Final Econ 2113

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

When the price of a product rises this could mean that...

the supply curve has shifted to the left

Unregulated markets are beneficial because

they generate the largest possible total surplus

Businesses know if they raise prices...

they will sell fewer units

A variable cost in the short run would be

wages for employees

Necessities have ____ demand

inelastic

price elasticity of supply

measures the responsiveness of the quantity supplied to a change in price

A professional hockey arena has a maximum seating capacity of 20,000. The price elasticity of supply is-

perfectly inelastic

Which of the following is a characteristic of a monopoly but not of a competitive market?

price>marginal cost

Normative statement

statement which describes how the world should be

Positive statement

statement which describes the world as it is

in the short run, if you are above the variable cost you are going to...

stay open

Absolute advantage

the ability to produce a good using fewer inputs than another producer

Total Revenue

the amount that consumers pay and sellers receive for goods and services (PxQ)

Producer Surplus

the difference between the willingness to sell a good and the price received for that good

Law of increasing relative cost

the opportunity cost of producing a good rises as a society produces more of it

When the price of an hour of tutoring increases,

the quantity demanded for tutoring decreases.

Why are binding price ceiling laws passed?

They make a good less expensive for those customers who are able to purchase the good in the legal market.

Demand Schedule

a table that shows the relationship between the price of a good and the quantity demanded

Has a negative cross-price elasticity of demand

coffee and cream

In the long run...

deadweight loss from a tax will be greater than it is in the short run

The demand curve for the product of a firm in a competitive market is __________.

horizontal

When can a firm lower prices and still increase revenue?

when the demand is elastic

The incidence of a tax reflects

who bears the burden of the tax

price elasticity of demand

a measure of responsiveness of quantity demanded to a change in price

Elasticity

a measure of the responsiveness of buyers and sellers to changes in price or income

natural monopoly

a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

Ceteris Paribus

economists examine a change in one variable while holding everything else constant

Luxuries have ____ demand

elastic

In the short run, the firm will shut down when

$<AVC

If the firm is maximizing the profits, profit is represented by the area

(A-B)xC

In the short run, ATC and AVC converge as output increases because

AFC continually decrease

Perfectly inelastic demand

Consumer will buy no matter what the price

What event would cause a supply curve to shift outward?

Firms entering the market

Which of the following would cause the demand curve to shift to the right?

Income decreases for an inferior good

When the average total cost curve is downward sloping, what must be true about the marginal cost curve?

It is below the average total cost curve.

Why does a surplus exist under a binding price floor?

It makes the price so high that the quantity supplied exceeds the quantity demanded in the legal market.

Economists believe that optimal decisions are made up to the point where...

Marginal benefits=marginal costs

How would an economist explain a teenager's continued unemployment where there exists a minimum wage?

The minimum wage law made it such that the quantity of labor willing to work at that wage was greater than the quantity of labor demanded at that wage.

If a perfectly competitive firm is maximizing profits in the short run, what does this mean?

The profit can be negative, zero, or positive.

A binding price ceiling will have which of the following consequences?

The quantity demanded will always exceed the quantity supplied

Comparitive advantage

The situation where someone can produce a good at lower opportunity cost than someone else can

cross-price elasticity of demand

a measure of how much the quantity demanded of one good responds to a change in the price of a related good

Which of the following is a microeconomic question?

What are the variables that determine the price of a specific good?

What good is most likely to have an income elasticity of demand equal to 8?

a five star hotel

The pollution emitted by a car is an example of a

external cost

The Coase theorem suggests that private parties

can negotiate to correct a negative externality if there are no barriers to negotiation

Fixed costs

costs that remain constant as output changes; rent

Variable costs

costs that vary with the quantity of output produced; wages, utilities

Deadweight loss

decrease in economic activity caused by market distortions

Consumer Surplus

difference between willingness to pay for a good and the price actually paid to get the good

The difference between the price consumers pay and the price sellers receive after a tax is imposed is equal to the

dollar amount of the tax

Demand curve for the product of monopolist is ________.

downward sloping

If a firm s average total costs decrease as it increases its scale of production, the firm is experiencing

economies of scale

If a firm's average total costs decrease as it increases its scale of production, the firm is experiencing:

economies of scale

A major reason why public goods are NOT supplied in the market is the

free-rider problem

The amount an individual pays for gasoline for his or her car is an example of a

internal cost

in the long run supply is

most elastic

in the short run supply is

most inelastic

Control of resources, problems raising capital, and economies of scale are all examples of

natural barriers

Externalities exist because

property rights are not clearly defined

Demand is inelastic if

quantity demanded changes a small amount as the result of the price change

Demand is elastic if

quantity demanded changes significantly as the result of a price change

The tragedy of the commons occurs because the good being produced is

rival and non excludable

It is said that taxes drive a wedge between prices. This statement is true because taxes cause

the consumer price to increase and the producer price to decrease

The flatter the demand curve...

the greater the price elasticity of demand


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