micro test 2

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

A(n) _____ good is a good for which the amount consumed declines as a consumer's income increases.

inferior

income elasticity is less than 1, then it is a __________ good

inferior

A good with an income elasticity that is negative is said to be a(n):

inferior good

Marginal utility

is the additional satisfaction a consumer obtains from consuming one more unit of a good or service

Total utility

is the total satisfaction a person obtains from consuming a specific amount of goods

income elasticity is greater than 1, then it is a ___________ good

luxury

elasticity

measure of the relative responsiveness of one variable to a change in another variable in percentage terms

Cross elasticity of demand

measures how responsive demand for one good is to a change in the price of another good

price elasticity of demand

measures how sensitive consumers are to changes in price.

elasticity of supply

measures the extent to which businesses react to price changes, and its formula is virtually identical to that of demand:

if elasticity is between 0-1, the it is a __________ good

normal

A _____________ is one for which the quantity demanded increases as income increases.

normal good

implicit cost

opportunity costs associated with firms use of resources it owns

if one person consumes a public good:

other cannot be excluded from enjoying it

ES formula

% Change in Quantity Supplied / % Change in Price

two factors to the budget line:

1.) change in the price of a good 2.) change in budget

Marginal utility per dollar spent:

MU / P

long run

a time period long enough for firms to alter their plant capacity or for firms to enter or leave the industry.

Unitary elastic demand

The percentage change in quantity demanded is just equal to the percentage change in price. This results in the absolute value of the price elasticity of demand to be equal to 1.

statutory influence

the entity responsible for payment of the tax, this burden falls on the producer

lump sum tax

a fixed amount of tax regardless of income (type or regressive tax)

regressive tax

a tax in which the tax rate falls as the taxable amount rises (FICA)

flat tax

a tax in which the tax rate is the same at all levels (medicare)

progressive tax

a tax that rises as the taxable amount rises (income tax, property tax)

Short run

a time period in which plant capacity is fixed and the number of firms in an industry does not change.

law of diminishing marginal utility

as consumption of a specific good increases, the increase in total satisfaction will decline

If a pharmaceutical company knows that one of its products has a dangerous side effect but does not disclose that to its customers, then the market for that product is likely to fail due to:

asymmetric information

Suppose the equilibrium price for a gallon of milk is $2.50, but due to government price supports, the minimum legal price is $2.75 per gallon. This price floor:

causes a surplus of milk in the market

sunk cost:

cost that has been paid and cannot be recovered

Total revenue _______________ when price rises on an ________________ or is lowered on an inelastic good.

decreases, elastic good

explicit costs

direct payment made to others in the course of running a business, such as wage, rent and materials

the most substitutes, the more:

elastic

accountants only use __________ costs

explicit

Utility

hypothetical measure of consumer satisfaction.

If the price elasticity of demand for a good is inelastic and the price of the good rises, the revenue of the firm selling the good will:

increase

Total revenue _______________ when price rises on an ___________________ or is lowered on an elastic good

increases, inelastic good

The steeper the curve, the more _________ it is going to be

inelastic

if a good is not available, then the good is:

inelastic

Elasticity of demand equation

percent change in Q demanded / percent change in price

normal economic profit

point when total revenue equals total cost

A firm increases its price for a good and total revenues increase. From this, we can conclude that its demand:

price inelastic

sunk cost fallacy

situations where people make decisions based off how much was already spent instead of how decisions might affect current well being

Influence of taxation

the division of the economic burden of taxation between producers and consumers

Behavioral Economics

the study of how human psychology affects economic decision making and individuals

inelastic

this results in the absolute value of the price elasticity of demand to be less than 1

accounting profit

total revenue - explicit costs

economic profit

total revenue - total costs

As a person consumes more of a good or service, the person's _____ will increase. At the same time, this person's _________ will decrease with each additional unit.

total utility, marginal utility

Total revenue is maximized at the point where demand is ______ __________________

unitary elastic

over confidence bias

when a person has more confidence in their abilities than actually exist

framing bias

when individuals are steered into making one decision over another

elastic

when the absolute value of the computed price elasticity of demand is greater than 1


Kaugnay na mga set ng pag-aaral

Chapter 10: Grief and Loss, Grief and Loss - Videbeck Ch.10, Chapter 10: Grief and Loss, Chapter 10

View Set

Memmler's Structure and Function of the Human Body 10e: Chapter 3 Cells and Their Function

View Set

Chapter 11-COMPENSATION: ESTABLISHING A PAY STRUCTURE/PAY FOR PERFORMANCE

View Set

ELA 10 - A Doll's House, Pt3: Theme and Society (Pre-test)

View Set