Econ 201 – CH. 4 – 14 – Flashcards

A likely example of complementary goods for most people would be

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

A likely example of complementary goods for most people would be

Buyers are able to buy all they want to buy and sellers are able to sell all they want to sell at

A demand schedule is a table that shows the relationship between

If a surplus exists in a market, then we know that the actual price is

Equilibrium price must decrease when demand

An example of a perfectly competitive market would be the market for

In a market economy, supply and demand determine

A competitive market is one in which there

A improvement in production technology will shift the

The forces that make market economies work are

A good will have a more inelastic demand, the

For which pairs of goods is the cross-price elasticity most likely to be negative?

A perfectly elastic demand implies that

An increase in price causes an increase in total revenue when demand is

As we move downward and to the right along a linear, downward-sloping demand curve

A perfectly inelastic demand implies that buyers

If sellers do not adjust their quantity supplied at all in response to a change in price, the price elasticity of supply is

sellers respond to very small changes in price by adjusting their quantity supplied by extremely large amounts, the price elasticity of supply approaches

For which pairs of goods is the cross-price elasticity most likely to be positive?

For which of the following goods is the income elasticity of demand likely highest?

A price ceiling is binding when it is set

A legal maximum on the price at which a good can be sold is called a price

A tax imposed on the sellers of a good will lower the

A surplus results when a

A tax imposed on the buyers of a good will lower the

A tax on sellers will shift the

A tax imposed on the buyers of a good will raise the

A minimum wage that is set below a market's equilibrium wage will

A minimum wage that is set above a market's equilibrium wage will result in an excess

A shortage results when a

Donald produces nails at a cost of $350 per ton. If he sells the nails for $500 per ton, his producer surplus is

If a market is allowed to adjust freely to its equilibrium price and quantity, then an increase in demand will

.A demand curve reflects each of the following except the

If the current allocation of resources in the market for hammers is inefficient, then it must be the case that

A consumer's willingness to pay directly measures

If the United States changed its laws to allow for the legal sale of a kidney, which of the following is likely to occur?

Inefficiency exists in an economy when a good is

If the current allocation of resources in the market for wallpaper is efficient, then it must be the case that

When a buyer's willingness to pay for a good is equal to the price of the good, the

Suppose there is an early freeze in California that reduces the size of the lemon crop. What happens to consumer surplus in the market for lemons?

The higher a country's tax rates, the more likely that country will be

It does not matter whether a tax is levied on the buyers or the sellers of a good because

If the tax on a good is doubled, the deadweight loss of the tax

Other things equal, the deadweight loss of a tax

The Laffer curve illustrates that

When the government imposes taxes on buyers or sellers of a good, society

If the labor supply curve is nearly vertical, a tax on labor

A tax levied on the sellers of a good shifts the

Ronald Reagan believed that reducing income tax rates would

A $2 tax per gallon of paint placed on the buyers of paint will shift the demand curve

A tariff is a

An important factor in the decline of the U.S. textile industry over the past 100 or so years is

Opponents of free trade often want the United States to prohibit the import of goods made in overseas factories that pay wages below the U.S. minimum wage. Prohibiting such goods is likely to

If the United States threatens to impose a tariff on Honduran blueberries if Honduras does not remove agricultural subsidies, the United States will be

For any country that allows free trade,

A tariff on a product makes

Suppose Brazil has an absolute advantage over other countries in producing almonds, but other countries have a comparative advantage over Brazil in producing almonds. If trade in almonds is allowed, Brazil

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries...

Spain allows trade with the rest of the world. We know that Spain has a comparative advantage in producing olive oil if we know that

A quota is

Externalities tend to cause markets to be

Abe owns a dog, the dog's barking annoys Abe's neighbor, Jenny. Suppose that the benefit of owning the dog is worth $200 to Abe and that Jenny bears a cost of $400 from the barking. Assuming Abe has the legal right to keep the dog, a possible private solution to this problem is that;

Dog owners do not bear the full cost of the noise their barking dogs create and often take too few precautions to prevent their dogs from barking. Local governments address this problem by

By allowing an income-tax deduction for charitable contributions, the government

A dentist shares an office building with a radio station. The electrical current from the dentist's drill causes static in the radio broadcast, causing the radio station to lose $10,000 in profits. The radio station could put up a shield at a cost of $30,000

A cost imposed on someone who is neither the consumer nor the producer is called a

Suppose that smoking creates a negative externality. If the government does not interfere in the cigarette market, then

Two types of private solutions to the problem of externalities are

With a corrective tax, the supply curve for pollution is

A corrective tax

Markets do not ensure that the air we breathe is clean because

Elephants are endangered, but cows are not because

A cheeseburger is a

Which of the following is a disadvantage of government provision of a public good?

It is common knowledge that many U.S. national parks have become overused. One possible solution to this problem is to

If one person's use of a good diminishes another person's enjoyment of it, the good is

Property rights are well established for

A city street is

A cable television broadcast of a movie is

Adam Smith used a famous example of what type of firm to illustrate economies of scale?

Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing

Economic profit

Suppose that a firm's long-run average total costs of producing an individual income tax return is $75 when it produces 1,000 returns and $75 when it produces 1,200 returns. For this range of output, the firm is experiencing

For a firm, the production function represents the relationship between

A difference between explicit and implicit costs is that

If marginal cost is rising

If Kevin's children run a lemonade stand for a day and sell 200 glasses of lemonade at $0.50 each, their total revenues are

Fixed costs can be defined as costs that

Economists assume that the typical person who starts her own business does so with the intention of

For any given price, a firm in a competitive market will maximize profit by selecting the level of output at which price intersects the

In a market with a fixed number of firms, as long as price is above average

When buyers in a competitive market take the selling price as given, they are said to be

If a firm in a perfectly competitive market triples the quantity of output sold, then total revenue will

In the short run, a firm operating in a competitive industry will shut down if price is

Suppose that in a competitive market the equilibrium price is $2.50. What is marginal revenue for the last unit sold by the typical firm in this market?

In the long run, a firm will enter a competitive industry if

Firms operating in competitive markets produce output levels where marginal revenue equals

Assume a firm in a competitive industry is producing 800 units of output, and it sells each unit for $6. Its average total cost is $4. Its profit is

A monopolist will choose to increase output when

With no price discrimination, the monopolist sells every unit at the same price. Therefore

A government-created monopoly arises when

A fundamental source of monopoly market power arises from

Which of the following statements is correct?

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will

Many movie theaters allow discount tickets to be sold to senior citizens because

Monopoly profit is not a social problem because

A monopoly firm can sell 150 units of output for $10 per unit. Alternatively, it can sell 151 units of output for $9.90 per unit. The marginal revenue of the 151st unit of output is

If a monopolist can sell 7 units when the price is $4 and 8 units when the price is $3, then the marginal revenue of selling the eighth unit is equal to