AP Econ unit 2
What should a company do if it is making $0 economic profit?
Continue to operate since it is making an accounting profit.
Inefficiencies due to price controls are called
Dead-weight loss
Lower price and quantity
Decrease in Demand
Decrease in quantity and increase in price
Decrease in Supply
Which of the following will occur if consumers expect the price of a good to fall in the coming months?
Demand will decrease today
Which of the following conditions will cause producer surplus to increase?
More consumers come into the market
Which of these situations would cause an increase in the supply of jeans?
Producers improve productivity with computerized sewing machines.
Along a given demand curve for a product,
Quantity demanded decreases as price increases.
Price Floors always lead to
surpluses
When the price of a product falls, the purchasing power of our money income rises and will permit consumers to purchase more of the product. This statement describes:
the income effect.
Which of the following will not change the demand for ice cream?
A change in the price of ice cream.
If consumers are willing to pay a lower price than previously for each level of output, we can say that which of the following has occurred?
A decrease in demand
Kale continues to be the darling of the food industry and drives higher profits for kale producers
Change in Profit Opportunities from producing Other Products
New machinery developed for harvesting spinach
Change in Technology
If the price of coffee increases, which of the following is most likely to happen? A. An increase in the quantity of coffee consumers want to purchase. B. No change in the quantity of coffee consumers want to purchase. C. A decrease in the quantity of coffee consumers want to purchase. D. An increase in the demand for coffee. E. A decrease in the demand for coffee.
A decrease in the quantity of coffee consumers want to purchase.
Assume that the demand for apples is downward sloping. If the price of apples falls from $.80 per pound to $.65 per pound, which of the following will occur?
A larger quantity of apples will be demanded
Assume that the supply of pears is upward sloping. If the price of pears increases from 1.50 per pound to 2.00 per pound, which of the following will occur? A. Supply for pears will decrease. B. Supply for pears will increase. C. Demand for pears will increase. D. A smaller quantity of pears will be supplied. E. A larger quantity of pears will be supplied.
A larger quantity of pears will be supplied.
If consumers are willing to pay a higher price than previously for each level of output, we can say that which of the following has occurred?
An increase in demand
A technological advance in phone production will lead to which of the following?
An increase in phone supply
Which of the following situations would cause the supply of cars to move to the right? A. An increase in the efficiency of car production technology. B. An increase in the cost of steel used in car production.. C. A decrease in the number of people buying cars. D. An increase in consumers' income. E. A decrease in the number of car production companies in the industry.
An increase in the efficiency of car production technology.
Farmers continue to sell farmland to housing developers
Change Number of Sellers
People lose hours and income because of recession
Change in Consumer Income
New study shows eating spinach is good for health
Change in Consumer Tastes
People fear on-going drought will hurt spinach crop in the fall
Change in Consumers' Price Expectations
Fertilizer used in growing spinach goes up in price
Change in Cost of Production
Government introduces new subsidies to encourage farmers to grow more greens
Change in Government Tax/Subsidy
Farmers anticipate continued demand for spinach helping to drive higher profits
Change in Market Price Expectations
More people moving into the area
Change in Number of Consumers
Mushrooms, a popular item to serve with Spinach, double in price
Change in Price of a Complementary Good
Swiss Chard, a popular alternative to Spinach, goes on sale
Change in Price of a Substitute Good
Higher price and quantity
Increase in Demand
Increase in quantity and decrease in price
Increase in Supply
Which of the following will cause a shift to the right in the supply curve?
Technological advancements
Assume that people like mustard on their hot dogs. Due to increases in the cost of production, the supply of hot dogs decreases. How will this affect the market for mustard?
The demand for mustard will go down as hot dogs and mustard are complements
Which of the following is true at equilibrium?
The quantity demanded is the same as the quantity supplied
Which of the following is NOT an explicit cost for a business?
The salary the owner could have received from working for someone else.
Which of the following would lead to an increase in the price of blueberries? A. There is ideal weather for growing blueberries. B. The price of strawberries, a substitute good, falls. C. New technology leads to larger blueberry harvests. D. The wages of workers harvesting blueberries increases. E. The price of yogurt, a complementary good, increases.
The wages of workers harvesting blueberries increases
What is the equation to find ACCOUNTING profit?
Total Revenue - Explicit Costs
In the past few years, the demand for donuts has greatly increased. This increase in demand might best be explained by:
a change in consumer tastes
Suppose that in the market for computer memory chips, the equilibrium price is $50 per chip. If the current price is $55 per chip, then there will be a(an)______________ of memory chips.
surplus
With a downsloping demand curve and an upsloping supply curve for a product, a decrease in resource prices will
decrease equilibrium price and increase equilibrium quantity
The market price of a good will tend to fall if:
demand decreases
Most economists agree that price controls are good for the economy (true or false)
false
The market price of a good will tend to fall if:
it is above the equilibrium price
The market price of a good will tend to rise if:
it is below the equilibrium price.
The demand curve shows the relationship between:
price and quantity demanded
Which real-world issue illustrates the concept of a price ceiling?
rent controls
Consumer surplus: A. rises as the price of the product increases. B. rises as the cost of production decreases. C. falls as the cost of production falls.. D. rises as consumer income increases. E. is the difference between what the producer is willing to accept and what the buyer wants to pay.
rises as consumer income increases.
Consumer surplus:
rises as the price of the product decreases
Price Ceilings always lead to
shortage
If an increase in the price of good Y causes the quantity demanded of good X to increase, this means the two goods are:
substitute goods
If the price of sweaters increased and as a result, the price of sweatshirts also increased, it could be concluded that sweaters and sweatshirts are:
substitute goods and the higher price for sweaters increased the demand for sweatshirts