Final Exam Econ
Economic theory offers ________ about The full range of possible events and responses which can prevent __________ about households will respond to changes and prices or incomes
A systematically of thinking; misguided conclusions
The demand for a product is unit elastic at a price of $20, 10 units of the products are sold at the prices increase to $40 in one would expect sales to equal
5 units
Which of the following of most likely shift the production possibilities curve inward
A decrease in the average number of hours worked per week as a labor force chooses to enjoy more leisure time
Briefly explain what the term "agglomeration economies" refers to and briefly describe what the fundamental reason for the development of this particular type of economy relates too. Provide two examples of factors associated with agglomeration economies and identify what these factors help to explain. Identify two factors that would lead to diseconomies and briefly explain how the future of many of the world's cities will be likely be determined.
Agglomeration economies are economies that are created by large populations in an even larger city. The fundamental reason is the idea of economies of scale in a broader sense. Examples include: how a city is filled with workers, so a business hires easily and produces efficiently because of the number of customers; cities big enough to have attractions can draw in a bigger population and offer many items. They help explain why economies have a big portion living in urban areas. Traffic congestion and high amounts of people and trash can lead to a diseconomy. The future can be determined if a city can minimize the factors that would cause diseconomy and the benefit of agglomeration economies.
The choice on a production possibility set that is socially preferred with a choice when an individual's budget constraint that is personally prefer it will display
Allocative efficiency
Which of the following statements most likely lies within the round of microeconomics
An increasing labor cost will increase additional cost of producing another bus
Which of the following best characterizes the circular flow of income
Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.
Specialization
Can lead to an increase in overall production
How does the US Bureau of labor statistics gather information with regard to the typical consumption choices of Americans
Consumer Expenditure Survey
Briefly discuss how a higher interest rate or return affects the choices typical households with respect to inter temporal budget constraint.
Depending on the preference of consumption, the household can contribute the higher quantity of income to saving, want to keep the same amount of saving, or decrease saving.
When I am a gold miner chooses what quantity of gold each of its mind so produce over the next 12 months does quantity along with the price is prevailing in the market for output and input will
Determine the company's total revenue total cost and its profits
The law of___explains why people in society's really make all or nothing choices
Diminishing marginal unit
_______ - A term referring to the fact that for mini goods as a level production increases the average cost of producing each individual unit declines
Economies of scale
Regardless of whether you were looking through the microeconomics microscope or the macro economics telescope the fundamental subject material of the interconnected _______ doesn't change
Economy
The leader of a federal political party made the following campaign promise My administration will increase national defense without requiring sacrifices elsewhere in the economy the promise can we kept if
Either B or C occurs but not as a result of C
Contrast the role of fixed costs and variable costs in economic decisions about future production and pricing.
Fixed costs are in the past and can not be altered, so in other words, they are sunk costs. Fixed costs do not play a role in future economic decisions. Variable costs show the diminishing marginal return showing the reason they play a role in future production and pricing. They change over time and the marginal cost of producing greater levels of output rises.
Briefly explain how the zero profit point in the shut down Point for a firm operating and perfectly competitive market each determined
If a firm is operating in a perfect competitive market the zero profit point will be where the marginal cost curve crosses the average cost curve at the minimum of the average cost curve. When the marginal cost curve crossed the average variable cost curve, it will be the shutdown point.
A supply curve Is a graphical illustration of the relationship between price shown on the vertical axis and______shown on the horizontal axis
Quantity
If a graph is used to compare total revenue and total cost of a perfectly competitive firm then the horizontal axis of the graph represent the ______ and the vertical access represent ________
Quantity produced; both total revenue and total cost measured in dollars
The price elasticity of demand measure the
Responsiveness of quantity demanded to a change in price
If a firms revenues do not coverage average variable cost in that firm has reached it
Shut down point
Economist are able to determine total utility by
Summing up the marginal Utilities of each unit consumed
A drought decreases the supplies of agricultural products which means that at any given price a lower quantity will be supplied conversely especially good weather wood shift the
Supply curve to the right
As the_______complement for high skill labor Becomes cheap the demand curve for high skilled labor will shift to the right
Technology
Which of the following is considered to be a telltale signal that the point with the highest total utility has been found
The marginal utility per dollar is the same for both goods
philosophers draw a distinction between positive statements which describe the world as it is and ______'s Which describe how the world should be
Normative statement
It delivered demand is downward slopeing and labor supply is upward slopeing then when labor demand rises faster than labor supply it is expected that real wages
Will increase
Marginal thinking is best demonstrated by:
choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
Which of the following best denotes the reason for the existence of substantial black markets
command economy
In order to determine ________ The firms total cost must be divided by the quantity of its output
average cost
Marginal utility can
be positive, negative, or zero
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
budget constraint
An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________________ .
accounting profit; excluding opportunity cost
In order to reduce the harmful effects of recession and carbon emissions the government provided tax incentives for manufacturing firms to ________ that provide alternative more efficient methods of combining inputs to produce output
acquire energy efficient production technologies
Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.
all else is held equal
Which of the following results in a rightward shift at the market demand curve for labor
an increase in demand for the firm's product
Which of the following will not result in a leftward shift of the market demand curve for labor
an increase in the wage rate
If a firm is experiencing _____________________, then as the quantity of output rises, the average cost of production rises.
decreasing returns to scale
Which of the following is most likely to cause variation in American household spending patterns
each of the above will cause a variation
Which of the following is generally accepted as a valid criticism of the production of useful goods and services
environmental pollution
If the supply curve for a product is horizontal then the elasticity of supply is
equal to infinity
If the supply curve for a product is vertical, then the elasticity of supply is:
equal to zero
The __________ is the only price where quantity demanded is equal to quantity supplied
equilibrium price
The term constant returns to scale describes a situation where
expanding all inputs does not change the average cost of production.
A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.
fixed costs; do not change,
Which of the following best describes a fiscal policy tool
government spending
When economists attempt to predict the spending patterns of US households they will typically view the _____________ as a primary determining factor that influences the individual consumption choices that each will make
income level of each household
The longer the time period considered, the more the elasticity of supply tends to:
increase
In microeconomics, The term __________ is synonymous with economies of scale
increasing returns to scale
Taxes on goods with __________ demand curves will tend to raise more tax revenue for the government than taxes on goods with __________ demand curves.
inelastic; elastic
Which of the following best describes a monetary policy tool
interest rates
Scarcity implies that:
it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
Economist refer to relationship that a higher price leads to a lower quantity demanded as the
law of demand
The term _________ is used to describe the additional cost of producing one more unit
marginal cost
Under perfect competition, any profit-maximizing producer faces a market price equal to its
marginal costs
The step-by-step process of finding the choice with highest total utility involves a comparison of the
marginal utility gained and lost from different choices along the budget constraint.
The basic difference between macroeconomics and microeconomics is
microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The demand curve for a typical good has a
negative slope because some consumers switch to other goods as the price rises.
If cola and iced tea are good substitutes for consumers, then it is likely that:
their cross price elasticities are greater than zero.
_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.
total revenue
The lesson of______is to forget about the money that irretrievably gone and instead to focus on the marginal cost and benefits of future options
sunk costs
Demand is said to be ___________ when the quantity Demanded changes at the same proportion as a price
unit elastic
Nearly all supply curves share a basic similarity: they slope _______________.
up from left to right
Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.
usury laws
And a free market economy firms operating in a perfectly competitive industry are said to have only one major choice to make which of the following correctly sets out that choice
what quantity to produce
Approximately what portion of annual consumption is typically spent by American households on shelter
one third
The elasticity of supply is defined as the ____ change in quantity supplied divided by the _____ change in price
percentage; percentage
In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.
price ceilings
________ Refers to the total number of units that are purchased at that price
quantity demanded
When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.
the quantity demanded of financial capital at any given interest rate will shift to the right.
_______________ arises were many firms are competing in a market to sell similar but differentiated products
Monopolistic competition
I'maGoldMiner has benefited from a record rise and gold prices in the global commodities market while the price of its output is highly influenced by market speculation if it wants to increase production and take advantage of the current profit maximizing opportunity the company
Must accept market price for its physical capital input
Many economists believe that the trend toward grader weight any quality across the US economy was primarily caused by
New technologies
25% decrease in the price of breakfast cereals leads to a 20% increase in the quantity of cereal demanded as a result
Total revenue will decrease
In the US economy nearly half of all the workers employed by private firms work at
18,000 large firms that employ more than 500 workers.
Briefly explain the nature of a perfectly competitive firm briefly discuss the effects Avenue and trance into a perfectly competitive market on existing firms that have profits in the short run
It's perfectly competitive firm is a price taker. It has to except prices at which is a good sale in the prices their purchase that by the market. Firms in a highly competitive market can earn points in the short run by new firms coming in means it won't last.
In economic terms, A practical approach to maximizing profit requires an examination of how changes in production affect _________ and ________
Marginal revenue; marginal cost
When a business adopts a strategy of reducing and or discontinuing production in response to a sustain pattern of losses it is
Preparing to exit operations
As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good.
The production possibilities frontier
If new manufacturers enter the computer industry then (ceteris paribus)
The supply curve shifts to the right
Define wage elasticity of labor supply and differentiate the elasticity between teenage workers and that of middle-aged adult workers in the workforce.
The wage elasticity for teenage workers is elastic because the percentage change in wages will make a change in the number of hours worked. For adults, it is inelastic because when the wages go up and down, the number of hours because of their prime earning years of supply changes that causes a lesser percentage amount. Wage elasticity of labor supply is when there is a percent change in labor supplied due to change in wages.
Steel mill wage cost increase by 18% over a year what is the likely economic affect on the market for steel
There is an increase in the cost of producing steel which shift the supply curve of steel to the left thereby increasing the price of steel
After widespread pressure for its about the dangers of contracting madcal disease by consuming beef from Canada the likely economic affect on the US demand curve for beef from Canada is
They should the demand curve for beef to the left
The _________ arises when a price Changes because consumers have an incentive to consume less of the good with a relatively higher price and more of the good with the relatively lower price
substitution effect