Exam 1-3
Using the Marginal Approach, the firm should produce __ units of output (Q) in order to maximize profit.
**will be the same as TOTAL approach ...where MR=MC are as CLOSE TO
if UE rate is 8% this means
8% of the LF is UE
The unemployment rate in a town in which 54,200 persons are employed and 4,900 are unemployed equals:
8.3% 54,200+4,900=59,100 4,900/59,100 x 100= 8.3%
The basket of goods in the Consumer Price Index (CPI) consists of about _________ products; that is, several hundred specific products in over __________ broad-item categories.
80,000;200--from the book
aka negative inflation
DEFlation
the DEMAND curve for a monopoly firm si
DOWN slope
Gross Domestic Product equals $1.2 trillion. If consumption equals $660 billion, investment equals $220 billion, and government spending equals $250 billion, then:
EXP. exceed imports. by 70 million 1.2= (660+220+250+?) ?=70...so X-M must be 70+
____ is a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines
Economies of scale
Uganda has a GDP of $35 billion (measured in U.S. dollars) and a population of 47 million. Costa Rica has a GDP of $62 billion (measured in U.S. dollars) and a population of 5 million. Calculate per capita GDP for each country.
U= 744.68 and CR: 12,400 divide 35/47 and 62/5 ...all x 1,000 to convert millions and billions together
Efficiency wage theory
_______ argues that the productivity of workers will increase if they are paid more, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate.
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the ____, a diagram which shows all possible consumption combinations of goods that someone can afford to buy.
a budget constraint
A decrease in quantity SUPPLIED is demonstrated by
a movement from point B to point A --upward on S line
A firm that holds a monopoly position in the market place is
a price maker
A market is defined as
an interaction b/ buyers and sellers
________ occurs when a few large firms have all/most of the sales in an industry.
an oligopoly
when the RR is lowered, what happens
banks have more money to lend out ad the money supply increases
The rise in unemployment that occurs because of a recession is known as cyclical unemployment, because it is closely tied to the _____.
business cycle
A positive statement
can be tested against the facts
What role can advertising play with respect to differentiated products?
can influence customers by pointing out a product's physical aspects
A ______________ refers to a group of firms colluding with one another to produce at the monopoly output and sell at the monopoly price.
cartel? test said prisoner's dilemma?
CONSUMPTION
is the largest component of GDP
a lender of last resort is an institution that
provides short-term emergency loans in conditions of financial cris
market equilibrium occurs when
quantity demanded equals quantity supplied
the difference b/ nomainl and real is that
real has been adjusted for inflation
Kitchen Maid produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. Kitchen Maid's average fixed cost to produce the 7,000 can openers was:
$2.43 --45-28=17 / 7,000= 2.43
The table gives data on the production and prices in a very small local economy. Use 2018 as the base period. What does real GDP equal in 2019?
14.25. --look at notes for math
Suppose you are stuck on an island and you divide your time between catching fish and gathering fruit. Part of your production possibilities frontier is given in the above table. Suppose you are on your PPF and you increase the amount of fish you gather from 11 to 24 pounds. The opportunity cost is:
9 pounds of fruit subtract 98-89= 11. becuase moving from 11 to 24 pounds of fish
which does bank regulation help prevent or resolve
ALL bak runs loss of depositors money risky behavior by banks
Production efficiency is represented by ________ a production possibilities frontier.
all points ON
which example best describes division of labor
dividing the work based on each worker's skills
the discount rate is an IR
charged by the central bank on the loans that it gives to other commercial banks
the demand measure of GDP accoutning adds
consumption, investment gvt. spend trade balance
If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:
goods X and Y are complement goods
the demand curve for a a PERFECTLY COMP. firm is
horizontal
According to the textbook, when constructing the circular flow diagram, there are 2 types of markets to know:
households and firms
the largest category, by perctage that makes up the CPI is
housing
Once the government passes a bill to respond to a recession, it takes some time to disperse the funds to the appropriate agencies to start the programs. Economists call this time to start the projects the _________________.
implementation lag
In order to avoid double counting, statisticians just count the __________________.
final goods and services
when calculating the core inflation index, which economics variables are excluded
food and energy
In the __________, the perfectly competitive firm will react to losses by _______________.
log run; reducing production or shutting down
Refer to the table. If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?
losses equal $5
GDP does NOT directly incldue the value of
intermediate goods sold during a period
Economists refer to this pattern, the _______, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.
law of diminishing marginal utility
the most common form of market structure in the US is/are
monopolistic competition among firms with differentiated products
Marcella operates a small, but very successful art gallery. All of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business, EXCEPT:
monthly rent for the gallery
the PPF is a graph showing
productively effficient combos of g/s that can be produced
In a(n) ______________ market structure, firms sell their product in a market with other firms who produce identical products.
perfect competition
The term _______________ refers to a firm operating in a perfectly competitive market that must accept the prevailing market price for its product.
price taker
Which of the following is the name used to describe the price index that consists of intermediate goods and finished goods?
producer price index
Human wants for goods, services, and resources exceeeding what is available refers to the topic of
scarcity
according to the "invisible hand" idea
self-interested behavior by individuals can lead to positive social outcomes
If one company could gain ownership control all of the aluminum production plants in the US, then:
that firm could set up barriers to entry to discourage competition
which of the following regarding the circular flow diagram model is TRUE
the counter-clockwise flow is called the resource flow
A decrease in SUPPLY is shown by
shift from S to S1 leftward shift
On a production possibilities frontier (PPF) curve, economic growth is shown as a: Hint: This is covered in the module's video & resources.
shift outward of the PPF curve
fixed costs are important bc, at least in the ____, the firm
short run; cannot alter them
In the _______________, the perfectly competitive firm will seek out _______________.
short run; the quant. of output where profits are highest
If a firm's revenues do not cover its average variable costs, then that firm has reached its _________________ .
shutdown point
Using the data in the table above, if the price of a stapler is $8, then there is a ________ of staplers, and the quantity of staplers demanded is ________ the quantity of staplers supplied.
suprlus; is less than
th outward-bending shape of the PPF can be explained by
the law of diminishing returns
Which determinant causes a MOVEMENT along the demand curve w/o shifting the demand curve
the price of the good itself
which of the follwoin gis NOT included in the year's GDP
the sale of your 5yo BM to your neighbor
opportunity cost is best defined as
the value of the next best alternative that is forgone in making a choice
according to the law of supply
there is a direct relationship between price and quantity supplied
The above figure shows the market for game day t-shirts. If the price of them is $8, then
there is a shortage and the price of t-shirts will RISE _because the $8 t-shirt is to the left of the Demand curve
Suppose the market price of a pound of steak is $8/ pound and the equilibrium price is $6/pound. what takes place?
there is a surplus, so the price falls
if IMP. are more than EXP. this is
trade DEF.
the books says the typical ag economy is best shown by
traditional economy
example of crowding out?
when an increase in GVT. borrowing causes the interest rate to increase which reduces business and consumer spending
At what level output (Q) does the firm begin earning a profit? When Q = ____.
when does total profit (TR-TC) begin to be a positive number? Q=3
crowding out used to explain which?
when gvt. borrowing and spending results in higher interest rates
Using the data in the table above, if the price of a stapler is $5, then there is:
a shortage of 40 staplers price is $5. Qd=100. Qs=60
labor force is
all adults who are working or actively seeking work
OPEN MARKET ops target which of the following interest rates
federal funds rate
What are the Total Fixed Costs (TFC) for this firm?
$10---what are its TC when Q=0
What are the Total Variable Costs (TVC) for this firm when Q = 3 units per day?
$10.75 TC=20.75- $10. (what does Q= at 0?)
Milano's produces and sells pizzas. Last year, it produced 8,000 mushroom, sausage and spinach pizzas and sold each one for $8. To produce these 8,000 pizzas, the company incurred variable costs of $24,000 and a total cost of $40,000. Milano's average fixed cost to produce 8,000 pizzas totaled:
$2 40-24= 16 /8 = 2
Given the data provided in the table, what will the marginal cost equal for production at quantity (Q) level 4?
$4. look at Q 4 and Q 3 math is : $19-$15= $4
Given the data provided in the table, what will the marginal revenue equal for production at quantity (Q) level 4?
$5
Using the Total Approach, the firm should produce __ units of output (Q) in order to maximize profit
**find the highest value in total profit (TR-TC)
The graph below shows an economy in macroeconomic equilibrium. Suppose the government decreases spending in an attempt to reduce inflationary pressures. All else equal, illustrate the effect of this contractionary fiscal policy on macroeconomic equilibrium.
**says CONT= shift AD to the left
The graph below shows an economy in macroeconomic equilibrium. Suppose the government doubles the tax rebates tax filers receive in order to encourage consumption expenditures. All else equal, illustrate the effect of this expansionary fiscal policy on macroeconomic equilibrium.
**says expansionary= shift AD to the right
Based on the table, the unemployment rate is _____ percent.
10% UE= unemployeed/LF 15/150= 10
based on table, waht does GDP equal?
11,023 billion 8180+1520+1403+ (1290-1370) = 11,023
ACME produces and sells widgets. Last year, it produced 9,000 widgets and sold each one for $8. To produce the 9,000 widgets, the company incurred variable costs of $27,000 and a total cost of $36,000. ACME's average fixed cost to produce 9,000 widgets equaled:
36-27=9/9=1
Diminishing marginal returns sets in with the
3rd worker --this is where the avg. product starts to decrease
if CPI is 231.4 in one year and 241.2 the next. inflation rate id
4.24 241.2-231.4..all divided by 231.4
Based on the table, the labor force participation rate is _____ percent
71.4....LFPR: LF/WAP LFPR= 150/ 210
The table provides cost information for the production of golf balls. Some values are missing. Which of the following statements is correct?
A= 42, E=12
federal funds rate is a long term IR, that refelcts credit conditions in finanical markets
FALSE
retired person included in labor foce?
FALSE
The supply curve is a DOWN-sloping curve
FALSE.. supply= UP demand=DOWN
teacher quits job and moves from city to new city for a better job:
FRICTIONally emp.
Scooters and bikes are substitutes. suppose that the price of a bike falls. which figure best shows how this fall in price affects the DEMAND curve for scooters
Figure B...supply arrow pushing to the left
An economics professor is discussing a measure of inflation over time based on a basket of goods comprised of all the components of GDP. Which measure is it?
GDP deflator
what is true?
GDP inclues spending on recreation and travel, but doesnt cover leisure time
a basic difference b/ macro and micro is
MACRO= causes of inflation and unemployment
Eric goes to uni rather than fulltime work so he is
NOT part of the labor force
Assume the market is initially in equilibrium. Due to a technological advancement, there is an increase in the supply of bottled water. There is no change in demand. What will be the result? Hint: This is covered in the module's video & resourc
Qant. INCREASES and price DECREASES
the ___is the nominal interst rate minus the rate of inflation
REAL interest rate
The purpose of bank regulation is to prevent bank runs, financial crisis, and the loss of depositors' money, among other goals.
TRUE
Hot dogs and hot dog buns are complements. If the price of a hot dog falls, then
a demand for hotdog buns will INCREASE
Monica has stopped looking for work bc hasnt had any success. she is
a discourage worker and EXCLUDED from the LF
which of the following is most likely to be a monopoly
a local electricity distributor
best describes contractionary FP
action that decreases the level of AD, either t/ cuts in gvt. spending or increases in taxes
The form of legal protection intended to prevent reproduction of original works is referred to as _________ law.
copyright
how is the national debt different from budget deficit
debt= borrowed over time budge def= borrowed in ONE year
If a firm is experiencing _______________, then as the quantity of output rises, the average cost of production rises.
decreasing returns to scale
which expenditure is NOT one of the 4 main compoenents of US fed. gvt. spending
education the 4 are: interest payments, national defense , health programs, and social security
when we want to measrue wage inflation in the labo market, we use the
employment cost index
a BC reflections changes in economic activity, partic. real GDP. stages are
expansion peak recession trough
effects of inflation are seen in
g/s/ wages and income levels
The branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is called:
game theory
Inflation erodes the purchasing power of money for all of these groups EXCEPT:
ind. who borrow from banks at a FIXED rate and then inflation increases during the loan repayment period
A payment is said to be ________________ if it is automatically adjusted for inflation.
indexed
For a pure monopoly to exist,
is a single sller, so it is the industry
when the fed sells bonds on the open market
it decreases the money supply and increases the federal funds rate
when the fed buys securities on the open market
it increases the money supply and lowers the federal funds rate
The latin term "ceteris paribus" means
keeping other things the same
Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal alaysis
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _____, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal alaysis
for a PC firm, its price is equal to its
marginal revenue
Refer to the table. In this instance, confirmation that this firm is operating in a perfectly competitive market can readily be ascertained by the fact that its
marginal revenue is constant
Investment inclues the amount spent on
new factories and machinery
The above figure shows the production possibility frontier for an economy. Which point (or points) is/are productively inefficient (resulting in underproduction of both goods)?
point D because it is UNDER the curve
A country has a comparative advantage in a production of a good if it can
produce the good at a LOWER opp. cost
A monopolist is able to maximize its profits by
producing output where MR = MC and charging a price along the demand curve.
A budget surplus is a financial situation in which the government ___________ more money in taxes than it ______________ in a year.
receives; spends
utomatic stabilizer are programs that automatically____________ aggregate demand in a recession and ___________ aggregate demand in a potentially inflationary boom.
stimulate; hold down
UE bc of "skills gap"...lacks skills valued by job market
structurally unemployed
one of the reasons tha t a rise in the price of a fixed basekt of goods over time tends to overstate the rise in consumer's true cost of living is
substitution bias
in the US we call the central bank___, aka
the Federal Reserve; the Fed
Consumers expect the price of bottled water will rise by 50% next week. which of the following likely happens
the demand for bottled water decreases next week
In order to determine the average variable cost, the firm's variable costs are divided by ___________.
the quantity of output
According to the textbook, Division of Labor INCREASES production
true
If a monopolistic competitor raises its price, it will lose fewer customers than a perfectly competitive firm would, but it will lose more customers than a monopoly would.
true
a cartel arises when firms act together to reduce output to keep prices high
true
according to the book, there are substantial black markets in a command economy
true
UE rate measures
unemployeed workers as a percentage of the LF
if a monopolistic competitor raises their prices, the quantity demanded
will decrease