Econ

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Refer to Table 7-4. If tickets sell for $25 each, then what is the total consumer surplus in the market?

$60.00

Refer to Table 7-6. If the market price is $1,000, the producer surplus in the market is

$750

Refer to Figure 9-12. With trade, domestic production and domestic consumption, respectively, are

800 and 400

Tariff

A tax on imported goods

Refer to Figure 7-1. When the price is P1, consumer surplus is

A+B+C straight down chart

Costs

Amount that firm pays to buy imputs

ATC

Lies above the other two also u shaped

Relationship between Marginal cost and average total cost

MC<ATC----->ATC rises

Refer to Figure 9-7. The equilibrium price and the equilibrium quantity of cheese in Wales before trade are

P0 and Q0.

Total average Costs

TC/Q or ATF+AVC

Average Fixed costs

TFC/Q

Average variable costs

TVC/Q

They receive lower price

Tarde raises the economic well-being of country as a whole

If country does not have a comparative advantage

Then domestic price will be higher than the worldprice country will be importer of good

AVC and ATC

U shaped reflecting the law of diminshing marginal returns

A demand curve reflects each of the following except the

ability of buyers to obtain the quantity they desire

free trade

affects welfare in an exporting country

MC intersects AVC and ATC

at their minimum points

If a consumer places a value of $15 on a particular good and if the price of the good is $17, then the

consumer does not purchase the good.

total surplus equation

consumer surplus + producer surplus

An example of an explicit cost of production would be

lease payments for the land on which a firms factory stands

slope of production function

marginal product of labor

invisible hand

term economists use to describe the self-regulating nature of the marketplace

Imports

the difference between the domestic quantity demanded and the domestic quantity supplied at world price

The domestic price falls to equal the world price

the domestic consumption increases

willingness to pay

the maximum amount that a buyer will pay for a good

welfare economics

the study of how the allocation of resources affects economic well-being

long run

the time period in which all inputs can be varied

market supply

various quantities that suppliers would be willing and able to sell at different prices

Refer to Figure 7-8. If the supply curve is S and the demand curve shifts from D to D', what is the increase in producer surplus to existing producers?

$2,500

Refer to Figure 7-4. At the equilibrium price, consumer surplus is

$300

Refer to Figure 9-13. With trade, producer surplus is

$900

Free markets allocate

(1) the supply of goods to the buyers who value them most highly and (2) the demand for goods to the sellers who can produce them at least cost.

Effects of a Quota

1. Increase domestic price of good 2. Increase domestic production of good 3. Decrease consumption of the good 4. Create quota 'rents' which are typically pocketed by foreign firms (but government may also collect it-domestic) 5. Production inefficiency 6. Consumption inefficiency 7. Welfare loss

Effects of a tariff

1. Increase the domestic price of the protected good 2. Increase domestic production of the good 3. Decrease consumption of the good 4. Decrease consumer surplus 5. Increase producer surplus 6. Tariff revenue 7. Production inefficiency 8. Welfare loss

Plant

A physical establishment that performs one or more functions in the production, fabrication, and distribution of goods and services.

expected benefits

what determines how much a buyer would be willing to pay(max price) for a good

Market Efficiency

when a market is capable of producing output high enough to meet consumer demand

The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $600 per ton. The U.S. is a price-taker in the market for tomatoes. If trade in tomatoes is allowed, the United States

will become an exporter of tomatoes.

Lower marketplace

will increase consumer surplus

The before-trade domestic price of tomatoes in the United States is $500 per ton. The world price of tomatoes is $600 per ton. The U.S. is a price-taker in the market for tomatoes. If trade in tomatoes is allowed, the price of tomatoes in the United States

will increase, and this will cause consumer surplus to decrease.

Higher market

will reduce the consumer surplus

producer of steel

will want to sell steel at world price

comparitive advantage

Compares producers of a good according to their oppertunity costs

Price is $260 sonja wtp=$300

Cs= 300-260=$40

They pay lower price

Domestic producers of good are worse off

Suppose Katie, Kendra, and Kristen each purchase a particular type of cell phone at a price of $80. Katie's willingness to pay was $100, Kendra's willingness to pay was $95, and Kristen's willingness to pay was $80. Which of the following statements is correct?

For the three individuals together, consumer surplus amounts to $35.

Total Revenue (TR)

Market price x Amount sold=total revenue

consumer surplus

Measure economic welfare from buyer side

producer surplus

Measures economic welfare from the seller side

when domestic prices to equal the world price

Sellers in exporting country are better off Buyers in exporting country are worse off

If world price of steel is lower than the domestic price

The country will be an importer of steel

Turkey is an importer of wheat. The world price of a bushel of wheat is $7. Turkey imposes a $3-per-bushel tariff on wheat. Turkey is a price-taker in the wheat market. As a result of the tariff,

Turkish consumers of wheat become worse off and Turkish producers of wheat become better off.

which of the following expressions is correct

accounting profit=total revenue-explicit costs

Consumer surplus

area below the demand curve and above the market price

world price of steel is higher> domestic price

country will be an exporter of steel trade

A drought in California destroys many red grapes. As a result of the drought, the consumer surplus in the market for red grapes

decreases, and the consumer surplus in the market for red wine decreases.

When a country allows trade and becomes an importer of a good,

domestic consumers of the good are better off

A tariff on a product makes

domestic sellers better off and domestic buyers worse off.

Exports

equal the difference between the domestic quantity supplied and the domestic quantiy demanded at the world price

Refer to Figure 9-7. With trade, Wales

exports Q2 - Q1 units of cheese.

industry

group of firms producing the same or similar product

Refer to Figure 9-8. The country for which the figure is drawn

has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Producer with smaller opportunity costs of producing a good

has comparitive advatage of that good

Economics

include all the opportunity costs when measuring costs (explicit costs)

Refer to Figure 9-8. In the country for which the figure is drawn, total surplus with international trade in cars

is larger than total surplus without international trade in cars.

Equilibrium in a market

maximizes the benefit of buyers and sellers

marginal cost

mc=TC/Q

Accountants

measure the explicit costs but ignore the implicit costs

Producer surplus rises

more than consumer surplus falls

market equilibrium

reflects the way markets allocate scarce resources

Refer to Figure 7-17. If 4 units of the good are produced and sold, then

the allocation of resources is inefficient.

Consumer Surplus (CS)

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

producer surplus

the amount a seller is paid for a good minus the seller's cost of producing it measuring the benefits to sellers

marginal product

the extra output or change in total product caused by the addition of one more unit of variable input

short run

the period of time during which at least one of a firm's inputs is fixed

When the marginal product declines

the production function becomes flatter

Total revenue

the total amount of money a firm receives by selling goods or services

total costs

total fixed costs + total variable costs


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