ECON Exam 1

When quantity demand goes up, income goes up it is called a(n) _________________

Normal Good

___________________ are the extra costs incurred as a result of buying or selling internationally rather than domestically

Trade costs

When quantity demanded exceeds quantity supplied, _____ exists. a shortage equilibrium fixed demand a surplus

a shortage

If Beyoncé concert tickets are sold out within five minutes of being released, we can conclude that there is a control on how high the ticket prices can go Correct! there is a shortage of Beyoncé concert tickets in the market the price of the tickets is above the equilibrium price in the market the quantity supplied of Beyoncé concert tickets is more than the quantity demanded

there is a shortage of Beyoncé concert tickets in the market

What is the ability to do a task using fewer inputs called?

Absolute advantage

Chin purchases five protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4 for the third bar, $3.50 for the fourth bar, and $3 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar? $0 $.50 $1 $2

$0

Which of the following items is an inferior good? Luxury SUVs Discount stores Airline tickets Car rentals

Discount stores

What is the total quantity supplied by all sellers called?

World supply

A growing number of utility companies are using drones for site inspections. What is the effect of these changes on the equilibrium price and quantity, in the market for drones? The equilibrium price falls, and the equilibrium quantity rises The equilibrium price rises and the equilibrium quantity falls The equilibrium price rises and the change in equilibrium quantity is ambiguous Both the equilibrium price and the equilibrium quantity will rise

Both the equilibrium price and the equilibrium quantity will rise

What is it called when you have the ability to do a task at a lower opportunity cost?

Comparative advantage

What is it called when two things are used together? (If the price of good A increases, then the quantity demand of good B decreases)

Complements

What is it called when world supply equals world demand?

Equilibrium

What is it called to sell goods or services to foreign buyers & a good or service sold to a foreign buyer

Export

Vincent Pearson makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $1,000. The cost of the first table is $900, for the second it's $1,100. For each additional table he produces, the marginal cost of each table increases by $200. How many dining tables should Vincent produce, and what is the total cost of his production? Vincent will not make any tables He will produce one table at a cost of $900 He will produce two tables at a cost of $2,000 He will produce three tables at a cost of $3,300

He will produce one table at a cost of $900

When quantity demand goes down and income goes up it is called a(n) ________________

Inferior Good

Why does the demand curve slope downwards? It slopes downward due to the positive relationship between price and quantity demanded It slopes downward due to buyers perceiving fall in price as a fall in quality It slopes downward due to the law of demand It slopes downward due to stores lowering the prices on their products

It slopes downward due to the law of demand

What is it called when there is an inverse relationship between price and quantity demanded?

Law of demand

What is the extra benefit from one unit (of goods purchased, hours studied, etc) called?

Marginal benefit

What is the extra cost from one extra unit called?

Marginal cost

What is the true cost of something is the next best alternative you must give up to get it called?

Opportunity cost

What is the amount of a good buyers are able and willing to buy at a given price called?

Quantity demand

What is it called when one thing is used instead of the other? (f the price of good A increases, then quantity demand of good B should increase)

Substitutes

What is called when the price where a good or service is bought by the world market?

World price

An import quota is: a tax on imported products a limit on the quantity of a good that can be imported the revenue received from a tariff the cost of imposing a tariff

a limit on the quantity of a good that can be imported

When price equals marginal cost for the last unit sold, a seller will: earn consumer surplus on every unit sold earn producer surplus on all except the last unit sold earn consumer surplus not earn any producer surplus overall

earn producer surplus on all except the last unit sold

How do you evaluate opportunity cost?

hours the task takes / hours required to produce alternative output

What is the Rational Rule?

if something is worth doing, keep doing it until your marginal benefits equal your marginal costs

What does a PPF do?

it illustrates the trade-offs you experience when deciding how to allocate scarce resources

Which of the following is NOT an argument for limiting international trade? An increase in international trade may: reduce our ability to produce strategically important goods expose infant industries to strong competitive pressures lead domestic firms to outsource jobs to workers in other countries lead to economic growth through specialization in comparative advantages.

lead to economic growth through specialization in comparative advantages

The criterion of economic efficiency is that the _____ economic surplus that is generated, the _____ the outcome. wider; deeper narrower; better more; better more; worse

more; better

What is a cost that has been incurred and cannot be reversed called?

sunk cost

tariff is a: tax on imported products limit on the quantity of a good that can be imported tax on exported products limit on the quantity of a good that can be exported

tax on imported products

A new study discovers the health benefits of eating fish regularly. At the same time, some consumers decide to become vegetarians. What is the effect of these events on the equilibrium price and quantity in the fish market? The equilibrium price rises, and the equilibrium quantity falls The equilibrium price falls, and the equilibrium quantity rises The equilibrium price falls, and the change in the equilibrium quantity is ambiguous The change in both the equilibrium price and quantity is ambiguous

the change in both the equilibrium price and quantity is ambiguous

A market's deadweight loss is calculated as: the economic loss that a firm has when it is not producing its profit-maximizing output the loss to consumers when a product malfunctions or fails to meet expectations the economic surplus at the efficient quantity minus the economic surplus at the actual quantity the price at equilibrium minus the price at actual quantity

the economic surplus at the efficient quantity minus the economic surplus at the actual quantity

You are thinking of starting a tutoring service. You already have a part-time job on campus that pays $10 per hour. You think you can tutor fellow students for five hours each Saturday at $25 per hour. If you were not tutoring, you could work another five hours at your campus job. How much economic surplus will you generate each week if you start tutoring? $125 $75 $65 $50

$75

What are some consequences of imports?

- The price declines to the world price - The lower price reduces the quantity supplied by domestic sellers and increases the quantity demanded by domestic buyers - Imports fill the gap between supply and demand

What is it called to buy goods or services from foreign sellers, & a good or service bought from a foreign seller

Import

What is the total quantity demanded by all buyers called?

World demand

What is the total benefits minus the total costs flowing from a decision called?

economic surplus