Eco 202 first exam

autoworkers negotiate a wage increase, how does this change affect the supply of cars

it decreases the supply

what are the factors or production

land labor capital human capital entreprenurship

a shortage occurs when the price is

less than the equilibrium

when A1 makes the statement "the cost of living has increased 10 perfect over the past 10 years" he is

making a positive statement

what does ceteris paribus mean?

means all other things being equal. meaning in the law of gravity, if you throw something down on the ground. ceteris paribus. gravity will allow that object to fall if nothing else changes.

difference between microeconomics and macroeconomics

micro: the study of specific parts of an economy like firms, industries, households macro: deals with the economy as a whole or large

movement along demand curve

moving up or down he demand curve. a change in the price of the product

ceteris paribus

other things being equal--- all other relevant things remaining the same

law of supply

other things remaining the same, the higher the price of a good, the grater is the quantity supplied of it

all normal goods have

positive income elasticities of demand

difference between positive and normative statement

positive: consists of objective and/or empirically verifiable statements. deals with "what is" normative: consists of subjective and/or unsubstantiated statements that lack positive knowledge.

what shifts the supply

price of other goods Related in supply price of resources used in production of the good wages. number of suppliers technology weather expectations

the most fundamental economic problem is..

scarcity

demand is perfectly inelastic when

shifts of the supply curve results in no change in quantity demanded.

a substitute is a good

that can be used in place of another good.

quantity demanded

the amount of a good or service that consumers plan to buy during a given time period at a particular price

quantity supplied surplus

the amount of a good or service that producers plan to sell during a given time period at a particular price

shift in demand curve

the curve shifts left if decrease, right if increase. depends on ceteris paribus

on a linear demand curve that intersects both axes

the elasticity decreases as the price falls and quantity increases.

opportunity cost

the highest called alternative that we give up to get something

the opportunity cost of something you decide to get is

the highest valued alternative you give up to get it

relative price

the ratio of the price of one good or service to the price of another good or service. opportunity cost

factors or production

the resources used to produce goods and services

normative statements are statements about

what ought to be

when the price of a hot dog rises 10%, your expenditure on hot dogs increases. hence, it is certain that

your demand for hot dogs is inelastic

what countries in the world would be classified as capitalist and why

USA, Canada, Germany. they are controlled by a private operator like a president or prime minister

which of the following decreases the supply of popcorn?

a decrease in the number of popcorn suppliers

economic theory

a generalization that summarizes what we think we understand about the economic choices that people make and performance of industries and entire economies

inferior good

a good for which demand decreases as income increases

normal good

a good for which demand increases as income increases

market forces

a good that can be used in place of another good

the law of demand implies that if nothing else changes, there is

a negative relationship between the price of a good and the quantity demanded.

ceteris paribus is the latin expression for

an expression that means "other things being equal"

if goods are compliments, definitely their

cross elasticities are negative.

the demand curve for normal good shifts leftward if income________ or the expected future price ______

decreases, falls

if more people buy battery car, price of oil will go _____

down

when the price is below the equilibrium price, the quantity demanded

exceeds the equilibrium quantity. the quantity supplied is less than the equilibrium quantity.

normal goods

good that experiences increase in demand when income increases

a surplus occurs when the price is

grater than the equilibrium

an increase in Abigail's income decreases her demand for cassette tapes. for her, cassette tapes are

inferior good

the slope of a demand curve depends on

the units used to measure price and the units used to measure quantity.

total revenue

the value of a firm's sales. it is calculated as the price of the good multiplied by the quantity sold.

substitue good

when price of good falls, consumers are more willing to substitute this good with other goods.

what is likely to have the smaller price of elasticity of demand

automobile

scarcity requires the people must

make choices

a 10 percent increase in the quantity of spinach demanded results from a 20 percent decline in its price. the price os elasticity of demand for spinach is

0.5

a shift of the supply curve of oil raises the price of oil from 9.50 a barrel to 10.50. and reduces the quantity demanded from 41 million to 39 million barrels a day. the price of elastic of demand for oil is

0.5

during the summer you have made the decision to attend summer school, which precludes you from working at your usual summer job in which you normally earn 6,000 for the summer. your tuition cost is 3,000 for books and supplies cost 300 and room and board cost 1,000. the opportunity cost of attending summer school is.

10,300

the law of demand implies that other things remaining the same,

as the price of a cheeseburger rises, the quantity of cheeseburgers demanded will decrease.

complementary good

a good that can be used together with another good

inferior goods

a good that experiences a decrease in demand when income increases

complement

a good that is used in the conjunction with another good

because we face scarcity, every choice involves

an opportunity cost

if good A is a normal good and income increases, the equilibrium price of A

and the equilibrium quantity will increase

what is not an example of opportunity cost?

because Mary is now being paid a higher wage, she can afford to buy a new car even though she is moving into a bigger apartment.

what determines the quantity of a product or service

by holding other prices constant any change in the money price of the good represents change.

what is difference between capitalist and socialist

capitalist: can afford economic freedom, economic growth. socialist: controlled by a state and planned by central planning authority

what countries are communist and why

china, North Korea, Cuba. they are governed by a single party.

countries classified as socialist

china, canada, Mexico, sweden

donuts and coffee are complements. when the price of a donut increases, the demand for coffee _____ and the cross elasticity of demand for coffee with respect to the price of a donut is___

decreases, negative.

a decrease in the price of a game of bowling shifts the

demand curve for bowling balls rightward

how can you tell if a movement reflects an increase in demand?

demand curve shifts to the right

by reviewing its sales records, IBM economists discover that when it lowers the price of its personal computers, the total revenue IBM obtains from the sale of its personal computer rises. hence

demand for IBM personal computers is elastic

which of the following is an example of a positive statement?

households are the primary source fo saving

what shifts a demand curve

income price of related good taste population weather expectations

if a good is an inferior good, then purchases of that good will decrease when

income increases.

an increase in the quantity of oil supplied but NOT in the supply of oil is shown by a movement by...

increase from the first point to above on the same line.

if OPEC cuts oil production to increase total revenue, they know the demand for oil in the global market is

inelastic

ceteris paribus means

other things being equal

what determines quantity supplied

price of the product

a surplus causes the

price to fall

a shortage causes the

price to rise

demand

the entire relationship between the price of the good and the quantity demanded of it when all other influences on buyers plans remain the same.

goods A and B are complementary goods. the cost of a resource used in the production of A decreases. as a result

the equilibrium price of B will rise and the equilibrium price of A will fall.

the more substitutes available for a good or service

the larger is its price elasticity of demand

demand is inelastic if

the leftward shift of the supply curve raises the total revenue

money price

the number of dollars that must be given up in exchange for a good or service

equilibrium price

the price at which the quantity demanded equals the quantity supplied

what describes the price of elasticity of demand

the price elasticity of demand is larger at point A than at point B

producers total revenue will decrease if

the price rises and demand is elastic

equilibrium quantity

the quantity bought and sold at the equilibrium price

income elasticity of demand

the responsiveness of demand to a change in income, other things remaining the same.

economics

the social science that studies the choices that we make as we cope with scarcity an the incentives that influence and reconcile those choices

what is economics?

the study of the allocation of scarce resources

microeconomics

the study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments