ch 1-5 Econ
"Ceteris paribus" means
"other things constant."
A market is classified as an oligopoly when:
A few firms dominate the market.
Which of the following is NOT a characteristic of a perfectly competitive market?
A. The products sold by the firms in the market are homogeneous. B. There are many buyers and sellers in the market. Correct! C. It is difficult for a firm to enter or leave the market. D. Each firm is a price taker.
Which of the following is an example of a public good?
Amtrak rail transport services services of the U.S. Post Office the provision of medical care Correct! the provision of national defense
Suppose a concert by Lady Gaga and a basketball game played by the L.A. Lakers are substitutes, then which of the following is TRUE?
If the price of a ticket to a Lakers game decreases, the quantity of Lakers tickets demanded will increase.
Examples of transfer payments are
Social Security checks and unemployment insurance payments.
An example of a regressive tax is the
Social Security tax.
A monopolist is defined as
a single supplier of a good or service for which there is no close substitute.
A bowed outward production possibilities curve occurs when
additional units of output of one good necessitate greater reductions in the other good.
A point outside a production possibilities curve indicates
an output combination that is unobtainable with the current resource and technology levels.
Fred and Ann both decide to see the same movie when they are given free movie tickets. We know that
both bear an opportunity cost since they could have done other things instead of see the movie.
A price taker is a firm that
cannot influence the market price
Consumer spending can be divided into all of the following categories except:
correct! Investments Durable Goods Non-durable Goods Services
If the price of hot dogs increases, the demand for hot dog buns will
decrease
The fundamental goal of a firm or a business is to
earn the highest possible returns.
Macroeconomics deals with ________ while microeconomics deals with ________.
economywide choices; choices of individuals
Social Security and Medicare are clear examples of
governmental intervention in the market
All of the following are characteristics of perfect competition EXCEPT
homogeneous products. each firm is a price taker. Correct! product differentiation. a lack of barriers.
When two firms that serve the same set of customers merge it is called a _______ merger.
horizontal merger
Which of the following will cause a movement along the demand curve instead of a shift of the demand curve?
income tastes and preferences Expectations e the future price of a good Correct! None of these
A technological improvement in the production of tablets would
increase the supply of tablets.
Under a pure price system (free market economy), the decision of resource allocation is made by
individuals who own the resources.
Opportunity cost
is always the value of the next best forgone opportunity.
Which of the following is a disadvantage of the corporate form of business organization?
limited liability limited financing Correct! double taxation unlimited liability
Economics can be described as the study of how people use ________ resources to satisfy ________ wants.
limited; unlimited
Which of the following is NOT a barrier to entry?
patents licenses economies of scale Correct! U.S. antitrust legislation
The law of demand states that
quantity demanded will vary inversely with the price of the good.
In economics, ________ are limited but ________ are unlimited.
resources; wants
Price discrimination refers to
selling a product at different prices, with the price difference being unrelated to differences in marginal cost.
Price ceilings set below the equilibrium price cause
shortages
If an economy is operating at a point inside the production possibilities curve, then
society's resources are being inefficiently utilized
If an economy is operating at a point inside the production possibilities curve, then
society's resources are being inefficiently utilized.
A price floor set above a market equilibrium price causes
surplus
A student has a job that pays a wage rate of $10 per hour. The night before an economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost for her work is
the 15 extra points she estimates that she could have earned on the exam if she had studied the extra three hours.
In order to maximize utility, a consumer should allocate money income so that
the marginal utility obtained from the last dollar spent on each product is the same.
The price elasticity of demand is a measure of
the responsiveness of the quantity demanded of a good to a changes in the price of the good.
Implicit costs are measured by
the value of the next-best alternative uses of inputs.
Economic profit can be calculated as
total revenue - explicit costs - implicit costs
Accounting profit can be calculated as
total revenue - explicit costs.
