Econ

suppose that in a month the price of a gallon of milk increases from 2 to 2.50. at the same time the quantity of gallons of milk demanded decrease from 100 to 80. the price elasticity of demand for gallons of milk is

-0.8

15) which of the following saying best reflects the concept of opportunity cost

b) time is money

Economic capital refers to:

buildings, machinery, and equipment

an individual or country that has a comparative advantage in the production of one good

may or may not have an absolute advantage in the goods production

the perfectly competitive firm produces at the output level where

price equals marginal cost

you are hired by jumbos potato farm to determine when jumbo should shut down and produce no potato in the short run. jumbo sells his potato in a perfectly competitive market. you tell jumbo to shut down if

price is less than average variable cost when marginal revenue equals marginal cost

the law of supply indicates that

produces will offer more of a product at high prices than they will at low prices

if the demand curve is a vertical line, it means that

regardless of the price, the quantity demanded is a constant amount

when a tax is placed on a product, the price paid by buyers

rises, and price receive by sellers falls.

a perfectly competitive firm can

sell as much as it can produce at the market price

to say a firm has market power is to indicate that

the firm has the ability to affect market prices

average variable cost is defined by

total variable cost divided by quantity

coordination problems in large firms might lead to

upward sloping long run average cost curves

assuming that a specific firm always make an optimizing decision and currently when operation tr=500 vc=600 and fc= 800. what would their short run profits be

-800

suppose that elasticity of demand for a product us 0.5 and quantity demanded increases by 20%. What must the percentage decrease in price have been

40%

a market with several closely substitutable goods and sellars that can enter or exit a market relatively freely is most likely

a monopolistically competitive market

which real world market closely approximates perfect competition

agricultural markets

the price elasticity of demand for a good is relatively elastic if

all of the above

a decrease in supply would result from

an increase in the prices of input resources

a firm experiences diminishing marginal returns bc

at least one factor of production is fixed

14) to think at the margin means to consider

b) how a small change in one variable affects another variable

11) customarily, economists classify resources into these major groups:

b) land, labor, capitol, and entrepreneurship

3) in a market system, what provides individuals the information needed to make decisions

b) prices

if an economy is fully utilizing it resources, it can produce more of one product only if it

b) produces less of another product

2) Increasing opportunity cost while moving along a production possibility frontier is due to

b) the fact that resources are not equally productive in alternative uses

18) the expression "there's no such thing as a free lunch" implies that

c) costs are incurred when resources are used to produce goods and services

The__________ the opportunity cost of doing something, the________ likely it will be done

c) higher, less

8) when economists assume that people are rational and respond to incentives, they mean

c) people act in their own self interest

7) entrepreneurships refers to

c) persons who are risk taking and who develop new ways of doing things

16) the 3 key economic questions include all of the following except

c) where should these products be produced?

the differences between the max amount that a consumer is willing to pay for a product and the price that is paid for the product described

consumer surplus

19) what do economists mean when they state that a good is scarce

d) The amount of the good that people would like to have exceeds the supply that is freely available from nature

17) which of the following might be considered to be a characteristic of a planned economy?

d) there is no incentive for people to work hard

9) does voluntary exchange create wealth(Value)?

d) yes, trade generally permits the trading partners to gain more of what they value: this is why they agree to the terms of exchange

if the equilibrium price of a good decreases and the equilibrium quantity of the good decreases, we can conclude that

demand decreased

suppose that when a particular firm decreases its price its total revenue decreases. What kind of demand does this particular firm face?

demand is price inelastic

in part a solution to the principal again problem is to

devise compensation rules to induce agents to act in the best interest of principals

when the firm increase output and the costs rise disproportionatly slower, the the long run average cost cure is _______ and the firm is experiencing _______

downward sloping: economics of scale

increased specialization in large firms might lead to

economies of scale

a price equal to the free market equilibrium price is efficient because the willingness to pay someone to consume an additional unit _____ the marginal cost to someone for producing the unit

equals

economic profits for firm is defined as the total revenue of the firm minus its

explicit and implicit cost of production

The "coincidence of wants" problem associated with barter refers to the fact that

for exchange to occur each transactor must have a product with the other transactor

a ban on imports will ______ the price domestic consumers pay for the good, and _______ the amount of the good consumed by domestic consumers.

increase;decrease

as price falls along a particular demand curve consumer surplus

increases

a good for which demand decreases when income increases is knows as a(n) ______ good

inferior

if demand is inelastic, and the government decides to raise the tax on water. then the prices for water will increase by a _____ and water consumers will bear a _____ share of the tax

large, large

specialization and trade exploit differences in productivity workers and

make everyone better off

the change in total variable cost resulting from a one unit increase in the change in quantity is

marginal cost

the primary goal of a firm in a capitalistic market is to

maximize profits

the income elasticity of demand is likely to be lowest for which of the following goods

milk

given time, consumers have the opportunity to adjust to price changes. thus the elasticity of demand for gas varies over time, the demand for gas is

more elastic in the long run because consumers have time to respond to changes in price

a response to a price change would be described as a

movement along an existing demand curve

Quiz one

number 4

quiz one

number 5

the best example of decision making at the margin would be

observing the effect that a small change in income has on the amount of income tax owed and therefore upon after tax income

in which of the following market structures do you have significant barriers to entry

oligopoly and monopoly

if two countries are producing the some two products it is mutually beneficial if the countries specialize then trade. How is it determined who specializes in the production of which product?

one should produce what they have an absolute advantage in producing

in a market economy what encourages firms to develop new products and production processes

patents

an important determinant of the amount of grains harvested nect year by Ethiopian farmers is the amount of seeds planted this year. given that Western nations have guaranteed to donate five hundred tons of grain next year, this year the Ethiopian farmer will

plant less seeds as the price of grain will be lower with the food aid

a government sometimes creates an excess supply of a product by setting a minimum price at which the product may be sold to consumers. this is called a

price floor

in a market system, what provides individuals the information needed to make decisions

prices

the price elasticity of demand reflects the responsiveness of

quantity demanded to a change in price

suppose that a technological advancement substantially reduces the cost of laser eye surgery. this would cause the equilibrium

quantity of laser eye surgery to increase

the demand for oil in the us is increasing at a time when production from us oil fields has expanded. in the us crude oil market, ceteris paribus, this would definitely cause equilibrium

quantity to increase

number 11

quiz 2

number 14

quiz 2

number 15

quiz 2

number 6

quiz 2

number 10 11

quiz 4

number 14

quiz 4

number 4 5

quiz 5

a perfectly competitive firms marginal cost curve above the minimum of the average variable cost curve is its

short run supply curve

in the short run____ factors of production are fixed while in the long run___ of them are

some, none

which of the following is not a characteristic of a perfectly competitive market

substantial barrier to entry

if the marginal cost of producing the next unit of output exceeds the average total cost

the average total cost curve is increasing

assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases

the demand for salsa increases

bananas and apples are subs. when the price of bananas rises, and a technological advance in apple production occurs at the same time

the equilibrium quantity of apples rises and the equilibrium prices of apples might rise or fall.

consumers do not have a strong preference for the output of one seller over that of another in a perfectly competitive market bc

the firms sell a standardized product

if an excise tax per unit of production is levied on a good

the largest burden of the tax is born by the consumer or producer with the most inelastic response to price changes

producers surplus is

the price a producer receives for a product minus the marginal cost of production

a demand curve is defined as the relationship between

the price of a good and the quantity of that good that consumers are willing to buy

in the event of excess demand in the coffee market

the price of coffee will increase

when there is a change in the quantity demanded it means that

the quantity a consumer is willing to buy changes when the price changes

suppose that a new study is released stating that consumption of orange juice( sub for apple juice) reduces the risk of cancer, and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?

the quantity of apple juice might rise or fall, and the price of apple juice rises

according to the law of increasing opportunity costs

the slope of the supply curve is positive

flour is used to produce bread. if the price of flour increases

the supply of bread decreases

the law of supply states that

there is a positive relationship between price and quantitiy supplied, ceteris paribus

when a market is in equilibrium

there is no shortage and no surplus at the equilibrium price

the law of demand implies that when people are asked to conserve water during a drought

they will be more likely to cooperate if the rates charged for water rise

the long run average cost of production is defined by

total cost decided by the quantity of output the firm chooses when it can chooses a production facility of any size

marginal revenues is equal to price for a perfectly competitive firm bc

total revenue increases by the price of the good when an additional unit is sold