Econ exam
ceteris paribus
"other rings being equal"
increase increase
a decrease in rent will cause a _____ in supply and a _____ in quantity demanded
curve
a graph of a function
efficient, equal to inefficient, greater than
a market is economically _____ when the price is _____ the marginal cost
cost
a measure of what must be given up in order to obtain something else
increase increase
a new advance in production technology will cause a _____ in supply and ______ in demand
perfect competition
a price ceiling set by the government will most likely make which market structures less economically efficient
perfect monoploy monopolistic oligopoly
a price floor set by the government will most likely make which market structures less economically efficient
inferior good
a product whose demand decreases when the price of a normal good decreases
positive relationship
a relationship between two variables in which they both increases or decreases in conjunction
indifference map
a set of indifference curves with each successive curve lying outside the previous one and in the northeast direction on a Cartesian Plane
equilibrium
a situation in which economic agents or aggregates of economic agents such as markets have no incentive to change their economic behavoir
equilibrium
a situation in which economic agents or aggregates of economic agents such as markets have no incentive...
explicit cost
a specific amount of money given up in order to obtain something else
long run
a time period in which no factors of production are fixed
shift in a curve
a variable that is not directly represented on the graph changes, subsequently causing a change in the way that the X-variable and the Y-variable relate to one another
graph
a visual representation of the collection of all ordered pairs (x,y) of a function
indifference curve
a visual representation of the locus of combinations of the amounts of two goods such that an individual does not prefer any one combination over any other combination
more more
according to the law of increasing opportunity costs the ______ you try to benefit from something, the ______ it will cost you to get another one.
income
amount of funds, goods, or services received by an individual, corporation, or economy in a given time period
decrease decrease
an increase in rent will cause a ______ in supply and a _______ in quantity demanded
decrease decrease
an increase in wage rates will cause a _____ in supply and a ______ in quantity demanded
market
any context in which the sale and purchase of goods, services, or resources takes place
normal good
any product whose demand decreases when income decreases
variable cost
costs that change with the quantity of output
fixed cost
costs that do not change with the quantity of output
relationship
dependence between two quantities, one of which is given (the independent variable) and the other produced (the dependent variable)
break even analysis
determines the output level at which zero profit (accounting or economic) is earned
break even analysis
determines the output level at which zero profit is earned
demand curve
downward sloping curve
demand curve
downward sloping function on a market graph
normative economics
economic analysis which provides prescriptions or statements about what should be rather than what is
marginal social cost=marginal social benefit
economic efficiency is maximized where
ceteris paribus
employed to indicate that outer things remain unchanged when considering the effect of varying one or a few independent variables
technical progress
enables more output to be produced for unchanged quantities of the inputs of the factors of production to the production process
microeconomics
examines the behaviors of individuals households and businesses
transaction cost
expenses other than price which are incurred in a market exchange
increase increase
for a normal good an increase in consumer income will cause a ______ in demand and a _____ in quantity supplied
factors of production
general term used in economics to describe all the resources of society that are used for production
law of diminishing marginal utility
if increasing quantities of a good or service are consumed by an individual or household, then the amount of satisfaction received from additional units of the good or service will, after some point, begin to decrease.
law of diminishing marginal utility
if increasing quantities of a good or service are consumed by an individual or household...
enter decrease
in the short run, if firms in a monopolistically competitive market are earning economic profit, then in the long run, firms will ____ the market and economic profits will _______
exit increase
in the short run, if firms in a monopolistically competitive market are experiencing economic loss, then in the long run, firms will ______ the market and economic profits will ______
price
numerical value assigned to the market exchange of a product
average total cost
per unit cost of production
average fixed cost
per unit fixed cost of production
average variable cost
per unit variable cost of production
diminishing marginal utility
phenomenon whereby the additional satisfaction attached to consuming an extra unit of any good decreases as more and more
diminishing marginal utility
phenomenon whereby the additional satisfaction attached to consuming an extra unit of any good decreases as more and more of that good is purchased and consumed
total revenue
price x quantity
production
process of creating goods and services
capital
produced goods used as factor inputs for further production
normal good
product whose demand decreases when income decreases
inferior good
product whose demand decreases when the price of a normal good decreases
total cost
profit - total revenue
variable cost
profit - total revenue - fixed cost
marginal rate of substitution
refers to the amount of one good that is required to compensate the consumer for giving up an amount of another good such that the consumer has the same level of utility as before
marginal rate of substitution
refers to the amount of one good that is required to compensate the consumer for giving up an amount...
substitute
related good whose changes in demand are directly related to the price of another good
complement
related good whose changes in demand are inversely related to the price of another good
negative relationship
relationship in which one variable decreases as another increases
Y-axis
represents the dependent variable
X-axis
represents the independent variable
profit
revenues minus costs
variable
something that might be expected to have different values over time or between individuals
positive economics
that part of economic science which concerns itself with statements that are capable of verification by reference to the facts and testable by reference to empirical evidence
marginal cost
the additional cost from producing one more unit of output
marginal revenue
the additional income received from selling one more unit of output
income
the amount of funds, goods, or services received by an individual, corporation, or economy in a given time period
preference
the degree to which consumers think that a good or service is in style or "cool"
output
the end product of creating goods and services
marginal utility
the extra satisfaction obtained from an extra unit of any good
competition monopoly increased
the government implements and enforces anti-trust laws to encourage _____ and inhibit _____. This usually results in ______ market efficiency.
true
the law of increasing opportunity costs and the law of diminishing returns are basically the same thing
more more
the law of increasing opportunity costs suggests that the _____ you do something, the _____ it will cost you to do it.
average total cost
AFC + AVC
average variable cost
ATC - AFC
average fixed cost
ATC - AVC
production possibilities frontier
a bounding line that represents the limit of the capability for transforming resources into goods & services without contradicting the circumstances
budget constraint
indicates what combination of goods and services a consumer can buy with a given income
budget constraint
indicates what combinations of goods and services a consumer can buy with a given income
monopoly perfect competition
monopolistic competition is more like _____ in the short run and more like _____ in the long run in terms of how much economic profit is earned.
quantitiy supplied
the number of units of a good or service which a firm is willing to produce at the ruling price
quantity supplied
the number of units of a good or service which a firm is willing to produce at the ruling price
quantity demanded
the quantity of a good or service which an individual or group desires at the ruling price
short run
time period in which at least one factor of production is fixed
total revenue
total receipts from sales of a product or series of products produced by a single firm or industry
profit
total revenue - fixed cost - variable cost
quantity
total revenue / price
entrepeneurship
what is a factor of production that collects and organize the other factors of production in order to produce goods and services
capital
what is a factor of production that is created by using other factors of production
labor
what is a factor of production that uses knowledge, skills, and abilities for producing
monopoly monopolistic competition oligopoly
what market structures are economically inefficient
economic efficiency
when a firm is producing the maximum output possible with the available resources and technology
demand quantity supplied
when income increases for people in general, there is likely to be an increase in _____ followed by an increase in _____
movement along a curve
when the Y-axis variable changes, resulting in a subsequent change in the X-axis variable
surplus
when the government sets a price floor in a free market, the result is likely to be _____ of output in the market
perfect competition
which of the following is the most economically efficient market structure
monopoly monopolistic competition oligopoly
which of the following market structures produces a deadweight loss
kinked
which of the following of oligopoly is more similar to perfect competition than the two others?
cartel
which of the following theories of oligopoly is most like monopoly
set a price ceiling
which of the following would be most appropriate for decreasing the deadweight loss produced by inefficient market structures
utility
widely construed in economics to be synonymous with "welfare" economic welfare, satisfaction, or happiness
supply
willingness and ability of sellers to sell different quantities of a good or service at different prices