Econ Final Review (excluding graph questions)
The adverse selection of buyers is the tendency:
for the mix of buyers to skew toward more high-cost buyers when sellers don't know buyers' types.
Suppose the New York Rangers can rent out Madison Square Garden (the arena where they play hockey) to
implicit opportunity
If Bella uses the Rational Rule for Workers, she will keep choosing more work and less leisure until the:
marginal benefit of one more hour of leisure equals the wage.
16. Higher wages lead to:
more people supplying their labor to a labor market.
If the income elasticity of demand for a good is ______ the good is said to be _________
negative inferior
The owner of a Nissan dealership has determined that the cross-price elasticity of demand for new cars and oil change packages is -0.5. The dealership sells oil change packages as an add-on with new cars, and the package guarantees the customer regular oil changes at the dealership for the first five years the customer owns the car. The owner likes selling oil change packages because the customer bringing the car for an oil change results in an opportunity for the dealership to bring in revenue from additional maintenance services. If the owner wants to increase the quantity of oil change packages demanded by 5%, how much would she need to discount the price of a new car?
10%
Suppose the government imposes a price ceiling on a good because it believes that the market-determined price is too high. A price ceiling above the equilibrium price will cause:
neither sellers nor buyers to change their behavior.
Suppose you manage a convenience store. If macaroni and cheese is an inferior good, what do you suppose would
Both the price and quantity would increase
If raising taxes through Policy A yields more economic surplus than raising taxes through Policy B, then:
Policy A is more efficient and equitable than Policy B
Police protection is provided in most, if not all, urban and rural localities. However, individuals also purchase protective devices, such as alarm systems, to protect themselves. For most citizens, police protection is a good, while self-protection devices are a
Public; private
Which is a principal-agent problem?
Shareholders hire a CEO to increase profits, and the CEO remodels the office with expensive artwork and furnishings.
How does a business owner discover the business's demand curve?
The owner experiments with different prices for its product.
Hershey's Kit Kat candy bars are cheaper than usual. This could be because there is:
a surplus of Kit Kats.
In which scenario are you NOT part of a market transaction? a. You take a photo of flowers in bloom in a city park. b. You pay $5 to pick apples at a pick-your-own apples orchard. c. You buy meat and produce from a local farmer. d. You sell vegetables at a local fruit and vegetable stand.
a. You take a photo of flowers in bloom in a city park
Diane is a student studying economics and currently working on her class schedule for next semester. She considers the fact that more and more data is available every day and that data interpretation skills are learned by taking additional economics courses in her course selection. This acknowledgment highlights the dependencies that exist
between markets
Which is an example of an anti-coordination game? a. Jade is trying to decide where to locate her new store in relation to her suppliers and customers. b. Dina and her international suppliers are deciding what currency to use in contracts. c. Farid must decide whether to be aggressive or passive in negotiating the price of a new car. d. Sam wants the dictator in his country to be overthrown and must decide whether to protest against her.
c. Farid must decide whether to be aggressive or passive in negotiating the price of a new car
Because monopoly firms can set their prices above marginal cost, they:
can sell more only by lowering their prices.
Spaghetti and salad are related. If the price of spaghetti increases and the demand curve for salad shifts leftward, these goods are:
complements
A trade-off involves weighing:
costs and benefits
A subsidy for buyers of a product shifts the:
demand curve to the right
Two people have an interactive relationship. A table that has a row for each possible outcome for one person and a column for each possible outcome for the other person is called a(n):
payoff table
External benefits are generated by garden supplies that are used to beautify gardens and yards in neighborhoods.
price garden supplies at less than the marginal social benefit.
Yogurt has a perfectly inelastic demand and an upward-sloping supply curve. Cheese has a perfectly inelastic
price paid by consumers of yogurt will rise by more than the price paid by consumers of cheese.
On a graph of a company's cost, revenue, and demand cuves, the company's profit margin can be identified as the gap between _______ and ___________ for a given quantity
price; average cost
The two essential elements of risk are
probabilities; payoffs
Dependencies over time reflect the fact that:
resources can be spread across time
After a year delivering pizzas, you get a raise, and you choose to work the same number of hours as before. For
the income effect and the substitution effect offset each other exactly.
The marginal social cost of a unit of pollution is:
the marginal private cost plus marginal external cost from one extra unit of pollution.
Consider the decision to read your economics textbook. Which of the four core principles of economics applies to the notion that instead of reading this textbook you could be studying for your upcoming exam in a different course?
the opportunity cost principle
Consider your decision to attend class each day or skip it. Which of the four core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym?
the opportunity cost principle
Markets achieve an efficient allocation of resources when:
the quantity demanded equals the quantity supplied.
Tax incidence refers to:
who really pays the tax.