Econ final review

13. When building a model economists

simplify reality in order to highlight what really matter

14. The production possibility frontier illustrates that

if all resources of an economy are being used efficiently, more of one good can be produced only if less of another food is produced

Strategy tit for tat

in game theory, a strategy that involves playing cooperatively at first, then doing whatever the other player did in the previous period.

3. Microeconomics deals with

individual decision makers in the economy

19. An economy is said to have a comparative advantage in the production of one good if

it has the lowest opportunity costs for producing particular good

84. Reference 15-18 the firm show in the figure may engage in advertising because

its price is greater than marginal cost

In a monopoly to sell more they

lower the price

New York City limits the number of taxi cabs that can legally operate in the city. The most likely result of this practice is that

quantity control (cab fares will be higher)

39. producer surplus is represent by

the area above supply curve and below the price

15. If the economy produces 2 units of consumer foods per period, it also can produce at most ____ units of capital good

24

68. What is the average total cost of producing six purses

50

(Table: Spring Water) The table Spring Water shows the demand and cost data for a firm in a monopolistically competitive industry producing drinking water from underground springs. At the profit-maximizing output, profit is:

7.00

(Figure: A Rock Climbing Shoe Monopoly) Look at the figure A Rock Climbing Shoe Monopoly. If the firm acts to maximize profit, the firm will sell ________ pairs of shoes at a price of ________ per pair.

75. The firm will sell Q2 pairs of shoes at a price of P1 per pair

24. Which of the following factors would cause a movement along the demand curve a particular good?

A change in the price of that good

All else equal, if a price floor that is above the equilibrium price is imposed on a market and the government buys the surplus, what will happen to consumer and producer surplus?

Consumer surplus will fall and producer surplus will rise.

9. You are analyzing a trade-off when you compare _____ and _____ of doing something

Costs and Benefits

11. If the united states is more productive than Mexico in all line of production, than the united states cannot benefit from trade with mexico

False

73. Beef industry is perfectly competitive

False

5. In china, which of the following would not be a resource in the production of rice?

Money

62. if you cant recover what u spend-

Sunk cost

1. The study of economics arises because of the necessity for choice, and the necessity for choice arises because of the fundamental problem of scarcity of resources

True

2. A trade off involves weighing the costs and the benefits

True

41. binding minimum wage will generally cause

True

82. Non-cooperative equilibrium of a prisoners dilemma kind of game can be avoided by engaging in strategic behavior

True

29. A good is inferior if which of the following is true?

When income increases demand decreases

Which of the following two statements is a positive statement? Which is a normative statement? X. The federal minimum wage is increasing to $7.50 an hour. Y. The minimum wage should be high enough that families will not live in poverty.

X is positive; Y is normative (should be=normative)

64. a factor of production whose quantity can be changed during the short run is

a variable factor of production

30. The primary difference between a change in supply and a change in the quantity is that

a change in quantity supplied is amovement along the supply while change in supply is a shift

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system. Therefore, you would expect the demand for:

a home entertainment system to be more price elastic

47. elasticity 15% growth;

affect on total revenue will rise

23. The law of demand state that other things equal

as the price increases, the quantity demanded will decrease

17. Look at the figure guns and butter, this production possibility frontier is

bowed out from the origin because of increasing opportunity costs

The government decides to impose a price ceiling on a good, because it thinks the market-determined price is "too high." If the government imposes the price ceiling below the equilibrium price

consumers will respond to the lower price and therefore wish to purchase more of the good than at the equilibrium price.

the pricing in monopoly prevents some mutually beneficial trades from taking place. the value of these unrealized mutually beneficial trades is called

deadweight loss

27. If goods a and b are substitutes, a decrease in the price of good b will

decrease the demand for good A

28. If goods A and Z are complements an increase in the price of good Z will

decrease the demand for good A

50. yovanka has diabetes

demand for insulin is inelastic

22. The terms decrease in demand and decrease in quantity demanded can be used interchangeably

false

57. tax structure

false

59. administrative costs-

false

85. Tacit collusion-

not something monopolistic competition engages in

48. public transit-

price inelastic

The total producer surplus in the Wisconsin milk market represents ______.?

the sum of the individual producer surpluses in this market

52. suppose the price elasticity for demand for blueberries is 1.5-

total revenue will fall

4. Scarcity in economics means

we do not have sufficient resources to produce all the goods and services we want

35. Consumer surplus

what the consumers willing to pay minus good

80. A nash equiblirium-

occurs when each player pursues a dominant strategy.

61. because resources are scarce the true cost of something is its

opportunity cost

58. to minimize deadweight loss, excise tax-

true

65. the total product curve for the wallmark greeting card company shows how the quantity of output depends on ....

true

70. Long run equilibrium in a perfectly competitive market, all firms will be operating at their lowest possible average totally cost-

true

79. Oligipolgy choose often not to keep on price

true

Cindy's Nail

true

74. In the short run id a perfectly...

true (marginal cost equals marginal revenue)

71. Lawn mowing service, he should close-

false

Critics of the pharmaceutical industry often argue that price ceilings should be imposed on the drug manufacturers. If this happened, the quality of drugs would improve.

false

25. Which of the following statements is correct?

A change in the quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve

Which of the following is (are) true concerning monopoly?

A) monopoly is at the opposite end of the spectrum from a perfectly competitive firm B) a monopoly has no rivals C) Barriers to entry prevent other firms from entering the industry D) all of the statements are true D is correct

16. Look at the figure Guns and butter, on this figure points A, B, E, F

indicate combinations of guns and butter that society can produce using all of its factors efficiently

8. A choice made ______ is a choice whether to do a little more or a little less of something

at the margin

10. In an attempt to reduce shooting deaths, some cities have offered money to people who turn in illegal guns. This program is an example of the government using _____ to influence behavior

incentives

price controls

legal restrictions on the prices that can be charged for goods and services in a market

63. economy profit reflect

opportunity cost

18. Technological improvement will

shift the production possibility frontier outward; (increasing productivity)

If an increase in price for cotton increases total revenue, then the price effect is ________ the quantity effect.

stronger than

26. When the economy suffers a downturn and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for the phenomenon

travel is a normal good and vacation travel by car is an inferior good

21. A competitive market occurs when there are many buyers and sellers of the same good

true

54. lump sum tax-

true

55. progressive tax is based on ability to pay-

true

56. tax system causes loss in efficiency bc taxes distort incentives-

true

6. Opportunity cost is the

value of the best alternative forgone in making any choice

7. You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook the opportunity cost is

your enjoyment of the new CD player