ECON 205 Final Exam

In long run ATC per unit of output stays the same as output increases, the firm is experiencing

constant economies of scale

Labor and capital are substitute inputs, a decrease in price of a cost of capital will

decrease the demand for labor

Minimum wage laws under perfect competition in the labor market will

decrease the number of workers the firm will hire

Market systems response of fundamental question : "how much out put to be produced?"

efficiency

Ceteris paribus, labor is a small percentage of firms total cost, the firms elasticity of demand for labor will be

elastic

Ceteris Paribus concludes that the

elastic the demand for a good or service

The next best alternative surrendered when choice is made is?

Opportunity cost

If L and M are substitute goods, a decrease in the price of L will result in?

a decrease in demand for M

X and Y are complimentary goods, an increase in the price of X will result in?

a decrease in the demand for Y

At D2 and S1 equilibrium the euro has ___________ and the dollar has ____________

appreciated, depreciated

Technological advance in production

be indeterminate and increase

If world price was 2.25 would result in:

exports of 100

Amount of subsides provided to the producer deceases at the same time the numbers.... we can conclude that

be indeterminate, decrease

Union rules designed to increase the number of workers is

featherbedding

Profits in short run in a perfectly competitive market:

firms will enter the market, and increase industry supply

Negotiations between workers and management regarding labor contracts is known as

collective bargaining

If world price was 1.75 would result in:

imports of 100

Economics profits differ from accounting profits because economic profits:

include opportunity costs

Largest source of federal expenditures are:

income security ,health care, interest on debt, and defense.

Decrease in the supply curve might be caused by?

increase in prices of needed inputs

Compared to pure competition, monopolies:

increase price and decrease output

Trade barriers tend to:

increase price of goods and services

Increase in the product of labor will

increase the demand for labor

Protectionism ( tariffs and quotas) is necessary for all the following reasons except:

increase world trade through specialization

Derived demand suggests that union increases wages through

increases demand for product

Which of the following is not a characteristic of the market system?

governmental allocation of resources

Marginal utility of good A is greater than marginal utility of good B, an individual purchase will

"not enough information given"

At D1 and S1 equilibrium, the value of the euro is _____________ and the dollar(s) and the value of the dollar is ______________

1,1

HHI (Herfindahl Index) for an industry consisting of one firm?

10,000

Production at point A, the opportunity cost of producing a gun is

2 units of beer

the substitute increases and the increase in the number of sellers, we can conclude for it to be

indeterminate, and increase

Production of more guns at the expense of less beer illustrates

law of increasing opportunity cost

The economic problem is deciding how to make the best use of

limited resources to unlimited wants

When the price is less than ATC?

losses exist

Allowing the value of a currency to fluctuate within certain limits is referred to as:

managed float

Firm can only hire union workers and no one is required to join a union

open shop

based on the graph, the firm should:

operate but realize a loss

Lacking necessary household income to satisfy basic needs:

poverty

The law of demand states that

price and quantity demanded are inversely related

The price of a good increases and the total revenue decreases, we can conclude that

price elasticity of demand is ELASTIC

"what is to be produced?"

profits

Federal personal income tax structure is:

progressive

A source of government tax revenue is:

property tax

Transfer programs that are founded out of general tax revenue are called

public assistance

Non exclusion and non rivalry are characteristics of:

public goods

The problem with using four firm concentration ratios is:

ratios ignore foreign competition

Sales taxes are generally considered:

regressive

Some states have made union shops illegal and these states are called what?

right to work states

Largest sources of state tax revenue are:

sales and personal income

Regarding AP and MP

sometimes AP is greater than MP and Mp is greater than AP

Minimum wage is $8 (graph)

surplus of 10,000

Which is NOT among the top three sources of federal government revenue

tariff tax

Economics short run refers to time period where:

the firm cannot change capacity

Price elasticity of supply, the longer time the firm has to adjust to the price changes

the more elastic the price elasticity of demand

nations exchange rate is fixed, an increase in the value of the currency will be adjusted by:

the nations central bank increasing the supply of the currency

Terms of trade refers to:

the ratio at which nations exchange goods

Exports result when

the world price is less than the domestic price

According to collective bargaining model unions can bargain for higher wages because they know that

their wage rate is below the MRP

Ceteris Paribus demand for good or service will be more elastic

there exists a large number of good substitutes

Firm can only hire union or nonunion

union shop

Costs that vary with level of output are?

variable costs

Two largest sources of state expenditures are public assistance and:

education

Lorenz Curve

Graph showing how much the actual distribution of income differs from an equal distribution

Firm faces imperfect competition in labor market, we know that

MRC > W

Firm faces imperfect competition in product market, we know that

MRP > D

Firm will continue to hire workers as long as

MRP > MRC

If the socially optimal quantity of the commodity good is Q0?

Neither external costs or benefits exist.

Market structure characteristics by few independent firms?

Oligopoly

Technological advance in the production results in

a rotation of the curve from (1) to (2)

A decrease in taste for a good, and the supply is constant, the equilibrium price will _____________ and equilibrium quality will ____________?

decrease, decrease

We can conclude that equilibrium price will __________and equilibrium quantity will ____________?

decrease, increase

The membership restriction model suggests that union increase wages through:

decreasing the number of union workers

Which of the following following polices would achieve the optimal quantity of this good?

decreasing the supply by taxing production process

When losses exist in a monopolistic competition market, if some firms exit, which of the following will occur to any specific firm in the market?

demand a firm faces will increase

Mac and Cheese are an inferior good, when the price increases, the quantity ________ will __________?

demanded, decrease

A shift from D1 to D2 may have been caused by?

depreciated, appreciated

Demand for labor is based on demand for a good or service the labor is producing is what?

derived demand

Long run ATC per unit of output decreases as output increases the firm is experiencing:

economies of scale

Largest sources of local government expenditure is:

education

One public assistance program is

medicaid

"who is to receive the output?"

money

Which of the following is not an economic resource?

money

Differentiated products and no long run profits are

monopolistic competition

Market structure consisting of one firm is

monopoly

A shift from S1 and S2 may have been caused by:

nations central bank increasing supply of euros

Costs associated with production or consumption of a good or service that are passed on to a third party refer to:

negative externalities