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