consumer income will cause demand to increase, which shifts the demand curve to the right. this shift indicates that at all prices for which the good is offered for sale, a greater quantity will be demanded due to the increase in income. normal goods include most products such as gasoline, coffee and clothing.

determinant of supply, change in number of sellers in the market

indicate the specific determinant of supply or demand if a famous chef decides to produce and sell her signature cookies, the cookie supply would increase because the number of producers has increased.

determinant of demand, change in consumer tastes and preferences

indicate the specific determinant of supply or demand if consumers like a product less based on their experience with the product or negative reports about the product, the demand will decrease, shifting the entire demand curve to the left.

determinant of demand, change in consumer tastes and preferences

indicate the specific determinant of supply or demand if consumers like a product more based on their experience with the product or based on advertising of the product, demand will increase and cause the entire demand curve to shift to the right.

determinant of supply, change in number of sellers in the market

indicate the specific determinant of supply or demand if nabisco stopped producing cookies, the supply of cookies would decrease because the number of producers in the market would have decreased.

determinant of demand, change in consumer income

indicate the specific determinant of supply or demand if personal income tax rises, consumers will have less money to spend, and the demand for most normal goods will decrease.

determinant of demand, change in consumer tastes and preferences

indicate the specific determinant of supply or demand if the product is a type of clothing and a famous athlete or actor advertises the product, the advertisement may change consumer tastes and preferences for the product, and the demand for the product may increase.

determinant of supply, change in technology

indicate the specific determinant of supply or demand keep it sharp inc has developed a laser cutter for textile production. this has cut the production time per pair of jeans from three minutes to 90 seconds. many jeans manufactures are using the new laser cutter. the result is an increase in the jeans supply.

determinant of demand, change in number of buyers in the market

indicate the specific determinant of supply or demand market demand is derived from individual demands, so the demand for a product increases as the number of consumers in the market for a product increases. as the number of consumers in the market for a product decreases, the demand for the product decreases.

determinant of demand, change in consumer expectations

indicate the specific determinant of supply or demand people's expectations about the future may affect the demand for the good or service today. if people expect the price of coffee to rise in the future, they may buy more cans/bags of coffee today and store it.

determinant of supply, change in taxes or subsidies

indicate the specific determinant of supply or demand the government gives tax subsidies to big-box stores in counties where the unemployment rate is more than 7 percent. the government's rationale is that big box stores provide jobs in the community, the supply of big box stores increases.

determinant of supply, change in input prices

indicate the specific determinant of supply or demand to produce chocolate chip cookies, firms use various inputs such as eggs, sugar, chocolate, ovens, machines, buildings and workers. the prices of these inputs play an important role in developing the supply curve. if the prices of these inputs increase, producing cookies is less profitable, and the firm will supply fewer cookies. if the prices of these inputs decrease, producing the cookies is more profitable and the firm is willing and able to supply more cookies.

diminishing marginal utility

the decrease in satisfaction or usefulness received from each additional unit of a product

it shows that there is an inverse relationship between the price of an item and the quantity demanded

which of the following statements describes the demand curve?