ECON Exam 1

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rbeato
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ECON Exam 1
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2013-05-10 12:18:43
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  1. _________ is when people often make the mistake of thinking that what is true or best for one person is necessarily true for all.
    A. fallacy of composition
    B. fallacy of association
    C. fallacy of causation
    D. fallacy of appropriation
    A.
    (this multiple choice question has been scrambled)
  2. Stealing internet from your neighbor is good for you, but what if everyone did it?  There would be no internet. This is an example of ________.
    A. tragedy of public goods
    B. the free-rider approach
    C. fallacy of composition
    D. common resources issues
    C.

    It is the theory that what is good for you is not always good for everyone else.
    (this multiple choice question has been scrambled)
  3. You take a shortcut to avoid traffic on the way to class. If everyone took this shortcut it would not make the trip shorter. This is an example of _________.
    A. common resources issues
    B. fallacy of composition
    C. tragedy of public goods
    D. the free-rider approach
    B.
    (this multiple choice question has been scrambled)
  4. Child-proof aspirin bottles actually caused more children to get access to drugs since the adults just left the caps off because they were too hard to open. What is the unintended and intended consequence?
    • Intended Consequence: Stopping children from using aspirin
    • Unintended Consequence: Adults had trouble opening up the tops and would leave tops open.
  5. _______ is when people choose to be in the group being studied.  Because of this, the stats are based on these people and not on those who did not choose to be in the group.  Just think about who the stats apply to.
    A. adverse selection
    B. self-selection
    C. natural selection
    D. divided selection
    B.
    (this multiple choice question has been scrambled)
  6. Car insurance commercials are biased because “People on average saved … by switching to Geico.” It is not representative of a large population. This is an example of ________.
    A. natural selection
    B. adverse selection
    C. self-selection
    D. divided selection
    C.
    (this multiple choice question has been scrambled)
  7. Goods and services are scarce because ________ are scarce.
    A. land
    B. resources
    C. public goods
    D. natural gases
    B.
    (this multiple choice question has been scrambled)
  8. What are the four main resources used to make goods?
    1.
    2.
    3.
    4.
    • 1. Labor
    • 2. Capital
    • 3. Natural Resources (Land)
    • 4. Entrepreneurial Ability
  9. ________ is human effort and _________ is human creations.
    A. Capital, labor
    B. Labor, capital
    B.

    Labor is physical and mental effort, while capital is what we have created.
  10. Factories are an example of _________ and education is an example of ___________.
    A. physical capital, human capital
    B. human capital, physical capital
    A.
  11. Explain the meaning behind the slogan, "There are no free lunches."
    We give up some goods and services to get others (opportunity cost).  Everything has a cost!

    Why? Time is money.
  12. What are the 2 types of markets?
    A. consumer and producer markets
    B. public and private markets
    C. product and resource markets
    D. household and firm markets
    C.


    Meaning:
    Product markets–Goods and services (or “outputs”
    Resource markets–Resources or “inputs”
    (this multiple choice question has been scrambled)
  13. In many way, econ is like a science.  Perhaps most importantly, we rely on the _______ when doing research.
    A. reflection guide
    B. data analysis chart
    C. model
    D. scientific method
    D.
    (this multiple choice question has been scrambled)
  14. ____________ is costs that cannot be avoided, regardless of what is done in the future, because they have already been incurred.
    A. tariffs
    B. taxes
    C. sunk costs
    D. quotas
    C.
    (this multiple choice question has been scrambled)
  15. If something is worth its value, the marginal benefit ________ the marginal cost.
    A. exceeds
    B. does not exceed
    C. none of the above
    A.
  16. Opportunity costs are also known as _________.
    A. lost costs
    B. sunk costs
    C. net welfare loss
    D. opportunities loss
    B.
    (this multiple choice question has been scrambled)
  17. ________ the best alternative that we forgo, or give up, when we make a choice or a decision.
    A. opportunity cost
    B. net welfare loss
    C. lost cost
    D. value-added cost
    A.
    (this multiple choice question has been scrambled)
  18. _________ means to be “absolutely” better at something.
    Absolute advantage
  19. ___________ means to be “comparatively” better at something.
    Comparative advantage
  20. Something that is monetarily free(you don’t have to pay for) has no cost.
    A. True
    B. False
    B.

    Opportunity cost is time.
  21. There is a teacher and a basketball player. Who is better at basketball. The basketball player is better so he has a(n) ____________.
    A. absolute advantage
    B. comparative advantage
    C. free-rider problem
    D. tragedy of the commons
    A.
    (this multiple choice question has been scrambled)
  22. You and your roommate need to do two things: cook and clean. Your roommate is a great cook and a really fastidious cleaner.  You are a decent cleaner (but not as good as your roommate) and you can not cook at all. Your roommate has a(n) ____________.
    A. absolute advantage
    B. comparative advantage
    A.

    However, you care comparatively better at cooking, so cook.
  23. Law of specialization means ___________.
    A. specialize in what costs less
    B. specialize in the two task that you are best at
    C. specialize in what you have a comparative advantage in
    C. do not let someone specialize in a task if they are not as efficient as you in everything.
    C.

    Specialize in what you suck at less
    (this multiple choice question has been scrambled)
  24. Look at Lecture 3 slide 8 to understand comparative advantage charts.
    Learn how to find who has the comparative advantage and how to calculate opportunity costs.
  25. When trying to find the opportunity costs, we divided __________ by ____________.
    What we are not doing/ what we are doing = the opportunity costs of what we are not doing
  26. I can wash 3 dishes or bake 6 pies. If I wash dishes, my opportunity costs is _______.
    My opportunity cost is 2 pies.

    • 6/3 =2
    • you ARE NOT doing/you ARE doing = Opportunity costs of what you ARE NOT doing
  27. I can clean 8 rooms or cook 4 dinners. If I clean 8 rooms, my opportunity costs is _______.
    A. 1/2 rooms
    B. 1/2 dinners
    C. 4 rooms
    D. 4 dinners
    4/8 = 1/2 dinners

    you ARE NOT doing/you ARE doing = Opportunity costs of what you ARE NOT doing
  28. When your opportunity costs is less of doing an activity, then you should ________.
    A. less the other individual do both activities
    B. specialize in the other activity
    C. specialize in that activity
    C.
    (this multiple choice question has been scrambled)
  29. If Colleen gathers one bushel of food, she is giving up gathering one log (10/10).  If Bill gathers one bushel of food, he is giving up gathering ½ of a log (4/8).  Who should gather food?
    A. Colleen
    B. Bill
    B.

    His opportunity costs are lower.
  30. If one person has comparative advantage in one thing, then the other person must have comparative advantage in the other thing.
    A. True
    B. False
    A.
  31. It is possible to have absolute advantage in two activities.
    A. True
    B. False
    A.
  32. ____________ is when each person specializes in one small part of the production process.
    A. specialization
    B. division of labor
    C. human labor dispersion
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  33. _____________ is a graph that shows all the combinations of goods and services that can be produced if all of society’s resources are used efficiently.
    A. Elasticity Graph
    B. CPF
    C. Lorenz Curve
    D. PPF
    D.

    What does it exemplify?
    PPF: society can produce millions of goods so we use this graph to simplify.
    (this multiple choice question has been scrambled)
  34. At what point on the Production Possibilities Frontier should we produce at to maximize our production?
    A. the point underneath the curve
    B. the point on the curve
    C. the point above the curve
    D. none of the above
    B.

    • Underneath the curve: we are not using all resources
    • Above the curve: we do not have the resources to reach that amount of production
    • On curve: we are using all resources possible
  35. What are signs that tell us that countries are not producing at their maximization point?
    Check all that apply
    A. when industrial plants run at less than their total capacity
    B. unemployment of labor
    C. unemployment of capital
    D. inefficient use of resources
    • A.
    • B.
    • C.
    • D.
  36. __________ is the law that states that as society makes more of one output good, it needs to give up more and more of the other output good.
    A. The Law of Diminishing Opportunity Cost
    B. The Law of Increasing Marginal Returns
    C. The Law of Diminishing Marginal Returns
    D. The Law of Increasing Opportunity Cost
    D. The Law of Increasing Opportunity Cost
    (this multiple choice question has been scrambled)
  37. What can shift the PPF?
    • 1. Changes in resource availability
    •       -skill of labor
    • 2. Increases in capital stock
    •       -more output (we produce more cars, houses, boats)
    • 3. Technological change
    •       - employs resources more efficiently (same output/less time)
    • 4. Improvements in the rules of the game
    •       -economic growth
  38. _______ goods are produced for present consumption, and __________ goods are used in the production of other goods and services.
    A. private, public
    B. consumer, capital
    C. public, private
    D. capital, consumer
    B.
    (this multiple choice question has been scrambled)
  39. When dealing with the PPF, very poor countries cannot afford to invest much at all as all available resources are used to keep people alive and keep society operating. They cannot invest in _______.
    A. labor
    B. capital
    C. none of the above
    B.
  40. When dealing with the PPF, rich countries can consume a lot AND invest a lot in new _____ – which makes them even richer over time.
    A. labor
    B. capital
    C. none of the above
    B.
  41. When the curve of the PPF is farther from the origin, what does it mean?
    A. the country is reaching efficiency
    B. the country is richer
    C. the country is not reaching efficiency
    D. the country is poorer
    B.
    (this multiple choice question has been scrambled)
  42. ___________ economy is an economy in which tradition alone determines the nature of economic activity.
    A. free-market
    B. market
    C. traditional
    D. command
    C.
    (this multiple choice question has been scrambled)
  43. _______ economy is an economy in which a central government either directly or indirectly sets output targets, incomes, and prices.
    A. command
    B. traditional
    C. free-market
    D. market
    A.
    (this multiple choice question has been scrambled)
  44. North Korea is an example of a __________ economy.
    A. traditional
    B. free-market
    C. command
    D. market
    C.
    (this multiple choice question has been scrambled)
  45. _________ economy is an economy in which individual people and firms pursue their own self-interests without any central direction or regulation.  The market determines what is produced, how it is produced, and who gets it.
    A. free-market
    B. market
    C. command
    D. traditional
    B.

    Market economies are also known as "laissez-faire or pure capitalism"
    (this multiple choice question has been scrambled)
  46. ________ the idea that consumers ultimately dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase).
    A. free enterprise
    B. free choice
    C. consumer sovereignty
    D. consumer control
    C.
    (this multiple choice question has been scrambled)
  47. __________ the freedom of individuals to start and operate private businesses in search of profits.
    A. free enterprise
    B. consumer sovereignty
    C. consumer control
    D. company insurance
    A.
    (this multiple choice question has been scrambled)
  48. Market economies are rare, however, the two places that are close to being a market economy are:
    A. United States and Mexico
    B. France and Spain
    C. Germany and Russia
    D. Hong Kong and New Zealand
    D.
    (this multiple choice question has been scrambled)
  49. The United States is mostly a ________ economy.
    A. market
    B. traditional
    C. command
    D. free-market
    A.

    They do say that it is a mix of traditional, command, and market.
    (this multiple choice question has been scrambled)
  50. Reasons why economies are "mixed" and "not market."
    • Markets are sometimes inefficient.
    • Firms get too much power.
    • Rewards are not distributed evenly.
    • Market economies have their ups and downs.
    • Pollution is an issue.
    • There is a lack of knowledge.
    • People do not know what they are buying.
  51. Free-market meaning that prices are free to change.
    A. True
    B. False
    A.
  52. What are the 4 conditions that need to be meet to have a market economy?
    • 1.There must be a market for resources (especially labor)  and those resources must be paid for.
    • 2.There must be a market for goods and services. People must be able to own private property.
    • 3.People must be able to own private property.
    • 4. The economy must allow economic winners and losers.
  53. What are the 3 elements to the model of supply and demand?
    • 1.buyers / consumers / customers/ households
    • 2.sellers / producers / firms
    • 3.the markets where consumers and producers interact
  54. Households consume ______, and supply ______.
    A. inputs, outputs
    B. outputs, inputs
    C. none of the above
    B.
  55. Firms consume ______ and supply _______.
    A. inputs, outputs
    B. outputs, inputs
    C. none of the above
    A.
  56. Product or output markets  The markets in which goods and services are exchanged (Households demand, firms supply).

    AND

    Input or factor markets  The markets in which the resources used to produce products are exchanged. (Households supply, firms demand)
    Facts
  57. What are the 3 input markets? Check all that apply.
    A. land market
    B. labor market
    C. capital market
    D. output market
    • A.
    • B.
    • C.
  58. ________ market: the input/factor market in which households supply work for wages to firms that demand labor.
    A. land
    B. labor
    C. capital
    B.
    (this multiple choice question has been scrambled)
  59. _________ market: the input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods.
    A. labor
    B. capital
    C. land
    B.
    (this multiple choice question has been scrambled)
  60. ______ market: The input/factor market in which households supply land or other real property in exchange for rent.
    A. capital
    B. land
    C. labor
    B.
    (this multiple choice question has been scrambled)
  61. __________ is a relationship between the price of a good and the quantity of that good that consumers are willing and able to buy per period, other things constant (Line or Curve).
    A. Law of Demand
    B. Demand
    C. Quantity Demanded
    D. None of the above
    B.
    (this multiple choice question has been scrambled)
  62. __________ is the amount (number of units) of a product that a consumer would buy in a given period if it could buy all it wanted at the current market price.
    A. Demand Schedule
    B. Demand
    C. Quantity Demanded
    D. Law of Demand
    C.
    (this multiple choice question has been scrambled)
  63. ___________ is when price and quantity are inversely related.  As price goes up, quantity that people want to buy falls (all else equal).
    A. Quantity Demanded
    B. Demand
    C. Law of Demand
    D. Demand Schedule
    C.
    (this multiple choice question has been scrambled)
  64. ________ effect is as the price of one good rises, people switch from buying that good to buying other goods.
    A. income
    B. substitution
    C. complement
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  65. _________ effect is as the prices of anything you buy goes up, you feel poorer so you buy less of everything (including the good whose price rose).
    A. income
    B. substitution
    C. complement
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  66. Coke is too expensive and so you switch to another product that is cheaper. This is an example of ________.
    A. substitution effect
    B. income effect
    C. complement effect
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  67. If your rent goes up, you have less money overall to buy other things. This is an example of _________.
    A. income effect
    B. complement effect
    C. substitution effect
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  68. If price of gas goes way up you try to cut back on gas. This is an example of _________.
    A. complement effect
    B. substitution effect
    C. income effect
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  69. ___________ is a table showing how much of a given product a household would be willing to buy at different prices (during a fixed time period).
    A. Demand Curve
    B. Demand Schedule
    C. Quantity Demanded
    D. Demand
    B.
    (this multiple choice question has been scrambled)
  70. ________ is a graph illustrating how much of a given product a household would be willing to buy at different prices (giving a fixed time period).
    A. Demand Curve
    B. Demand
    C. Demand Schedule
    D. Quantity Demanded
    A.
    (this multiple choice question has been scrambled)
  71. As prices rises, quantity demanded ______.
    A. increases
    B. stays the same
    C. decreases
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  72. As price falls, quantity demanded _________.
    A. increases
    B. stays the same
    C. decreases
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  73. If price changes, the curve does not move, we just move to a different point along the curve.
    A. True
    B. False
    A.
  74. Thinking about demand.
    There is no good that you can consume for an endless period.
  75. ___________ is the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service.
    A. law of demand
    B. market demand
    C. demand curve
    D. demand schedule
    B.
    (this multiple choice question has been scrambled)
  76. How do you find the market demand?
    To find the market demand, you add up all the quantities from each household.

    Household demands are separate graphs so find the quantities(not price) then add.
  77. What 5 factors can cause a shift in the demand curve?
    • 1.A change in consumers’ income or wealth.
    • 2.A change in the price of other available products (substitutes or compliments).
    • 3.A change in consumers’ tastes.
    • 4.A change in consumers’ expectations about things like future income or prices.
    • 5.A change in the number or composition of consumers.
  78. ________ is the sum of all a household’s wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time.  It is a flow measure.
    A. income
    B. real income
    C. net worth/wealth
    D. none of the above
    A.

    Income is how much we earn per period/money coming into our household.
    (this multiple choice question has been scrambled)
  79. __________is the total value of what a household owns minus what it owes.  It is a stock measure.
    A. income
    B. real income
    C. net worth/wealth
    D. none of the above
    C.

    It is basically how much money you have currently.
    (this multiple choice question has been scrambled)
  80. A college student has low wealth because he has a lot of debt from college and has a large income if he is making 250,000 dollars a year.
    A. True
    B. False
    A.
  81. _________ goods for which demand goes up when income is higher and for which demand goes down when income is lower.
    A. public goods
    B. inferior goods
    C. normal goods
    D. private goods
    C.
    (this multiple choice question has been scrambled)
  82. ________ goods for which demand tends to fall when income rises.
    A. private goods
    B. public goods
    C. inferior goods
    D. normal goods
    D.
    (this multiple choice question has been scrambled)
  83. ________ goods for which demand tends to fall when income rises.
    A. normal goods
    B. public goods
    C. private goods
    D. inferior goods
    D.
    (this multiple choice question has been scrambled)
  84. Potatoes, ramen noodles, Genesee Cream Ale, generic anything, used cars (not “vintage” or “antique,” just used) are all examples of ______.
    A. private goods
    B. normal goods
    C. inferior goods
    D. public goods
    C.
    (this multiple choice question has been scrambled)
  85. If income goes up, our demand shifts ______.
    A. in
    B. it stays the same
    C. out
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  86. At first I go to the movies 3 times a month, but now I go to the movies 6 times a month because I make more money. This is an example of what kind of goods?
    A. normal goods
    B. public goods
    C. inferior goods
    D. private goods
    A.

    You have more money to buy movie tickets.
    (this multiple choice question has been scrambled)
  87. College students buy cheap beer. This is an example of what kind of good?
    A. inferior goods
    B. normal goods
    C. private goods
    D. public goods
    A.
    (this multiple choice question has been scrambled)
  88. ____________ goods that can serve as replacements for one another:  when the price of one increases, demand for the other goes up.
    A. complements
    B. substitutes
    C. substitutes
    B.
    (this multiple choice question has been scrambled)
  89. Bacon and sausage are an example of ________.
    A. complements
    B. perfect substitutes
    C. substitutes
    C.
    (this multiple choice question has been scrambled)
  90. _________ are identical or interchangeable products.
    A. complements
    B. substitutes
    C. perfect substitutes
    C.
    (this multiple choice question has been scrambled)
  91. _________ are goods that “go together”:  a decrease in the price of one results in an increase in demand for the other, and vice versa.
    A. perfect substitutes
    B. substitutes
    C. complements
    C.
    (this multiple choice question has been scrambled)
  92. Peanut butter and jelly are examples of ___________.
    A. complements
    B. perfect substitutes
    C. substitutes
    A.
    (this multiple choice question has been scrambled)
  93. If the price of blue ray DVD players falls, then you might want to buy more blue ray disc. These products are ___________.
    A. substitutes
    B. complements
    C. perfect substitutes
    B.
    (this multiple choice question has been scrambled)
  94. If the price of Pepsi goes up, then people want to buy more Coke. These products are ________.
    A. substitutes
    B. perfect substitutes
    C. complements
    A.
    (this multiple choice question has been scrambled)
  95. If the price of Pepsi goes up, then people want to buy more Coke. What happens to the curves?
    A. the demand curve for Pepsi stays the same, the demand curve for Coke moves rightward.
    B. the demand curve for Pepsi moves left, the supply curve for Coke moves right.
    C. the demand curve for Pepsi moves right, the supply curve for Coke moves left.
    A.
    (this multiple choice question has been scrambled)
  96. If you think that you will lose your job in a month, you probably won’t buy a new car.

    If you think prices of TVs will fall next year, you might be less likely to buy one now. These are examples of which one of the 5 factors that influence demand?
    A. change in number of consumers
    B. tastes and preferences
    C. expectations
    D. prices of other goods and services
    E. income and wealth
    C.
    (this multiple choice question has been scrambled)
  97. When there is a fad for a product, the demand curve shifts __________.
    A. it stays the same
    B. rightward
    C. leftward
    B.
    (this multiple choice question has been scrambled)
  98. A diet was started that said pasta contains carbohydrates and should not be eaten. The demand curve shifts ________.
    A. it stays the same
    B. rightward
    C. leftward
    C.
    (this multiple choice question has been scrambled)
  99. The market skyrockets based in baby booms. This is an example of which of the five factors that influence the demand curve to shift?
    A. income and wealth
    B. change in number of consumers
    C. expectations
    D. tastes and preferences
    E. prices of other goods and services
    B.
    (this multiple choice question has been scrambled)
  100. When your income increases, you buy _______.
    A. less
    B. a smaller amount
    C. more
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  101. __________ is the amount of a particular product that a firm would be willing and able to offer for sale at a particular price during a given time period.
    A. supply curve
    B. law of supply
    C. quantity supplied
    D. supply
    C.
    (this multiple choice question has been scrambled)
  102. __________ is a relation between the price of a good and the quantity of that good that firms are willing and able to sell per period, other things constant.
    A. supply curve
    B. quantity supplied
    C. law of supply
    D. supply
    D.
    (this multiple choice question has been scrambled)
  103. ________ is the positive relationship between price and quantity of a good supplied:  An increase in market price will lead to an increase in quantity supplied, and a decrease in market price will lead to a decrease in quantity supplied.
    A. supply
    B. quantity supplied
    C. supply curve
    D. law of supply
    D.
    (this multiple choice question has been scrambled)
  104. ____________ is a table showing how much of a product firms will sell at different prices.
    A. supply schedule
    B. quantity supplied
    C. law of supply
    D. supply curve
    A.
    (this multiple choice question has been scrambled)
  105. __________ is a graph illustrating how much of a product a firm will sell at different prices.
    A. supply schedule
    B. law of supply
    C. quantity supplied
    D. supply curve
    D.
    (this multiple choice question has been scrambled)
  106. ___________ the sum of all that is supplied each period by all producers of a single product.
    A. supply curve
    B. market supply
    C. law of supply
    D. supply schedule
    B.
    (this multiple choice question has been scrambled)
  107. What are the 5 factors that shift the supply curve?
    • 1. a change in technology
    • 2. a change in the price of inputs
    • 3. a change in the price of other (alternative) goods
    • 4. a change in producer expectations
    • 5. a change in the number of producers
  108. A pizza industry is Blacksburg is thriving. Other companies join the industry. There are now more producers, so the supply curve will ______.
    A. stay the same
    B. shift rightward
    C. move up the curve
    D. shift leftward
    B.

    For any product, if more firms produce a product for the total, the supply curve shifts out more.
    (this multiple choice question has been scrambled)
  109. If producers think that their product will become very popular in the future, they will ________ supply today so they will have more left over to sell tomorrow. 
    A. increase
    B. decrease
    C. keep it the at the same
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  110. If they think that their product will become unpopular tomorrow, they will empty their warehouses, shifting the current supply ________.
    A. keep the
    B. shift rightward 
    C. shift leftward
    D. none of the above
    B.

    They are increasing the supply because they are trying to get rid of it.
    (this multiple choice question has been scrambled)
  111. If next week was the 4th of July, you might store ice in the stock room because you expect to sell it for a higher price in the future. This would cause your supply to _________.
    A. shift rightward
    B. shift leftward
    C. stay the same
    D. none of the above
    B.

    They are decreasing their supply at the moment because they are storing the supply for later.
    (this multiple choice question has been scrambled)
  112. For a phone that might be obsolete in the future a firm will try to sell them all as soon as possible. This would cause the supply to ___________.
    A. shift leftward
    B. shift rightward
    C. stay the same
    D. none of the above
    B.

    They are increasing the supply because they want to get rid of the product.
    (this multiple choice question has been scrambled)
  113. What happens to the supply curve if there is a change in price?
    A. the supply curve will shift rightward
    B. the supply curve will shift leftward
    C. the supply curve will move to another point along the line
    D. the supply curve will stay the same.
    • Product A's supply curve will shift rightward, while Product B's supply curve will shift leftward.
    •  
    • There is an increase in the supply of Product A and a decrease in the supply of Product B.
  114. What happens to the supply curve if there is a change in price?
    A. the supply curve will stay the same.
    B. the supply curve will move to another point along the line
    C. the supply curve will shift rightward
    D. the supply curve will shift leftward
    B.
    (this multiple choice question has been scrambled)
  115. What happened to the supply curve of soybeans when researchers created a new disease-resistant seed strain?
    A. the supply curve will stay the same
    B. the supply curve shifts leftward
    C. the supply curve moves along the curve
    D. the supply curve shifts rightward
    D.

    This new technology causes the supply curve to shift rightward because they can produce more. There is an increase in the supply.
    (this multiple choice question has been scrambled)
  116. Which factor does not lead to a shift in the supply curve?
    A. a change in the number of producers
    B. a change in producer expectation
    C. a change in technology
    D. a change in the price of inputs
    E. a change in the price of the product
    E.
    (this multiple choice question has been scrambled)
  117. A change in technology, input costs,  prices of alternative products, producer expectations or number of producers leads to a shift in the supply.
    A. True
    B. False
    A.
  118. Explain why there is a shift in the supply curve when there is a change in inputs.
    When the prices of the inputs changes, producers react to this.

    If the input price increases, producers supply less of the product.

    If the output price decreases, producers supple more of the product.
  119. If the price of cheese goes up, then the supply curve of pizzas will shift __________.
    A. leftward
    B. rightward
    C. stay the same
    D. none of the above
    A.

    The price of the input went up, so the producers want to supply less of the pizza. It is more costly for them to produce it now.
    (this multiple choice question has been scrambled)
  120. If the price of fruits goes down, Tropical Smoothie will supply more smoothies. This causes the supply curve to _________.
    A. shift leftward
    B. shift rightward
    C. stay the same
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  121. When the assembly line was established. Henry Ford used this feature to produce his cars. This caused the supply curve to ____________.
    A. shift leftward
    B. stay the same
    C. shift rightward
    D. none of the above
    C.

    He could now produce more because technology helped him to produce products faster and cheaper.
    (this multiple choice question has been scrambled)
  122. What is the best example of a vertical supply curve?
    A. a dog food supplied at the grocery store
    B. a cereal brand supplied at a store
    C. a Nike sweatshirt sold at a department store
    D. a Van Gogh painting
    D.

    Why?
    No matter how high the price goes, there will always be the same quantity supplied. There is only a certain quantity in the world.
    (this multiple choice question has been scrambled)
  123. Demand curve:
    price more -->consumers buy less
    price less -->consumers buy more
    Facts
  124. Supply curve:
    price more -->producers supply more
    Price less --> producers supply less
    Facts
  125. At what point is the market equilibrium?
    A. where supply and demand meet
    B. where demand is slightly over supply
    C. where marginal costs and marginal product meet
    D. where supply is slightly over demand
    A.
    (this multiple choice question has been scrambled)
  126. Equilibrium is not just where the quantity bought is equal to the quantity sold. 
    A. True
    B. False
    A.

     In order for something to have been bought it must be sold and vice versa.  Therefore this is not a correct definition.
  127. At equilibrium, there is no tendency for price to change.
    A. True
    B. False
    A.
  128. ________ is the condition that exists when quantity demanded exceeds quantity supplied at the current price.
    A. shortage
    B. surplus
    C. deadweight loss
    A.

    People want a lot of the item but there is not enough being supplied --> shortage
    (this multiple choice question has been scrambled)
  129. When there is a big storm, prices go up because there is a high demand for items like milk. This causes a _________.
    A. deadweight loss
    B. shortage
    C. surplus
    B.

    This is also known as excess demand
    (this multiple choice question has been scrambled)
  130. Draw what a shortage looks like.
    The price should be less than the equilibrium price.
  131. When there is a shortage, the price slowly begins to _____ and eventually they reach equilibrium.
    A. raise
    B. fall
    A.
  132. _______ is the condition that exists when quantity supplied exceeds quantity demanded at the current price.
    A. surplus
    B. deadweight loss
    C. shortage
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  133. Once you pass over the equilibrium point, you are in the ________ zone.
    A. shortage
    B. surplus
    C. deadweight loss
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  134. When the price is higher than the equilibrium price, the economy is suffering from a _________.
    A. surplus
    B. deadweight loss
    C. shortage
    D. none of the above
    A.

    The price is so high --> the demand is less than the supply
    (this multiple choice question has been scrambled)
  135. When the price is lower than the equilibrium price, the economy is suffering from a __________.
    A. deadweight loss
    B. surplus
    C. shortage
    D. none of the above
    C.

    The price is so low -->the demand is more than the supply
    (this multiple choice question has been scrambled)
  136. 1.Excess supply leads to a _______ in price. Excess demand leads to an _______ in price.
    A. increase, decrease
    B. increase, increase
    C. decrease, decrease
    D. decrease, increase
    D.

    Surpluses cause a decrease in supply until it reaches equilibrium.
    Shortages cause an increase in supply until it reaches equilibrium.
    (this multiple choice question has been scrambled)
  137. In a pure market there are no surpluses or shortages.
    A. true
    B. false
    A.
  138. Toyota Priuses became so popular that there was a _______. The price went up and now there is a waitlist for the product.
    shortage
  139. If the demand curve shifts out (demand increases), equilibrium price and quantity will ______.
    A. rise
    B. fall
    C. stay the same
    D. none of the above
    A. rise
    (this multiple choice question has been scrambled)
  140. If the demand curve shifts back (demand decreases), equilibrium price and quantity will ________.
    A. fall
    B. stay the same
    C. rise
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  141. If the supply curve shifts out (supply increases), equilibrium price will ____ but quantity will _____.
    A. rise, rise
    B. fall, rise
    C. fall, fall
    D. rise, fall
    B.
    (this multiple choice question has been scrambled)
  142. If the supply curve shifts back (supply decreases), equilibrium price will ____ but quantity will ____.
    A. fall, fall
    B. fall, rise
    C. rise, fall
    D. rise, rise
    C.
    (this multiple choice question has been scrambled)
  143. If the supply curve shifts back (supply decreases), and demand shifts back, the equilibrium quantity will fall but price could rise or fall.
    KNOW THIS
  144. if the supply curve shifts out (supply increases), and demand shifts out, the equilibrium quantity will rise but price could rise or fall.
    KNOW THIS
  145. If both curves shift in the same direction, quantity will go in that direction, price can do whatever the heck it wants.
    Realization
  146. If the supply curve shifts back (supply decreases), and demand shifts out, the equilibrium price will rise but quantity could either rise or fall.
    KNOW THIS
  147. If the supply curve shifts out (supply increases), and demand shifts back, the equilibrium price will fall but quantity could either rise or fall.
    KNOW THIS
  148. Supply Curve shifts out, demand curve shifts back

    What happens to price and quantity?
    • Price falls
    • Quantity can rise/fall
  149. Supply curve shifts back, demand curve shifts out

    What happens to price and quantity?
    • Price rises
    • Quantity can fall/rise
  150. Supply shifts back, demand shifts back

    What happens to price and quantity?
    • Quantity falls
    • Prices can rise/fall
  151. Supply shifts out, demand shifts out

    What happens to price and quantity?
    • Quantity rises
    • Prices can rise/fall
  152. An auction is a market where the _________ is reached out loud.
    A. equilibrium
    B. demand
    C. supply
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  153. In an American or English auction, the auctioneer attempts to find the maximum price that consumers are willing to pay for a given good.  Prices start low and then move up (think eBay). This is an example of a market reaching _________.
    equilibrium
  154. Say that there is a shortage for Product A. 40 people got pushed out of the market because the price goes up. Originally 120 people wanted Product A but not when the price went up.
    The idea that when there is a shortage, prices will rise until the market reaches equilibrium.
  155. People that are willing to pay the high price will get the product in a market economy.
    A. True
    B. False
    A.
  156. __________ is the process by which the market system allocates goods and services to consumers when quantity demanded exceeds a quantity supplied.
    A. production rationing
    B. deadweight loss
    C. shortage
    D. surplus
    A.
    (this multiple choice question has been scrambled)
  157. A legal minimum price is a _______________.
    A. tax break
    B. price floor
    C. price ceiling
    D. tariff
    B.
    (this multiple choice question has been scrambled)
  158. A legal maximum price is a _________.
    A. tax break
    B. price floor
    C. tariff
    D. price ceiling
    D.
    (this multiple choice question has been scrambled)
  159. If the price floor is $5, you cannot sell below $5.
    A. True
    B. False
    A.

    Flo= the lowest you can go
  160. If the price ceiling is $5, you cannot charge higher than $5.
    A. True
    B. False
    A.
  161. Price ceilings cause __________.
    A. a surplus
    B. a profit
    C. deadweight loss
    D. a shortage
    D.

    Price ceilings are set below the equilibrium.
    (this multiple choice question has been scrambled)
  162. If there are long lines for a product it shows that there is a shortage. In the 1970s people would wait for gas in line because there was a ________ and caused a shortage.
    A. price ceiling
    B. price floor
    C. deadweight loss
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  163. What are the 4 main consequences of price ceilings?
    • 1. queuing or searching
    • 2. the formation of black market
    • 3.“Add-ons” and “trade-ins” that become part of the cost of purchasing goods
    • 4. favored customers (discrimination by sellers)
  164. When there is a shortage, people search for the product and waste time(opportunity costs).
    This is a consequence of __________.
    A. deadweight loss
    B. price floors
    C. price ceilings
    D. none of the above
    C.

    Queuing and searching is one of the consequences of price ceilings.
    (this multiple choice question has been scrambled)
  165. When there is a shortage, black markets sell legal products at prices above the legally mandated price set. This is a consequence of _____________.
    A. price floors
    B. price ceilings
    C. deadweight loss
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  166. During WWII, there was a $1400 price ceiling on cars.   Dealers would not sell a car without a trade-in and would pay next to nothing for those trade-ins.  Thus increasing the amount of total payment ($$+ “trade-in”) for the new car. This is an example of which consequence of a price ceiling?
    Add-ons” and “trade-ins” that become part of the cost of purchasing goods
  167. Price ceilings on rental units in Israel have led to something called a “key charge.”  While the rent is still under the legal ceiling, Landlords charge their tenants large sums of money for the key to the unit – thus finding a way around the rent ceiling. This is an example of which consequence of price ceilings?
    “Add-ons” and “trade-ins” that become part of the cost of purchasing goods:
  168. Some customers receive special treatment from dealers during situations of excess demand.  Other customers are discriminated against and do not have equal opportunity to buy the product. This is an example of what consequence from price ceilings?
    favored customers
  169. Price floors lead to ___________.
    A. deadweight loss
    B. a surplus
    C. a shortage
    D. a profit
    B.
    (this multiple choice question has been scrambled)
  170. Tobacco has a _______.  So there is a surplus of tobacco in the US.
    A. price floor
    B. deadweight loss
    C. profit
    D. price ceiling
    A.
    (this multiple choice question has been scrambled)
  171. Low skill labor has a _______ (called the minimum wage).
    A. deadweight loss
    B. price floor
    C. price ceiling
    D. profit
    B.
    (this multiple choice question has been scrambled)
  172. The _______ from a price floor is called unemployment.
    A. shortage
    B. surplus
    C. deadweight loss
    D. profit
    B.
    (this multiple choice question has been scrambled)
  173. In some places, there is a maximum on the interest rate that can be charged on loans – these are called usury laws. 
    A. advantage laws
    B. usury laws
    C. broke laws
    D. protective laws
    B.

    Usury law: a price ceiling on interest rates.
    (this multiple choice question has been scrambled)
  174. Arkansas has a usury law.  Texas does not.  TexArkana is a town on the border.   Everyone goes to the Texas half to get loansbecause no lenders want to operate in Arkansas.
    Issue of price ceilings
  175. Usury laws are a _______ and cause a ______.
    A. price floor, shortage
    B. price floor, surplus
    C. price ceiling, surplus
    D. price ceiling, shortage
    D.
    (this multiple choice question has been scrambled)
  176. What is the overall consequence of usury laws?

    Usury laws are price ceilings that they put on interest rates.
    Even though the intention of the usury law is to protect lower income borrowers from excessively high rates.  The consequence, in reality, of these usury laws is to deny these low-income borrowers funds.
  177. What are the four consequences of usury laws?
    • Banks offer a loan for low but then they make sure that the consumers put their house up for collateral.
    • Banks also due add ons. They give you a good loan but then say that there is a $1000 processing fee.
    • They raise the qualification requirements and lower income individuals are thrown out of the market.
    • The unintended consequence of the low price ceilings is that low income people are thrown out because the banks work around the system.
  178. Which factor does not influence customer demand?
    A. expectations.
    B. incomes
    C.preferences
    D. wealth
    E. prices of other goods
    F. government
    F.
    (this multiple choice question has been scrambled)
  179. __________ is a general concept used to quantify the response in one variable when another variable changes.
    A. quantity supplied
    B. demand
    C. elasticity
    D. quantity demanded
    C.
    (this multiple choice question has been scrambled)
  180. The slope of the demand or supply curve tells us how much quantity demanded will change in response to price?
    A. True
    B. False
    B.
  181. ___________ is the ratio of the percentage of change in quantity demanded to the percentage of change in price; measures the responsiveness of quantity demanded to changes in price.
    A. elasticity
    B. quantity demanded
    C. price elasticity of demand
    D. quantity supplied
    C.
    (this multiple choice question has been scrambled)
  182. Go to Lecture 9, slides 8-13 to memorize all the formulas.
    These are hard to memorize
  183. ___________ is demand for which quantity drops to zero at the slightest increase in price (ED=-∞)  Infinitely responsive demand.
    A. inelastic demand
    B. perfectly elastic demand
    C. perfectly inelastic demand
    D. elastic demand
    B.
    (this multiple choice question has been scrambled)
  184. ________ is demand for which the percentage change in quantity demanded is larger in absolute value than the percentage change in price (a demand elasticity with an absolute value greater than 1 (ED<-1)).  Very responsive demand.
    A. perfectly elastic demand
    B. elastic demand
    C. inelastic demand
    D. perfectly inelastic demand
    B.
    (this multiple choice question has been scrambled)
  185. ________ is demand for which the percentage change in quantity demanded is less in absolute value than the percentage change in price. It always has a numerical value between zero and -1 (-1<ED<0).  Not very responsive demand.
    A. inelastic demand
    B. perfectly inelastic demand
    C. perfectly elastic demand
    D. elastic demand
    A.
    (this multiple choice question has been scrambled)
  186. __________ is demand for which quantity demanded does not respond at all to a change in price (ED=0).  Not at all responsive demand.
    A. perfectly inelastic demand
    B. perfectly elastic demand
    C. elastic demand
    D. inelastic demand
    A.
    (this multiple choice question has been scrambled)
  187. If the elasticity is between 0 and -1, it is _____.
    A. inelastic
    B. elastic
    A.
  188. If the price of insulin goes up we still buy it, therefore the curve for insulin is _______.
    A. perfectly elastic demand
    B. perfectly inelastic demand
    C. elastic demand
    D. inelastic demand
    D.
    (this multiple choice question has been scrambled)
  189. Draw a perfectly elastic curve and a perfectly inelastic curve.
    • Perfectly elastic - horizontal
    • Perfectly inelastic - vertical
  190. The steeper the curve, the more __________ it is.
    A. elastic
    B. inelastic
    B.
  191. Telephone services are _________ because we constantly need to be in connect with people.
    A. elastic
    B. inelastic
    C. perfectly elastic
    D. perfectly inelastic
    B.
    (this multiple choice question has been scrambled)
  192. Bananas are _________ because we do not want to pay a high price for them. When they go on sale everyone buys them.
    A. perfectly inelastic
    B. inelastic
    C. perfectly elastic
    D. elastic
    D.
    (this multiple choice question has been scrambled)
  193. Electricity is _____________. We might cut back a little if the price rises, however, we are always in constant need of electricity.
    A. inelastic
    B. perfectly elastic
    C. elastic
    D. perfectly inelastic
    A.
    (this multiple choice question has been scrambled)
  194. Elasticity is always negative, however, in economics we do not always use the negative sign.
    A. True
    B. False
    A.
  195. Name the 3 parts of a demand curve and label them --> elastic, unitary elastic, and inelastic.
    Elastic should be at the top(closer to y-axis), unitary elastic is in the middle, and inelastic should be at the bottom(closer to the x-axis)
  196. As price falls on a demand curve, we can more and more ________.
    A. elastic
    B. inelastic
    B.

    • Remember
    •  y axis ==> elastic
    •  x axis ==> inelastic

    ye and xi
  197. What is the equation to calculate total revenue?
    A. TR = MC x MB
    B. TR = P x Q
    C. TP = P x G
    D. TR = MC x MR
    B.
    (this multiple choice question has been scrambled)
  198. What is elasticity?
    A. how consumers respond to price
    B. how consumers respond to quantity change
    C. how producers respond to price
    D. how producers respond to quantity change
    A.
    (this multiple choice question has been scrambled)
  199. For a inelastic demand curve, if price goes up and quantity demanded goes up, total revenue ________.
    A. goes down
    B. goes up
    B.
  200. For a elastic demand curve, if price goes up and quantity demanded goes down, total revenue ________.
    A. goes down
    B. goes up
    A.
  201. For an elastic demand curve, if price goes down and quantity demanded goes up, total revenue ________.
    A. goes up
    B. goes down
    A.
  202. For an inelastic curve, if price goes down and quantity demanded goes down, total revenue _______.
    A. goes up
    B. goes down
    B.
  203. You don't want to cute price with inelastic demand.
    A. True
    B. False
    A.
  204. You don't want to cut price with elastic demand.
    A. True
    B. False
    B.
  205. Total revenue reaches a maximum at the rate of output where D is unit elastic.
    A. True
    B. False
    A.
  206. What are the 3 determinants of price elasticity?
    • 1. availability of substitutes
    • 2. low price + infrequently purchased
    • 3. the time dimension
  207. Toilet paper has many brands meaning that it has a high _________.
    A. inelasticity
    B. elasticity
    B.


    We can switch from one product to another if price rises for one of the many brands.
  208. Salt is extremely cheap, and we buy it very infrequently. If the price of salt doubled, we would not know. The demand curve is overall __________.
    A. elastic
    B. inelastic
    B.

    We will usually by it at whatever price.
  209. In the longer run, demand is likely to become more elastic, or responsive, simply because households make adjustments over time and producers develop substitute goods. This is what determinant of price elasticity?
    time dimension
  210. In the _____ run, we find ways to save money and work around the price. Buy other things so there is a behavior change.Gasoline has an inelastic demand. We have seen more hybrid cars coming out and that is how people get around the price of gasoline.
    A. short
    B. long
    B.
  211. In the long run, we make adjustments to our use of what 2 mains products? This changes the price elasticity curve.
    A. meat and vegetables
    B. cell phones and televisions
    C. gas and electricity
    D. none of the above are good matches
    C.
    (this multiple choice question has been scrambled)
  212. Cigarettes are _______ because people will pay any price for them.
    A. inelastic
    B. elastic
    A.
  213. Medical care is ________.
    A. inelastic
    B. elastic
    A.
  214. Chevrolets are very _____ because people respond quite differently to changes in price.
    A. inelastic
    B. elastic
    B.

    When we buy a car, we take time to make our decisions.
  215. ___________ is a measure of the response of quantity of a good supplied to a change in price of that good.  Likely to be positive in output markets.
    A. elasticity
    B. quantity supplied
    C. price elasticity of supply
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  216. For a __________ there is no change in supply for different prices.
    A. inelastic supply
    B. perfectly elastic supply
    C. perfectly inelastic supply
    D. elastic supply
    C.
    (this multiple choice question has been scrambled)
  217. For a _______, if price goes up at all, the quantity will increase as a result.
    A. perfectly elastic supply
    B. inelastic supply
    C. elastic supply
    D. perfectly inelastic supply
    C.
    (this multiple choice question has been scrambled)
  218. What are the 2 determinants of elasticity of supply?
    • 1. Time
    • 2. Production Technology
  219. When the price of something goes ______, producers want to supply more. However, in the short run it is difficult to respond to change very quickly.
    A. up
    B. down
    A.
  220. A steeper supply curve means more ______.
    A. elastic
    B. inelastic
    B.
  221. How quickly a firm can respond to a price change shows their elasticity.
    A. true
    B. false
    A.

    • more responsive --> elastic
    • less responsive --> inelastic
  222. _____________ measures the responsiveness of demand to changes in income
    Income elasticity of demand
  223. Go to Lecture 10, slide 12 to learn the equation for income elasticity of demand.
    It is hard
  224. The income elasticity is positive for _______ goods and negative for ______ goods.
    A. inferior, normal
    B. public, private
    C. private, public
    D. normal, inferior
    D.
    (this multiple choice question has been scrambled)
  225. For Ramen noodles there is a ________ elasticity.
    A. negative
    B. positive
    C. absolute
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  226. For substitutes, when the price of Product A falls, the demand of Product B ______.
    A. stays the same
    B. rises
    C. falls
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  227. If the cross price elasticity of demand is positive, then the goods are __________.
    A. complements
    B. substitutes
    C. inferior goods
    D. normal goods
    B.
    (this multiple choice question has been scrambled)
  228. If the cross price elasticity of demand is negative, then the goods are ___________.
    A. substitutes
    B. complements
    C. normal goods
    D. inferior goods
    B.
    (this multiple choice question has been scrambled)
  229. Bud has a _____ elastic curve than beer because there are not many substitutes for beer.
    A. less
    B. more
    C. equal
    more
  230. If they are not changing their services, their costs will remain the same, so the manager must be increasing fares to increase revenue.  The Metro manager is implicitly assuming the demand for Metro services is ________.
    A. inelastic
    B. elastic
    A.
  231. To assess the elasticity of a new product, companies will release the product indifferent cities at different prices.
    A. True
    B. False
    A.
  232. Birdseye can estimate elasticity by comparing sales volume in the three cities.
    Fact
  233. Review slides 19 and 20 in Lecture 10 to understand how unemployment affects society.
  234. __________ is the level of satisfaction or happiness a consumer derives from the consumption of a good or service.
    A. utility
    B. Content
    C. utilism
    D. utile
    A.
    (this multiple choice question has been scrambled)
  235. The units for utility is _________.
    A. utils
    B. metric system
    C. satisfaction points
    D. decibels
    A.
    (this multiple choice question has been scrambled)
  236. It is not possible to compare utility across people, it is only possible to compare utility across products for one person at a time.
    A. True
    B. False
    A.
  237. ___________ is the additional satisfaction gained by the consumption or use of one more unit of something.
    Marginal utility
  238. _______ is the total amount of satisfaction obtained from consumption of a good or service.
    Total utility
  239. How do you find marginal utility?
    A. Change in Price +U = MU
    B. TU/ Change in Quantity = MU
    C. TU+U = MU
    D. MR/ U = MU
    B.
    (this multiple choice question has been scrambled)
  240. How do you calculate total utility?
    A. MR x MU = TR
    B. Add up all MU = TU
    C. Add up all prices/ MU = TU
    D. MC x U = TR
    B.
    (this multiple choice question has been scrambled)
  241. The law of _________________ states that the more of any one good a person consumes per period, the less additional satisfaction (utility) generated by consuming each additional (marginal) unit of the same good (holding the consumption of all other goods and services constant.)
    diminishing marginal utility
  242. The more you consume of a good, the more utility you get out of each product.
    A. True
    B. False
    B.
  243. Market systems do not maximize total social utility.
    A. True
    B. False
    A.
  244. __________ tried to make a system that allocates society’s scarce goods and services to those who would derive the most utility from consuming these goods and services.
    A. Utilitarian's
    B. FDCA
    C. The government
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  245. Cracker Jack used to have a motto“The more you eat, the more you want.” This motto goes against what law?
    A. law of diminishing marginal utility
    B. law of increasing marginal costs
    C. law of diminishing marginal product
    D. law of increasing marginal benefit
    A.
    (this multiple choice question has been scrambled)
  246. The _____ line depicts all possible combinations of goods that a consumer can afford.
    A. substitute
    B. income
    C. budget
    D. complement
    C.

    The budget line is also known as the budget constraint.
    (this multiple choice question has been scrambled)
  247. ___________ is all combinations of goods that a household can afford (i.e. all bundles of good that lie inside or on the budget constraint).
    A. choice combination
    B. choice options
    C. choice set
    D. choice ideas
    C.
    (this multiple choice question has been scrambled)
  248. Which name does not depict the demand curve?A. opportunity set
    B. choice set
    C. marginal cost
    D. none of the above
    C.
  249. What happens to the demand curve if your income increases from $10 to $20.
    A. the demand curve will not change
    B. the demand curve will move along the line
    C. the demand curve will shift rightward
    D. the demand curve will shift leftward
    C.
    (this multiple choice question has been scrambled)
  250. __________is the set of opportunities to purchase real goods and services available to a household as determined by prices and money income.
    Real income
  251. Real income rises if money income rises and prices stay the same or if prices fall while money income stays the same.
    A. True
    B. False
    A.
  252. What are the 2 possible graphs that show income rising and prices staying the same, then prices lowering and income staying the same?
    • When only income changes --> the entire demand curve shifts
    • When only prices changes --> the demand curve peaks
  253. Understanding marginal utility and consumption
    The consumer will set the per dollar marginal utility to be the same across all goods and services. (they will equalize the “bang for their buck”)
  254. What is the equation for the utility-maximizing rule?
    • MUA
    • ------
    • PA    SHOULD EQUAL MUB
    •                                              ------
    •                                              PB
  255. To find the utility maximization, we need to know the marginal utility and price.
    A. True
    B. False
    A.

    We HAVE TO HAVE both
  256. The law of diminishing marginal demand curve is _________.
    A. upward slope
    B. has an undefined slope
    C. downward sloping
    D. has a zero slope
    C.
    (this multiple choice question has been scrambled)
  257. For utilizing maximization, equilibrium means that we are spending all our income.
    A. True
    B. False
    A.
  258. When the price of a good changes, what are the 2 main effects?
    • 1. income effect
    • 2. substitution effect
  259. ________
    When the price of something we buy falls, we are better off. Our REAL INCOME (income in terms of what we can buy) rises as prices fall. 
    As real income rises, we want to buy more of all normal goods.

    When the price of something we buy rises, we are worse off.  Our REAL INCOME falls and we want to buy less of all normal goods.
    Income effect
  260. We our income rises we are more likely to buy _________.
    A. normal goods
    B. private goods
    C. public goods
    D. inferior goods
    A.
    (this multiple choice question has been scrambled)
  261. When our income falls we are more likely to buy ____________.
    A. public goods
    B. inferior goods
    C. normal goods
    D. private goods
    B.
    (this multiple choice question has been scrambled)
  262. ________
    If the price of one good falls (ceteris paribus), that good becomes less expensive relative to substitutes.  If this happens we are likely to buy more of the good whose price fell and less of other goods (to equalize MU/P).

    If the price of one good rises (ceteris paribus), that good becomes more expensive relative to substitutes.  If this happens we are likely to buy less of the good whose price rose and more of other goods (to equalize MU/P).
    Substitution effect
  263. If the cost of Coke rises, we are more likely to buy Pepsi. What effect is this?
    the substitution effect
  264. If the price of X falls and the consumer buys more X as well as more Y, we say that the _________ effect dominates.
    A. substitution
    B. income
    B.
  265. If the price of X falls and the consumer buys more X and less Y, we say that the ________ effect dominates.
    A. substitution
    B. income
    A.
  266. Tell me how LDMU can explain why soda machines only dispense one pack at a time, while newspaper stands expose all of the newspapers when you put your quarters in.
    The MU of another paper is very low, while the MU of another soda is higher.
  267. Draw the differences in graphs for the marginal utility of a newspaper machine and for a soda can machine.
    • 1. the newspaper MU (like a demand curve) is steep
    • 2. the soda can MU (like a demand curve) is more flat
  268. __________ is when you pay the same percentage of your income in taxes, regardless of your level of income.
    Flat Tax, proportional taxing
  269. ___________ is as your income increases, the amount of taxesyou pay (asa percentage of your income) increases.
    Progressive tax
  270. A progressive tax system is based on the belief that paying taxes should be equally “painful” for all, whether they are extremely wealthy or whether they are of more modest means.  A progressive tax system assumes the MU of income is a decreasing function of income. Which law is this?
    The law of diminishing marginal utility
  271. A _______ progressive tax system is where everyone receives the same income after taxes.
    A. substantial
    B. inelastic
    C. elastic
    D. perfectly
    D.
    (this multiple choice question has been scrambled)
  272. A perfectly progressive tax system is what the ______ (is/are) looking for.
    A. utilitarian's
    B. the government
    C. republicans
    D. democrats
    A.
    (this multiple choice question has been scrambled)
  273. What 4 assumptions hold true for a perfectly progressive tax system?
    • 1. income affects utility
    • 2. Everyone has the same utility function for income
    • 3. The LDMU applies to income
    • 4. Total income in society is fixed
  274. Draw the diagram for a perfectly progressive tax system.
    • It almost looks like a U.
    • Go to lecture 12, slide 15 for help.
    • It explains:
    • If I was paid more, my marginal utility would be really low.
    • If Steve was paid little, his marginal utility is really high.
  275. Reasons why a perfectly progressive tax system is impossible?
    1 and 3 are believable.  But 2 and 4 are not. 

    Not everyone has the same utility function for income.  i.e. some people value money more than others.

    Also, total income is not fixed.  The amount that people work can affect the total income.  Good workers can increase the total income.  Also, it is possible for very high taxes to discourage work and lower total income.
  276. __________ is the difference between what you are willing to pay and the price.
    Consumer surplus
  277. Say you go for a run and are really thirsty afterward.  You go into 7-11 and buy a Gatorade.  It costs you $1.  But you were so thirsty that you would have gladly paid $4 for it. What is the consumer surplus?
    It is $3.

    $4 - $1 = $3
  278. Draw a graph showing consumer surplus. You need to draw a demand curve and the price (then the CS).
    The consumer surplus should be a right triangle shaded below the demand and above the price.
  279. ____________ is a paradox stating that
    (1) the things with the greatest value in use frequently have little or no value in exchange(2) the things with the greatest value in exchange frequently have little or no value in use.
    A. hefty/heavy paradox
    B. diamond/water paradox
    C. value-added paradox
    D. expensive/cheap paradox
    B.
    (this multiple choice question has been scrambled)
  280. Water is the greatest value of exchange. We are willing to pay for water. (Basically water is free and we are willing to pay the price.) That is a lot of consumer surplus.
    We buy diamonds for ourselves and others but it is not that useful. We have to fix a budget. You spend exactly what you budget. Say you only want to spend $5000, you only spend $5000. This explains _________.
    the diamond/water paradox
  281. _______ is the difference between the current market price and the full cost of production for the firm.
    Producer surplus
  282. Draw producer surplus. You will have to draw the supply curve and the price of the good.
    The producer surplus is the shaded right triangle above the supply curve and beneath the price.
  283. Draw a picture showing the total surplus.
    The total surplus is both the consumer and producer surplus. You should use both a demand and supply curve and a price line.
  284. Total surplus is maximized when ______.
    A. quantity demanded > quantity supplied
    B. quantity demanded = quantity supplied
    C. quantity demanded < quantity supplied
    D. none of the above
    B.
    (this multiple choice question has been scrambled)
  285. __________ is the net loss of producer and consumer surplus from underproduction or overproduction
    Deadweight loss
  286. For a product if consumers are supplying less or more than the equilibrium price, society is going to experience ________.
    A. deadweight loss
    B. government tariffs
    C. government taxes
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  287. With over production, cost is _______ benefit.
    A. greater than
    B. equal to
    C. less than
    D. none of the above
    A.
    (this multiple choice question has been scrambled)
  288. With underproduction, benefit is _________cost.
    A. less than
    B. equal to
    C. greater than
    D. none of the above
    C.
    (this multiple choice question has been scrambled)
  289. Which factor is not a reason for overproduction?
    A. price ceilings
    B. price floors
    C. pollution
    D. all of the above
    B.
    (this multiple choice question has been scrambled)
  290. Sometimes we are willing to pay _______ for a product, if somehow we save time.
    A. the same amount
    B. less
    C. more
    D. none of the above
    C.

    This is the issue of time and demand
    (this multiple choice question has been scrambled)
  291. You can buy a product for $15 at Best Buy or for $10 online with a 5-7 day delivery time. This relates to the issue of ___________.
    A. place and income
    B. price and frequency
    C. elasticity and quantity
    D. time and demand
    D.
    (this multiple choice question has been scrambled)
  292. __________ economics is what should be.
    A. Normative
    B. Negative
    C. Figurative
    D. Positive
    A.
    (this multiple choice question has been scrambled)
  293. _________ economics is what is.
    A. Positive
    B. Normative
    C. Figurative
    D. Negative
    A.
    (this multiple choice question has been scrambled)
  294. Suppose you go to a movie, and the ticket price is $7.00.  Suppose you could have earned $30 during that movie at a part time job. What is the accountant's costs and the economists costs?
    • Accountant cost ==> $7
    • Economists cost ==> $37

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