Which of the following is NOT and example of economic decision making? A) writing a thesis B) building simple models C) using cost-benefit analysis D) taking small, incremental steps

D More test answers on https://studyhippo.com/econ-chapter-1-multiple-choice/

b) The role of value judgements in influencing economic decision making and policy

Value judgement has a major influence on decision making for consumers and producers due to their personal preference and beliefs in normative economics. Even with government, they may choose one policy over another because that is their preference on how to run an economy. More test answers on https://studyhippo.com/1-1-2-positive-and-normative-economic-statements/

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Cost Benefit Analysis Ecological Economics Economic Decision Making Gross Domestic Product Law Of Supply And Demand

CHAPTER 1 | Economics: Foundations and Models – Flashcards 46 terms

Isabel Padilla

46 terms

Preview

CHAPTER 1 | Economics: Foundations and Models – Flashcards

question

Economics is the study of all of the following except

answer

how the prices of goods and services are determined

question

Which of the following statements best defines scarcity?

answer

Scarcity is a situation in wh ich unlimited wants exceed the limited resources available to fulfill those wants.

question

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

answer

A market

question

In economics, how do rational people behave?

answer

They decide on an action only if its benefits outweigh its costs.

question

Fill in the blank. In economics, optimal decisions are made _____________.

answer

at the margin

question

Which of the following is not among the fundamental economic questions that every society must solve?

answer

What goods and services will be exchanged?

question

What types of economies require that answers be given to the following questions: what goods and services will be produced, how will the goods and services be produced, and who will receive the goods and services produced?

answer

market economies, centrally planned economies, mixed economies

question

In what type of economy does the government decide how economic resources will be allocated?

answer

a centrally planned economy

question

Which of the following is the best classification for the economies of the United States, Canada, Japan, and Western Europe?

answer

mixed economies

question

Which of the following terms best refers to a fair distribution of economic benefits?

answer

equity

question

Which of the following is achieved when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it?

answer

allocative efficiency

question

Which of the following terms summarizes the situation in which a buyer and a seller exchange a product in a market and, as a result, both are made better off by the transaction?

answer

voluntary exchange

question

What does an economy achieve by producing a good or service at the least possible cost?

answer

productive efficiency

question

Which of the following best describes the characteristics of models used in economics?

answer

Models are simplifications of reality that include only essential elements and exclude less relevant details.

question

Which of the following is not an essential component of an economic model?

answer

normative statements

question

What is the purpose of an economic hypothesis?

answer

to establish a causal relationship

question

What type of economic analysis is concerned with the way things ought to be?

answer

normative analysis

question

The statement "A minimum wage actually reduces employment" would be considered what type of statement?

answer

a positive statement

question

Which of the following is an example of a positive question?

answer

If the college increased tuition, would class sizes decline?

question

Which of the following questions can be answered using normative economic reasoning?

answer

Should a college cut tuition to stimulate enrollments?

question

Which of the following involves an estimation of the benefits and costs of a particular action?

answer

positive analysis

question

What type of assessment is one in which a person's values and political views form part of that assessment?

answer

a normative assessment

question

Fill in the blank: ____________is the study of how households and businesses make choices, how they interact in markets, and how the government influences their choices.

answer

Microeconomics

question

Which of the following covers the study of topics such as inflation and unemployment?

answer

macroeconomics

question

What is the name given to the development of a new good or a new process for making a good?

answer

an invention

question

A firm's processes to produce goods and services are called

answer

technology

question

The stock of computers, factory buildings, and machine tools used to produce goods better are known as

answer

physical capital

question

Human capital is

answer

the accumulated training and skills that workers possess

question

Fill in the blanks. The slope of a straight line equals the change in value on the ____________ axis____________ by the change in the value on the other axis between any two points on the line.

answer

vertical; divided

question

Why do economists distinguish between financial capital and physical capital?

answer

Economists distinguish financial capital and physical capital because only physical capital (for example, machinery, tools, and buildings) is a productive resource. Financial capital includes stocks, bonds, and holdings of money. Financial capital is not part of a country's capital stock, because financial capital does not produce output.

question

Explain the difference between productive efficiency and allocative efficiency.

answer

Productive efficiency is the situation in which a good or service is produced at the lowest possible cost. Allocative efficiency is a state of the economy in which production reflects consumer preferences: every good or service is produced to the point at which the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it.

question

TF: Stating a hypothesis in an economic model is an example of normative analysis

answer

question

TF: Only poor people face problems related to scarcity

answer

question

TF: Economists assume that human beings respond only to monetary incentives.

answer

question

TF: In a centrally planned economy, the goods and services produced are always distributed equally to all citizens

answer

question

TF:Equity is achieved when economic benefits are equally distributed.

answer

question

TF: A mixed economy is an economy in which the three fundamental questions (What? How? Who?) are answered by a mixture of consumers and producers.

answer

question

TF: Only centrally planned economies face trade-offs when producing goods and services

answer

question

TF: People are rational when they only take actions that benefit society as a whole

answer

question

TF: Government intervention in the U.S. economy increased dramatically as a result of the Great Depression.

answer

question

TF: Economists use normative analysis to show that the minimum-wage law leads to higher unemployment.

answer

question

TF: Microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government attempts to influence their choices.

answer

question

TF: The slope of a straight line is the same at any point.

answer

question

TF: To measure the slope of a nonlinear curve at a particular point, one must draw a straight line from the origin to the point. The slope of this line is equal to the slope of the curve at that point

answer

question

TF: All societies face the economic problem of having a limited amount of economic resources.

answer

question

TF: Economic models can help analyze simple real-world economic situations but are of little value in analyzing complicated economic situations.

answer

STUDY

Economic Decision Making Ego Defense Mechanisms Psychology

Biological Psychology Chapter 1 – Flashcards 31 terms

Amber Moore

31 terms

Preview

Biological Psychology Chapter 1 – Flashcards

question

biological psychology

answer

the study of the biological bases of psychological processes and behaviour (also called behavioural neuroscience)

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neuron

answer

the basic unit of the nerve system

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neuroscience

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the study of the nervous system

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conserved

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in the context of evolution, referring to a trait that is passed on from a common ancestor to two or more descendant species.

question

five research perspectives on the biology of behaviour

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1. description: structural and functional 2. evolution 3. development over the life span 4. mechanisms 5. applications

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physiological psychology

answer

More specific and defined area of biological psychology - Deals with the relationship between mind and body (i - Tends to be invasive (i.e., manipulating directly the nervous or endocrine system of animals) - Focus is on the central nervous system

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psychophysiology

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Tends to take physiological measures, and correlate them with behavioural or cognitive measures. - Focuses on autonomic nervous system measures, brain waves, muscle activity, etc. - Ex: EEG, EMG, EOG, GSR, etc. - Applications: Biofeedback, sleep studies, polygraph

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neuropsychology

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Typically in the human and clinical context ("clinical neuropsychology") - A clinical psychology Ph.D or PsyD is required. - based on assessment of patients (for brain disorders and injuries) and rehabilitation. - Working with neurologists (MD's) is often required in hospitals)

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behavioural neuroscience

answer

Tends to be defined as "biological psychology" (so quite general) with the exclusion of cognitive neuroscience. - Fundamental (basic) research with both animal models and humans. - Definitions depend on how you define "behaviour" - Focus on observable behaviours (i.e., motor behaviour), and emotions (affective processes) and motivational processes

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ethology

answer

the science of animal behaviour

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behaviourism

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the theory that human and animal behavior can be explained in terms of conditioning, without appeal to thoughts or feelings, and that psychological disorders are best treated by altering behavior patterns.

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striated muscle

answer

A type of muscle with a striped appearance, gen- erally under voluntary control. Compare smooth muscle

question

cognitive neuroscience

answer

Fundamental research with predominantly human but some animal models - Heavy reliance on non-invasive neuroimaging techniques (e.g., CAT, PET, fMRI, etc.). - Focuses on cognitive processes (covert processes) and functions (e.g., behavioural plasticity, communication, etc.): Learning and memory, Attention and perception, Problem solving, decision making, Language

question

developmental psychology or neuroscience and behaviour genetics

answer

Study of - life-span development - early development (pre-natal, peri-natal, early post natal) - aging - genetic vs. environmental influences - epigenetics - brain growth and regeneration, neuroplasticity, etc. - In behavioural endocrinology and toxicology: organizational effects of hormones, endocrine disruptors, neuroteratology

question

3 emerging areas of neuroscience

answer

1. Affective neuroscience: The neuroscience of emotions, affect 2. Social neuroscience: The neuroscience of social behaviour and socio-affective processes. 3. Motivational neuroscience: the study of motivational processes. "Drives" and incentives, and how the brain responds to "reward", and becomes addicted

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behavioural pharmacology or psychopharmacology

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The study of the effects of drugs on brain, behaviour, cognition

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behavioural endocrinology and psychoendocrinology

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The study of the effect of hormones on brain and behaviour and also the effect of behaviour on the endocrine system

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behavioural toxicology

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The study of the effect of neurotoxins (and sometimes endocrine disruptors) on brain and behaviour

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neurotoxin

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a poison that acts on the nervous system

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psychoneuroimmunology

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Study of the relationship between the immune system, the nervous system and behaviour

question

3 main approaches to studying the neuroscience of behaviour

answer

1. somatic intervention 2. behavioural intervention 3. both of these variables measured to allow for correlations between somatic and behavioural changes - each approach enriches the others

question

somatic intervention

answer

investigators change the body structure or chemistry of an animal in some way and observe and measure any resulting behavioral effects.

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behavioural intervention

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An approach to ﬁnding relations between body variables and behavioural variables that involves intervening in the behaviour of an organism and looking for resultant changes in body structure or function.

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epigenetics

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The study of heritable changes in gene activity that are not caused by changes in the DNA sequence - The study of factors that affect gene expression without making any changes in the nucleotide sequence of the genes themselves.

question

monism

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the brain and the mind are the same - also physicalism, materialism

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dualism

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brain and mind are not the same - but could interact (interactionism) - Cartesian dualism

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telencephalon

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The frontal subdivision of the forebrain that includes the cerebral hemispheres when fully developed.

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MacLean's brain theory

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The Triune Brain - telecephalic components: 1. reptilian brain 2. paleo-mammalian brain 3. neo-mammalian brain

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reptilian brain

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basal ganglia and extrapyrimidal motor system

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paleo-mammalian brain

answer

"visercal" or "ventral" brain - limbic system, social emotions

question

neo-mammalian brain

answer

"dorsal" brain - neocortex, complex cognitions

STUDY

Behavioral Economics Diminishing Marginal Utility Economic Decision Making Economics Marginal Utility Per Dollar

Chapter 8 Utility and Demand – Flashcards 12 terms

Steven Colyer

12 terms

Preview

Chapter 8 Utility and Demand – Flashcards

question

Budget Line

answer

The limit to a household's consumption choices. It marks the boundary between those combinations of goods and services that a household can afford to buy and those it cannot afford.

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Preferences

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A description of a person's likes and dislikes and the intensity of those feelings.

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Utility

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The benefit or satisfaction that a person gets from the consumption of goods and services.

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Total Utility

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The total benefit that a person gets from the consumption of all the different goods and services.

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Marginal Utility

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The "change" in total utility resulting from a one-unit increase in the quantity consumed.

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Diminishing Marginal Utility

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The tendency for marginal utility to decrease as the quantity consumed of a good increases.

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Consumer Equlibrium

answer

A situation in which a consumer has allocated all his or her available income in the way that, given the prices of goods and services, maximizes his or her total utility.

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Marginal Utility per Dollar

answer

The marginal utility from a good that results from spending one more dollar on it. It is calculated as the marginal utility from the good divided by its price.

question

Behavioral Economics

answer

A study of the ways in which limits on the human brain's ability to compute and implement rational decisions influences economic behavior—both decisions that people make and the consequences of those decisions for the way markets work.

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Neuroeconomics

answer

The study of the activity of the human brain when a person makes an economic decision.

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The reason why we do not always make rational economic choices/decisions

answer

Behavior Economics & Neuroeconomics seek to acheive:

question

• Bounded Rationality • Bounded Willpower • Bounded Self-interest

answer

(3) Limitations on Human Rationality:

STUDY

Economic Decision Making Fixed Interest Rate Macroeconomics

Macroeconomics Chapters 6-9 – Flashcards 65 terms

Daniel Jimmerson

65 terms

Preview

Macroeconomics Chapters 6-9 – Flashcards

question

Adjustable-rate mortgage (ARM)

answer

A mortgage (home loan) that adjusts the nominal interest rate to changing rates of inflation.

question

Aggregate demand

answer

The total quantity of output (real GDP) demanded at alternative price levels in a given time period, ceteris paribus.

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Aggregate supply

answer

The total quantity of output (real GDP) producers are willing and able to supply at alternative price levels in a given time period, ceteris paribus.

question

Autonomous consumption

answer

Consumer spending not dependent on current income.

question

Average propensity to consume (APC)

answer

Total consumption in a given period divided by total disposable income.

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Base year

answer

The year used for comparative analysis; the basis for indexing price changes.

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Bracket creep

answer

The movement of taxpayers into higher tax brackets (rates) as nominal incomes grow.

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Business cycle

answer

Alternating periods of economic growth and contraction.

question

Consumer Price Index (CPI)

answer

A measure (index) of changes in the average price of consumer goods and services.

question

Consumption

answer

Expenditure by consumers on final goods and services.

question

Consumption function

answer

A mathematical relationship indicating the rate of desired consumer spending at various income levels.

question

Core inflation rate

answer

Changes in the CPI, excluding food and energy prices.

question

Cost-of-living adjustment (COLA)

answer

Automatic adjustments of nominal income to the rate of inflation.

question

Cyclical unemployment

answer

Unemployment attributable to a lack of job vacancies—that is, to an inadequate level of aggregate demand.

question

Deflation

answer

A decrease in the average level of prices of goods and services.

question

Demand-pull inflation

answer

An increase in the price level initiated by excessive aggregate demand.

question

Discouraged worker

answer

An individual who isn't actively seeking employment but would look for or accept a job if one were available.

question

Disposable income

answer

After-tax income of households; personal income less personal taxes.

question

Dissaving

answer

Consumption expenditure in excess of disposable income; a negative saving flow.

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Equilibrium (macro)

answer

The combination of price level and real output that is compatible with both aggregate demand and aggregate supply.

question

Equilibrium GDP

answer

The value of total output (real GDP) produced at macro equilibrium (AS = AD).

question

Fiscal policy

answer

The use of government taxes and spending to alter macroeconomic outcomes.

question

Frictional unemployment

answer

Brief periods of unemployment experienced by people moving between jobs or into the labor market.

question

Full employment

answer

The lowest rate of unemployment compatible with price stability, variously estimated at between 4 percent and 6 percent unemployment.

question

Full-employment GDP

answer

The value of total market output (real GDP) produced at full employment.

question

GDP deflator

answer

A price index that refers to all goods and services included in GDP.

question

Growth recession

answer

A period during which real GDP grows but at a rate below the long-term trend of 3 percent.

question

Hyperinflation

answer

Inflation rate in excess of 200 percent, lasting at least one year.

question

Inflation

answer

An increase in the average level of prices of goods and services.

question

Inflation rate

answer

The annual percentage rate of increase in the average price level.

question

Inflationary flashpoint

answer

The rate of output at which inflationary pressures intensify; the point on the AS curve where slope increases sharply.

question

Inflationary GDP gap

answer

The amount by which equilibrium GDP exceeds full-employment GDP.

question

Investment

answer

Expenditures on (production of) new plants, equipment, and structures (capital) in a given time period, plus changes in business inventories.

question

Item weight

answer

The percentage of total expenditure spent on a specific product; used to compute inflation indexes.

question

Labor force

answer

All persons over age 16 who are either working for pay or actively seeking paid employment.

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Labor force participation rate

answer

The percentage of the working-age population working or seeking employment.

question

Laissez faire

answer

The doctrine of "leave it alone," of nonintervention by government in the market mechanism.

question

Law of demand

answer

The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus.

question

Macroeconomics

answer

The study of aggregate economic behavior, of the economy as a whole.

question

Marginal propensity to consume (MPC)

answer

The fraction of each additional (marginal) dollar of disposable income spent on consumption; the change in consumption divided by the change in disposable income.

question

Marginal propensity to save (MPS)

answer

The fraction of each additional (marginal) dollar of disposable income not spent on consumption; 1 − MPC.

question

Monetary policy

answer

The use of money and credit controls to influence macroeconomic outcomes.

question

Money illusion

answer

The use of nominal dollars rather than real dollars to gauge changes in one's income or wealth.

question

Natural rate of unemployment

answer

The long-term rate of unemployment determined by structural forces in labor and product markets.

question

Nominal GDP

answer

The value of final output produced in a given period, measured in the prices of that period (current prices).

question

Nominal income

answer

The amount of money income received in a given time period, measured in current dollars.

question

Okun's Law

answer

One percent more unemployment is estimated to equal 2 percent less output.

question

Outsourcing

answer

The relocation of production to foreign countries.

question

Price stability

answer

The absence of significant changes in the average price level; officially defined as a rate of inflation of less than 3 percent.

question

Production possibilities

answer

The alternative combinations of final goods and services that could be produced in a given period with all available resources and technology.

question

Real GDP

answer

The value of final output produced in a given period, adjusted for changing prices.

question

Real income

answer

Income in constant dollars; nominal income adjusted for inflation.

question

Real interest rate

answer

The nominal interest rate minus the anticipated inflation rate.

question

Recession

answer

A decline in total output (real GDP) for two or more consecutive quarters.

question

Recessionary GDP gap

answer

The amount by which aggregate spending at full employment falls short of full-employment output.

question

Relative price

answer

The price of one good in comparison with the price of other goods.

question

Saving

answer

That part of disposable income not spent on current consumption; disposable income less consumption.

question

Say's Law

answer

Supply creates its own demand.

question

Seasonal unemployment

answer

Unemployment due to seasonal changes in employment or labor supply.

question

Structural unemployment

answer

Unemployment caused by a mismatch between the skills (or location) of job seekers and the requirements (or location) of available jobs.

question

Supply-side policy

answer

The use of tax incentives, (de) regulation, and other mechanisms to increase the ability and willingness to produce goods and services.

question

Underemployment

answer

People seeking full-time paid employment that work only part-time or are employed at jobs below their capability.

question

Unemployment

answer

The inability of labor force participants to find jobs.

question

Unemployment rate

answer

The proportion of the labor force that is unemployed.

question

Wealth effect

answer

A change in consumer spending caused by a change in the value of owned assets.

STUDY

Applied Economics Economic Decision Making Producing Goods And Services Three Basic Economic Questions

FBLA Economics Test 1 – Flashcards 100 terms

Brenda Gannon

100 terms

Preview

FBLA Economics Test 1 – Flashcards

question

A need is something that you desire to have because someone else has one.

answer

False

question

One of the problems in economics is that wants are unlimited.

answer

True

question

There are only two kinds of economic resources: human and capital.

answer

False

question

Labor is another name for human resources.

answer

True

question

Some resources, such as clean air and water, are limited.

answer

True

question

Scarcity is a problem that is faced by individuals and businesses but not by governments.

answer

False

question

Economic decision making is important to businesses and governments but not to individuals.

answer

False

question

Economic decision making is a process requiring four important steps.

answer

False

question

An arrangement that allows buyers and sellers to come together to trade goods, services, and resources is called a market.

answer

True

question

Determining which of its citizens should benefit from the production of goods and services something each nation must decide.

answer

True

question

When the government hires new employees, it is participating in the marketplace.

answer

True

question

In a system of capitalism, the government decides what will be produced with the resources available.

answer

False

question

In the private enterprise system, you may start or invest in any business as long as it is not illegal to do so.

answer

True

question

The profit motive is designed to allow lazy owners to become rich.

answer

False

question

The three roles that everyone must perform are worker, consumer, and saver.

answer

False

question

Quantity demanded means the quantity of products and services that consumers are willing and able to buy at a particular price.

answer

True

question

Quantity supplied means the quantity of a product or service that businesses are willing and able to provide at a particular price.

answer

True

question

Success in your role as a worker will affect your standard of living.

answer

True

question

When you pay your taxes, you are performing your citizen role.

answer

True

question

Economic growth refers to a steady increase in the production of goods and services in an economics system.

answer

True

question

There are over 120 million workers in the U.S. economy.

answer

True

question

The GDP in our economy has declined steadily for the past few years.

answer

False

question

Changes in the business cycle form a pattern of good times to bad times and back.

answer

True

question

Recovery in the business cycle occurs after a period of inflation.

answer

False

question

The production process of getting goods to consumers usually requires only one business.

answer

False

question

A supermarket, a bank, and a utility company are all examples of businesses.

answer

True

question

Marketing involves just transporting and selling products.

answer

False

question

Marketing activities add value to a product.

answer

True

question

Building a specific, unique product for one customer is called processing.

answer

False

question

Mass production is not the standard of U.S. manufacturing.

answer

False

question

Service businesses are the fastest growing part of our economy.

answer

True

question

All businesses must raise capital, use human resources, and keep records.

answer

True

question

One of the eight marketing functions is risk management.

answer

True

question

Consumers often have a negative or narrow view of marketing.

answer

True

question

The marketing strategy is a two-step process.

answer

True

question

Buying motives can be rational or emotional.

answer

True

question

A wholesaler sells directly to consumers.

answer

False

question

If a company has a limited supply of a product, it may lower its price.

answer

False

question

Effective personal selling includes contact with the customer after the purchase.

answer

True

question

Another term for international business is foreign or world trade.

answer

True

question

among the advantages enjoyed by the U.S. in world trade is our own production of wool and oil.

answer

False

question

It is necessary for the U.S. to import a variety of metals.

answer

True

question

There are a number of challenges involved with international trade, but currency exchange rates are not one of them.

answer

False

question

A limit set on the quantity of a product that can be imported or exported is called an embargo.

answer

False

question

A balance of payments and a balance of trade are the same thing.

answer

False

question

A business budget anticipates sources and amounts of income.

answer

True

question

Expenses include the total revenue minus operating costs of the small business.

answer

False

question

The most important step in financial planning is developing an income statement.

answer

False

question

In a small business, the budgeting goals are much the same as in a household-- to determine what the sources of income are and how they will be distributed.

answer

True

question

Budgets identify the financial plans of a business.

answer

True

question

Which of the following is NOT a need? •food •housing •car •clothing

answer

car

question

Members of a family might not be able to afford the things they want because of an economic factor called ________.

answer

the basic economic problem

question

What step is defining the problem in the decision-making process?

answer

first

question

A weekend skiing trip, a summer home at the lake, and a new 32-inch stereo television are all examples of ______.

answer

wants

question

Which of the following is NOT one of the three key economic questions? •What goods and services should be produced? •For whom should goods and services be produced? •When should the production of goods and services take place? •How should goods and services be produced?

answer

When should the production of goods and services take place?

question

Which of the following are characteristics of capitalism? •Economic resources are privately owned. •Individuals are free to decide what to produce. •Decisions about production and distribution are made through voluntary exchange.

answer

All

question

Which of the following is the best definition of profit? •the money a business takes from its sale •the money left from sales after expenses have been paid •an operational device that makes business owners rich •what is left after all merchandise has been sold

answer

the money left from sales after expenses have been paid

question

The "new rights" in previously controlled economies include ______.

answer

•the right to earn a fair profit, •the right to do business with minimal government regulation •the right to fail

question

A weekend skiing trip, a summer home at the lake, and a new 32-inch stereo television are all examples of _______.

answer

wants

question

Some of our wants are satisfied through the efforts of other people. These are called ______.

answer

services

question

You must make a choice. Either go to the concert or buy the group's new CD. If you buy the CD, you will miss going to the concert with your friends but you will have the music to pay whenever you want. In the decision-making process, you are ______.

answer

evaluating the advantages and disadvantages of each choice

question

The employees who work in an automobile assembly plant are that company's _____.

answer

human resources

question

Which of the following is NOT one of the economic roles performed in our economy? •worker •citizen •leader •consumer

answer

leader

question

What is the effect of dollar votes by consumers?

answer

•demand is affected •businesses learn about consumer preferences •businesses are helped in making decisions

question

Which of the following is NOT true about prices? •If prices are too high, consumers won't buy. •If prices are too low, businesses will not earn a profit. •Prices are affected by both supply and demand. •Setting a price does not require any study by a business.

answer

Setting a price does not require any study by a business.

question

The factor that helps to keep prices at a reasonable level is ____

answer

Competition among businesses

question

Which of the following is true about your citizen role? •voting is not part of it •keeping informed is not important •decisions made are individual and not collective •it helps provide goods and services needed by the community

answer

It helps provide goods and services needed by the community

question

Collective decision making means that _____

answer

citizens as a group influence community decisions

question

The quantity of a good or service that businesses are willing and able to sell at a particular price is called _____

answer

quantity supplied

question

Which of the following would NOT be counted in computing GDP? •building a do-it-yourself picnic table for your own yard •hamburgers you flip on your job at a fast-food restaurant •a pair of socks you sell on your job at a department store

answer

building a do-it-yourself picnic table for your own yard

question

When the effect of price changes is taken out of GDP, we have ______

answer

real GDP

question

Which of the following is true about the business cycle? •it has four phases •there are recurring ups and owns •there is a pattern of good times to bad times and back again

answer

all

question

Prosperity is the condition when _____

answer

the business cycle is at its high point

question

The future of our economy is characterized by _____

answer

serious problems that must be faced

question

This is when citizens decide how public goods will be provided for their common use.

answer

collective decision making

question

The quantity of a good that an average worker can produce in an hour is know as _____

answer

labor productivity

question

The business that takes raw materials and turns them into some usable form is known as

answer

a manufacturer

question

A firm that creates a product to meet a customer's specifications engages in _____

answer

custom manufacturing

question

Changing something from one form to another so it can be consumed or used to make something else is known as ____

answer

processing

question

Getting the product from the producer into the hands of the consumer is just one function of ____

answer

marketing

question

Understanding labor laws, hiring employees, and training staff are all functions of ____

answer

human resources

question

The eight marketing functions do NOT include ______

answer

manufacturing

question

Anything offered to the target market to satisfy their needs is

answer

the product

question

Maximizing profits, increasing sales, and maintaining an image are objectives related to _____

answer

pricing

question

Which of the following is the set of activities that ensures a smooth exchange relationship between businesses and consumers?

answer

marketing

question

When we develop a product or service with a specific group of customers in mind, we are considering the

answer

target market

question

The path that a product follows when moving from producer to consumer is called

answer

channel of distribution

question

Reinforcing the purchase decision, or simply reminding customers that they have made the right choice, is a function of ____

answer

Promotion

question

Which of the following is used to completely stop the import or export of a product? •embargo •tariff •duty •tax

answer

embargo

question

Which of the following are barriers to international trade? •quotas •tariff •duty •tax

answer

all

question

If you own your own small business, the money you receive is called

answer

revenue

question

A budget that estimates income and expenses from the beginning of the business until it becomes profitable is called a

answer

start-up budget

question

A balance sheet lists

answer

assets and liabilities

question

When expenses are greater than income, the result is

answer

a net loss

question

What statements do business owners review to determine how their businesses are performing?

answer

financial statements

question

Which of the following restaurants would be opened as a result of ethnic cultural diversity in the United States? •Burgers R' Us •Dan's Dogs and Sandwiches •Wang's Chinese Restaurant •May Lou's Soup and Sandwich Shop

answer

Wang's Chinese Restaurant

question

Financial information on similar businesses and industries are available in

answer

•Forbes •Fortune •The Wall Street Journal

question

What are the two most used financial statements?

answer

Balance sheet and income statement

question

Which of the following would show the wages of the company employees? •credit accounts •inventory •payroll •assets

answer

payroll

question

If Rick Adamson's business income was $85,900, and his expenses were $48,100, how much would his net profit be?

answer

$37,800

STUDY

Basic Economic Questions Consumer Protection Laws Economic Decision Making Economics Next Best Thing Producing Goods And Services

Economics Unit 1 – Flashcards 69 terms

Martha Hill

69 terms

Preview

Economics Unit 1 – Flashcards

question

-is a social science -focuses on decision making -involves consumers and producers

answer

Select the items below that describe the field of economics. Economics: Is a social science Is a plan to buy everything Focuses on decision making Involves consumers and producers

question

needs

answer

water and food are examples of _____.

question

wants

answer

extra pairs of shoes and music downloads are examples of _____.

question

-going to the doctor -getting a haircut -mowing the lawn

answer

Select the items below that are kinds of services. Going to the doctor Getting a haircut Mowing the lawn Owning a house

question

good.

answer

Susan bought a new computer. She purchased a _____.

question

consumers.

answer

people who buy goods and services are part of a group of decision makers called ______.

question

-companies -governments -nonprofit organizations

answer

Select the items that name types of producers. Buyers Companies Governments Nonprofit organizations

question

governments

answer

public education and roads are produced by ________.

question

(2) what is gained when a decision is made (1) in-depth study (4) to receive the most from something (3) what is given up when a decision is made.

answer

Match the term with the appropriate definition. 1. analysis 2. benefit 3. cost 4. maximize

question

-receiving the most satisfaction from a decision. -working within given conditions.

answer

Select the two parts of rational behavior. Doing whatever a person wants Receiving the most satisfaction from a decision Working within given conditions Not analyzing decision options

question

-the price of the cell phone -the amount of money Ben has to spend

answer

Ben wants to buy a new cell phone. Select the conditions that Ben should consider for this buying decision. The price of the cell phone Ben's age The number of sisters and brothers Ben has The amount of money Ben has to spend

question

to make a decision using a rational approach

answer

a cost-benefit analysis is a way _______.

question

all

answer

Select the steps for a cost-benefit analysis. List the costs involved in making a decision. Compare the costs and benefits. List the benefits involved in making a decision. Make a decision based on maximizing satisfaction.

question

(2) quantity and quality of human effort to achieve a goal (3) factors from the environment used to achieve a goal (1) products made to make other products and services (4) factors used to achieve a goal.

answer

Match the term with the appropriate definition. 1. capital goods 2. human resources 3. natural resources 4. productive resources

question

renewable resources.

answer

Trees and sunlight are examples of ________.

question

Gas is a nonrenewable resource.

answer

Sergio likes to drive and thinks that gas will be around forever. What is the problem with Sergio's thinking?

question

-natural resources -human resources -capital goods

answer

People design computers, and machines assemble them. Gas is then used to transport the finished computers to stores. Select the factors used in producing computers. Health Natural resources Human resources Capital goods

question

-limited amounts -include fossil fuels (e.g., coal) and minerals (e.g., gold) -come from earth

answer

Select the items that describe nonrenewable resources. Limited amounts Last forever Include fossil fuels (e.g., coal) and minerals (e.g., gold) Come from Earth

question

consumer-driven

answer

America has primarily ______ ______ aggregate economical behavior.

question

food

answer

An example of a physiological need is ______.

question

scarce

answer

resources that will eventually run out are ______.

question

unlimited.

answer

scarcity exists because resources are limited, but people's wants are ______.

question

-businesses can only make a limited number of goods and services. -not everyone's needs are met. -using scarce resource today means having fewer tomorrow.

answer

Select all that apply. Which of the following describe the effects of scarcity? Businesses can only make a limited number of goods and services. People have limited wants. Not everyone's needs are met. Using scarce resources today means having fewer tomorrow.

question

conserve

answer

to have more resources in the future, we must _______ resources today.

question

distribution

answer

You had fifty gallons of water and decided to use twenty-five gallons for showering, brushing your teeth, and flushing the toilet. You also decided to use the rest for cleaning dishes and washing your car. This division refers to your water _____ .

question

all

answer

Select all that apply. Which of the following items determine your preference for a concert ticket? band that is playing date of the concert price of the ticket friends that are going

question

reward

answer

a positive incentive that makes people better off is a ______.

question

not doing the action often.

answer

receiving a penalty from an action will most likely result in ______.

question

retail price

answer

Charlotte paid $4 for a movie download. The monetary amount is the download's ______.

question

trade-offs

answer

Ben was considering spending his gift card on books, music downloads, or movie tickets. He chose the movie tickets. Any values given up from not choosing the books and music downloads are called _____ .

question

opportunity cost

answer

Any value given up from the best alternative is called the _____ .

question

-depend on the individual -affect how people behave -help to determine the choices of an individual

answer

Select all that apply. Select all the items that describe incentives. depend on the individual affect how people behave are not part of the decision process help to determine the choices of an individual

question

utility

answer

An economic term that describes happiness and is hard to measure in numbers is _____ .

question

accounting cost

answer

The cost of producing a good and getting it to the customers is called

question

endorsements

answer

Beyonce, Taylor Swift, and Miley Cyrus make commercials that encourage people to drink milk. These ads contain _____ .

question

individual preferences

answer

George and Martha both have the choice to go to the movies. George decides to go, while Martha decides to stay home. The example illustrates _____ .

question

saver

answer

Steven puts aside some of his money for future use. He is a ______.

question

non-monetary incentive

answer

You studied for an exam and received an "A." The "A" is an example of a _____ .

question

alternatives

answer

Joyce is thinking about spending Saturday night at the movies, although she has many other choices for how to spend her Saturday night. Her choices represent her _____ .

question

private property

answer

________ is an incentive in conserving both renewable and non-renewable resources.

question

-The civil War was about Northern businessmen trying to bankrupt Southern farmers by emancipating their enslaved workforce. -England developed a fair and just taxation system for the American Colonies

answer

Select all that apply. Identify the fallacious arguments. The Great Depression brought prosperity to a few and great poverty to the many. The Civil War was about Northern businessmen trying to bankrupt Southern farmers by emancipating their enslaved workforce. The Civil Rights movement in America brought much needed recognition to the rampant discrimination throughout America. England developed a fair and just taxation system for the American Colonies. The U.S. involvement in the Vietnam War was a rousing success.

question

-help countries respond to the issue of scarcity -answer the three key economic questions.

answer

Select all that apply. What do economic systems seek to do? provide basic care to citizens help countries respond to the issue of scarcity protect industry from competition answer the three key economic questions

question

entrepreneur

answer

You own a restaurant and are responsible for organizing your business's productive resources. You are a(n) _____

question

trade-off

answer

A company can use its resources to make shirts, towels, or sheets. It chooses to make shirts. Any value given up from not choosing to make the towels or sheets is the _____ .

question

is limited

answer

Your company needs to fix some of the machines in its factory. It also needs to buy more materials. But the company has to choose between these options, because money _____ .

question

expected

answer

Choices are really about trading off the__________ value of one option against the alternatives

question

productive resources can be used in different ways.

answer

The government uses its resources to provide different public goods. This shows that _____ .

question

unintended consequences

answer

Sometimes, things happen that offset the initial effect of a decision. These things are kinds of _____ .

question

marginal benefit

answer

The extra amount of satisfaction that you receive from an additional slice of pizza is part of the _____ .

question

marginal cost

answer

A business calculated that the expense to produce an additional unit of its product is $10. This amount is the

question

marginal utility

answer

The additional unit of happiness that you receive from a decision is called the _____ .

question

decreases

answer

The law of diminishing marginal utility says that as you consume more of something, the satisfaction that you get from each additional unit _____ .

question

not producing the extra car.

answer

Employees from Bob's Car Factory figured out that making another car would cost $25,000. The business also sells each car for $20,000. The company is better off _____ .

question

decide which one is greater.

answer

Jackie is doing a marginal analysis to decide if she should spend any more money on a movie download. After figuring out her marginal cost and marginal benefit, she will _____ .

question

spillover

answer

externalities are ________ effects

question

cannot satisfy everyone's wants

answer

Distribution systems _____ .

question

force

answer

Sue-Ellen took Charlie's cell phone without his permission because she wanted it. This is an example of distribution by _____ .

question

personal characteristics

answer

Kevin is selected to receive a free meal because he is the tallest person in the restaurant. This meal was distributed by using the _________ method.

question

sharing

answer

Rose brought in cupcakes for her birthday and gave one to each person in the class. This is an example of the ___________ distribution method.

question

price

answer

Free market economies offer distribution methods for goods and services based on _____ .

question

in a different way

answer

Free market economies distribute goods and services __________ than command economies.

question

-limited freedom for consumers -inefficient use of productive resources -usually not much economic growth

answer

Select all that apply. Select all the items that describe command economies. limited freedom for consumers inefficient use of productive resources usually not much economic growth encourages competition between businesses

question

-profit -a skilled and happy workforce -seeing an idea come into being

answer

Select all that apply. A primary incentive for entrepreneurs is _____. profit a skilled and happy workforce notoriety seeing an idea come into being paying taxes

question

(1) distribute (7) objects that can satisfy people's needs or wants (3) person whose needs and wants are satisfied by using goods and services (5) social science that focuses on decision-making (2) what is gained when decision is made (6) someone who organizes productive resources to make goods and services (4) what is given up when a decision is made.

answer

Match these items. Match the items in the left column to the items in the right column. 1. allocate 2. benefit 3. consumer 4. cost 5. economics 6. entrepreneur 7. good

question

all

answer

Select all that apply. Select all the items that can be used to make goods and services. renewable resources nonrenewable resources human resources capital goods

question

less of the action

answer

Receiving a penalty from an action will most likely result in doing _____ .

question

the marginal benefit is greater than the marginal cost

answer

You are better off consuming or producing an additional good or service if _____ .

question

non-market distribution methods

answer

Majority rule, first-come/first-served, and sharing equally are examples of _____ .

question

price

answer

Free-market economies allocate resources and distribute goods and services mostly based on _____ .

STUDY

AP Economics Economic Decision Making Economics

Econ – Flashcard 123 terms

Charlotte Small

123 terms

Preview

Econ – Flashcard

question

normative economics is

answer

the application of value theory to economics

question

the basic assumptions in all economic models are all of the following except

answer

good choices are free of opportunity cost

question

according to plato, the origin of the city is to be found in

answer

the need of people to join together and engage in commerce

question

according to the text, historically the structure of society is based on who is in control:

answer

the producers or the confiscators

question

the empirical views of Aristotle:

answer

rejected the theory of the forms; were rejected when they were first brought before the catholic church; provided a natural way of dealing with the day to day challenges of life; all of the above

question

classical liberalism is the school of philosophy that states

answer

individuals are endowed with freedom rather than nobility being endowed with authority

question

mercantilism is a

answer

rationalist based economic system; economic system that promotes greater exports than imports; economic system that calls for government interventions; all of the above

question

producers will prefer a legal system that is based on

answer

personal and economic freedom

question

for us to have all the advantages that the capitalist system provides, there must be

answer

private property rights

question

the invisible hand works to promote the general welfare through

answer

the self interest of producers in the society

question

among the fundamental concepts in economics are

answer

efficient markets; marginalism; opportunity cost; all of the above

question

the study of economics

answer

is a way of analyzing decision making processes caused by scarcity

question

suppose that you purchased a ticket to a jazz festival for 100 a month ago. last week someone invited you to a hockey game on the same night as the jazz festival. you would much rather go to the hockey game than the jazz festival. you have tried unsuccessfully to sell the jazz festival ticket. which of the following statements regarding this situation is c correct?

answer

the 100 you paid for the jazz festival ticket should be irrelevant in your decision making, because it is a sunk cost.

question

the reason that opportunity costs arise is that

answer

resources are scarce

question

if you own a building and you decide to use that building to open a book store

answer

there is an opportunity cost of using this building for a book store because it could have been used in other ways.

question

capital, as economists use the term,

answer

refers to things that have already been produced that are in turn used to produce other goods and services

question

when two people trade

answer

they both expect to be made better off by the exchange

question

someone has a comparative advantage in producing a good if they can produce that good

answer

at a lower opportunity cost

question

the law of demand is

answer

as price goes up, demand goes down

question

at equilibrium two things are equal

answer

quantity demanded and quantity supplied

question

consumer surplus is the

answer

area above the price line and below the demand curve

question

if they demand curve shifts to the right

answer

equilibrium quantity and price will increase

question

if a good is a normal good, and increase in consumer income will cause

answer

an increase in price

question

rich nations will trade with poor nationals only when

answer

each has a comparative advantage in the good being exported

question

two things are true about equilibrium

answer

quantity demanded equals quantity supplied, and there is a tendency to move towards that point

question

if price is above the equilibrium level in a free market

answer

then price will fall

question

what could cause is to redraw the demand curve for pizza

answer

a change in consumer income

question

when quantity supplied is greater than quantity demanded in a free market

answer

price will go down to eliminate the surplus

question

which of the following is held constant along the demand curve

answer

income

question

which of the following will not cause a shift in the demand curve for compact discs

answer

a change in the price of compact discs

question

during an economic downturn when consumer income falls, the demand for tacos increases and the demand for sushi decreases this implies that tacos

answer

are inferior goods and sushi is a normal good

question

demand for one item goes down when the price of another item goes up these items must be

answer

complements

question

a change in income, preferences, or prices of other goods or services leads to a ___ that causes a ___

answer

change in demand; shift of the demand curve

question

if the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will

answer

decrease, the quantity demanded will rise, and the quantity supplied will fall

question

if improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a

answer

increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded.

question

if exchange rates are set by the forces of supply and demand, then

answer

they are called floating exchange rates

question

in the market for the US dollar, an increase in interest rates within the UW will cause

answer

the value of the US dollar to increase when compared to other currencies

question

in the market for the US dollar, increase in prices within the US (i.e. inflation) will cause

answer

demand for the US dollar to decline in international exchange markets supply to increase in international exchange markets; value to decrease comparatively

question

in a free economy, allocative efficiency is achieved through

answer

markets

question

the price system

answer

automatically distributes scarce goods

question

attempts to bypass rationing in the market

answer

are costly and always fail

question

if the government imposes a maximum price that is above the equilibrium price

answer

this maximum price will have no economic impact

question

people scalping tickets for a jazz festival will be successful at selling the tickets for a profit

answer

when the prices set by the festival organizers is less than the market equilibrium price

question

if the market of coffee is 3 per pound but the government will not allow coffee growers to charge more than 2 per pound of coffee, which of the following will happen

answer

there will be a shortage of coffee

question

the adjustment of ____ is the rationing mechanism in market economies

answer

price

question

a price floor is

answer

a minimum price set by the government that sellers must charge for a good

question

producer surplus is

answer

the difference between current market price and full costs of production for the firm

question

if a household's income doubles, its budget constraint will

answer

shift out parallel to the old one

question

richard is consuming X and Y so that he is spending his entire income and MUx/Px=6 and MUy/Py=10. To maximize utility he should

answer

consume less x and more y

question

if MUx/Px<MUy/Py, then

answer

spending a dollar less on x and a dollar more on y increases utility

question

the marginal utility of the first cup of coffee that tom brinks in the morning is worth 2. the marginal utility of the 9th cut of coffee he drinks is positive while the marginal utility of the 10th cup of coffee he drinks in the morning is worth 0. This implies that at a price of 0, Tom would drink

answer

at most 10 cups of coffee per morning

question

we can state the utility maximizing rule in words in the following way: a personal maximizes utility when she equalizes the __________ across products

answer

marginal utility per dollar spent

question

the law of demising marginal utility implies that

answer

demand curves always slope downward and to the right

question

for normal goods, the substitution and income effects of a price decrease will

answer

both increase the quantity of the food demanded

question

for inferior goods, the substitution and income effects of a price increase will

answer

the substitution effect will decrease the quantity of the good demanded while the income effect will increase the quantity of the good demanded

question

a rise in the price of pepsi that causes a household to shift its purchasing pattern toward coke and away form pepsi is the ___ effect of a price change

answer

substituion

question

in the substitution effect of a wage change outweighs the income effect of a wage change, the labor supply curve is

answer

upward sloping

question

assuming that leisure is a normal good, if an individuals labor supply curve is backward bending, then the

answer

income effect outweighs the substitution effect at higher wages

question

Sponsors invest 100,000 in a new deli on the promise that they will earn a return of 10% per year on their investment. The deli sells 52,000 sandwiches per year. The deli's fixed costs include the return to investors and 42,000 in other fixed costs/ Variable costs consist of wages (1000 per week) plus materials etc (2000 per week). The deli is popen 52 weeks per year. What must the average price per sandwich be for the deli to earn a normal return? suppose the average price per sandwich is 5/50. What is the annual profit of the deli?

answer

$4; $78,000

question

you are hired as an economic consultant to the pampered pet shop. they operate in a perfectly competitive industry. This firm is currently producing at a point where market price equals its marginal cost. The market price is less than its average variable cost. You should advise the firm to

answer

cease production immediately because it is not covering its variable costs of production.

question

if the price of an input increases, each individual firms marginal cost curve shifts ___ and the industry supply curve ___

answer

up; shifts to the left

question

in the short run average costs eventually increase because of ___ and in the long run average costs eventually increase because of ____

answer

diminishing returns; diseconomies of scale

question

engineers for the figgen record company have determined that a 35% increase in all compact disc inputs will cause a 45% increase in output. Assuming that input prices remain constant, you correctly deduce that such a change will cause ___ as output increases.

answer

average costs to decrease

question

when an increase in the scale of production leads to higher average cost, the industry exhibits

answer

decreasing returns to scale

question

suppose heidis ice cream experiences economies of scape up to a certain point and diseconomies of scale beyond that point. its long run average cost curve is most like to be

answer

U shaped

question

assume the peanut industry, a perfectly competitive industry, is in long run equilibrium with a market price of $5. If demand for peanuts increases and this industry is a decreasing cost industry, long run equilibrium will be reestablished at a price

answer

less than $5

question

assume a perfectly competitive industry is in long run equilibrium at a price of $20. If this industry is a constant cost industry and the demand for the product decreases, long run equilibrium will be reestablished at

answer

$20

question

factors of production that can be used together to enhance the others productivity are

answer

complementary inputs

question

Tonys lawn service uses only one variable input, fertilizer. The firms demand curve for fertilizer in the short run is the inputs

answer

total product curve

question

the demand for any factor of production in a competitive industry depends on

answer

its productivity and upon the value of its output in the marketplace

question

a wheat farmer sells wheat in a perfectly competitive market and hires la bor in a perfectly competitive market. the market price of wheat is 2 a bushel, the wage rate is 10, the farmer employs fie works and the marginal product of the fifth worker is 3 bushes. what would you advise this farmer to do?

answer

reduce employment because the wage [aid is more than the marginal revenue product.

question

the marginal revenue product curve of labor will always shift to the right if

answer

product demand increases and product price increases

question

when a firm substitutes away from a factor whose price has risen and toward a factor whose price has fallen it is an example of the

answer

factor substitution effect

question

a profit maximizing firm will continue to employ land until

answer

MRPland=Pland

question

assume the backwoods shoe company hires three inputs: labor (l) capital (k and land (a) to produce shoes (x). which of the following conditions must be met so that the firm is using the optimal, or least costly combination of inputs.

answer

MPL=MPL=MPA=1/PX

question

a firm is currently hiring capital and labor so that MPL/PL<MPK/PK

answer

less labor and more capital

question

if economic profit is zero, a firm

answer

earns exactly a normal rate of return

question

you are the owner and only employee of a company that sets odds for sporting events. Last year you earned a total revenue of 100,000. Your costs for rent and supplies were 50,000. To start this business you invested an amount of your own capital that could pay you a return of 20,000 a year. Your accounting profit last year was? Your economic profit last year was?

answer

50,000 30,000

question

the optimal method of production is the one that

answer

minimizes cost

question

a firm produces 5 units of output from the last dollar it spends on labor and 10 units from the last dollar spent on capital. The firm should

answer

employ more capital and less labor

question

you are certain that a normal rate of return is 18% for the computer industry. What do you expect for a normal rate of return in the computer software industry, which is considered to be much riskier than the computer industry?

answer

above 18%

question

dana spend 10,000 on remodeling a storefront that she then opens as a shoe store. The business has not been very successful and she needs an additional 3,000 to keep the shoe store open. Which of the following is true?

answer

the 10,000 dana spent on remodeling is a fixed cost of her business

question

marginal cost

answer

is the increase in total cost resulting from producing one more unit

question

diminishing marginal returns implies

answer

increasing marginal costs

question

total variable costs

answer

always increase with output

question

in the short run where total variable cost is ___ at an ___ rate, marginal cost is positive and increasing

answer

increasing; increasing

question

if the marginal cost curve is below the average variable cost curve, then

answer

average variable costs are decreasing

question

the law of diminishing marginal returns

answer

results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate.

question

marginal revenue for a perfectly competitive firms is

answer

horizontal

question

profit maximizing firms want to maximize the difference between

answer

total revenue and total cost

question

imperfect competition

answer

results in less efficient market outcomes

question

monopolies, oligopolies, and monopolistic competitive industries all

answer

have market power

question

a monopoly is an industry with

answer

a single firm in which the entry of new firms is blocked

question

market power refers to a firms ability to

answer

raise price without losing all sales of its product

question

for a monopolist to sell more units of output

answer

the price must be reduced

question

an important distinction between perfect competition and monopoly is that in

answer

monopoly the firm faces the market demand curve

question

relative to a monopolized industry, a competitively organized industry is more likely to produce

answer

more output, charges lower pries, and earns only a normal profit

question

although patents are a ___, the also provide___

answer

barrier to entry; an incentive for invention and innovation

question

suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? The monopolist has

answer

equated marginal revenue and marginal cost

question

the XYZ computer company has a monopoly over the production of a specialized color printer. the XYZ computer company will find it profitable to increase the production of specialized color printers as long as marginal cost

answer

is less than marginal revenue

question

because of a patent, Alcoa is the only manufacturer of soda cans with a stay put tab. Alcoa can earn a profit on the sale of soda cans with stay put tabs

answer

in the long run because entry into the industry by new firms is blocked until the patent expires

question

the Sherman antitrust act of 1890

answer

made illegal every conspiracy in restraint of trade or commerce among the several states.

question

the biggest problem with the Sherman antitrust act of 1890 was that it was unclear what

answer

specific acts were to be considered "restraints of trade"

question

the criterion introduced by the supreme court in 1911 to determine whether a particular action was illegal or legal within the terms of the Sherman act is called the

answer

rule of reason

question

a form of industry structure characterized by a few firms each large enough to influence market price is

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oligopoly

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oligopoli is difficult to analyze because

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of the complex interdependence that usually exists among oligpolistic firms

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according to the five forces model, ____ are the five competitive forces that determine the level of competition and profitability in an industry.

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rivals, buyers, suppliers, substitutes, and potential entrants

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the oligopolistic model in which firms produce exactly the same results as would exist if a monopolist controlled the entire industry is called the

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collusive cartel model

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assume that firms in an oligopoly are currently colluding to set price and output to maximize total industry profit. If the government forces the oligopolists to stop colluding, the price charged by the oligopolies will ___ and the total output produced will ___

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decrease; increase

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in the Cournot model the final level of output falls between the output that would prevail if the market were ___ and out output that would be set by a ___

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competitive; monopoly

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a form of oligopoly in which a dominant firm sets the price and all the smaller firms in the industry follow the dominant firm's pricing policy is called

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the price leadership model

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the herfindahl-hirschman index is

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calculated by summing the squared market share percentages for all firms in the industry

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if the herfindahl-hirschman index of an industry is less than 1,000, then the antitrust decision of the justice department

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considers the industry unconcentrated

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economists no longer attack industry concentration with the same fervor they once did because

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the theory of contestable markets shows that even firms in highly concentrated industries can be pushed to produce efficiently under certain market circumstances.

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there is easy entry into the ___ and ___ industries

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perfectly competitive; monopolistically competitive

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monopolistic competition differs from perfect competition primarily because in

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monopolistic competition, firms can differentiate their products

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in monopolistic competition firms can have some market power

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by producing differentiated products

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the case for advertising includes the fact that

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it produces consumers with valuable information about product availability, quality, and price.

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the case against advertising includes that fact that

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firms spend large sums of money to create artificial differences among products

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critics of advertising contend all of the following except

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advertising can easily turn into productive competition that increases welfare

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the pizza delivery industry is monopolistically competitive. Little Joe's pizzeria raises its prices by 10% but all the other pizzerias in town keep their prices the same. Which of the following is most likely to occur.

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Little Joe's pizzeria will lose some if its customers

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a monopolistically competitive firm produces where

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marginal revenue equals marginal cost

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if firms in a monopolistically competitive industry are earning economic profits, then in the long run

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new firms producing close substitutes will enter the industry and this entry will continue until economic profits are eliminated

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Australia Circular Flow Diagram Cost Per Unit Economic Decision Making Economic Systems Goods And Services New And Improved

AP Economics Unit 1, Chapter 2: The Market System and Circular Flow – Flashcards 22 terms

Michael Seabolt

22 terms

Preview

AP Economics Unit 1, Chapter 2: The Market System and Circular Flow – Flashcards

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economic system

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a particular set of institutional arrangements and a coordinating mechanism to respond to the economizing problem

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command system

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a type of economic system in which the government owns most property resources, such as corporations, and economic decision making occurs through a central economic plan, with the division of output between capital and consumer goods centrally decided

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market system

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a type of economic system of private ownership of resources and the use of individualized self-interest to achieve individualized economic goals through work, competition, consumption, and production; economic decision making is widely dispersed and economic goals allow for entrepreneurs to flourish

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private property

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the private individuals and firms that own most of the property resources, encouraging investment, innovation, and economic growth

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freedom of enterprise

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the freedom of entrepreneurs and businesses to freely obtain and use economic resources to produce goods and sell them in chosen markets

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freedom of choice

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the freedom of owners to employ or dispose of property, money, and workers as they see fit; also, the freedom of consumers to buy whatever (legal) goods and services that they want

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self-interest

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each economic unit tries to advance its own particular goal by delivering something of value to others

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competition

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the freedom of choice exercised in the pursuit of monetary return, diffusing economic power and eliminating abuse of economic power; the regulatory mechanism of the market system

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market

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an institution or mechanism that brings buyers and sellers into contact

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specialization

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the use of resources of an individual, a firm, a region, or a nation to produce one or a few goods and services rather than a whole bunch of them

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division of labor

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the specialization of human beings, saving time and making use of differences in ability

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medium of exchange

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the function of money to make trade easier when you can't barter

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barter

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swapping goods for goods, requiring buyer and seller to have same wants

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money

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the convenient social invention to facilitate exchanges if goods and services, taking on a variety of forms

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consumer sovereignty

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the assertion that consumers lead the market system

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creative destruction

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the creation of new products and production methods that completely destroys the market positions of older firms with older ways of doing business, allowing for the rapid spread of new technologies

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invisible hand

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the phenomenonadvancement of public interests through private competition and self-interest in a market system

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the coordination problem

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the difficulty of planning and coordinating outputs of industries in command systems, due to chain reactions, sophistication of industries, and inefficiency

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the incentive motive

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the difficulty posed by the lack of incentives in command systems

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circular flow diagram

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simple economic model describing the flow of resources and products between businesses and households; the businesses expend costs from the resource market and obtaining revenue from the product market and the households expend factors of production into the resource market and obtaining products from the products market

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resource market

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place where resources or services of resource providers and bought and sold; households sell resources and businesses buy them

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product market

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place where goods and services are bought and sold; businesses sell resources and households buy them

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AP Microeconomics Circular Flow Diagram Cost Per Unit Economic Decision Making Economic Systems Economics Goods And Services

Economics Chapter 2 McConnell/Brue 18th edition – Flashcards 19 terms

Robert Lollar

19 terms

Preview

Economics Chapter 2 McConnell/Brue 18th edition – Flashcards

question

Economic System

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set of institutional arrangements and a coordinating mechanism

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Command System

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A method of organizing an economy in which property resources are publicly owned and government uses central economic planning to direct and coordinate economic activities; command economy; communism

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Market System

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An economic system in which individuals, not the government control the production and distribution of goods and services; also called capitalism

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Private Property

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property owned by individuals or companies, not by the government or the people as a whole

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Freedom of Enterprise

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Ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services and to sell them in their chosen markets

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Freedom of Choice

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enables owners to employ or dispose of their property and money as they see fit

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Self-interest

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economic unit tries to achieve its own goal, usually deliver something of value to others

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Competition

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Contest between individuals for shared resources

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Market

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mechanism that brings buyers and sellers into contact

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Specialization

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Goods and services are produced in better quality, quantity and speed when people focus on producing a few things instead of making everything they want by themselves.

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Division of labor

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human specialization

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Medium of exchange

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money; makes trade easier by not having to barter

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Barter

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swapping goods for goods

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money

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social invention to facilitate exchanges of goods and services

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consumer sovereignty

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consumers are in charge, crucial in determining what goods and services are produced

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dollar votes

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when consumers spend their income on goods they are most willing and able to buy showing their wants in the market

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creative destruction

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the creation of new products completely destroys the market positions of firms wedded to existing products and older ways of doing business

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invisible hand

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Adam Smith's primary idea in WoN, people all guided by selfish acts but better off for everyone

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circular flow diagram

answer

chart showing movement of goods and services from markets to businesses to consumer households

STUDY

Economic Decision Making Economic Growth Individual Decision Making Individuals And Societies

Economics Test One – Flashcards 85 terms

Sarah Adrian

85 terms

Preview

Economics Test One – Flashcards

question

Economics

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the study of how individuals and societies choose to use the scare resources that nature and previous generations have provided

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Opportunity Cost

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the best alternative that we forgo, or give up, when we make a choice or decision

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Marginalism

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the process of analyzing the additional or incremental costs or benefits arising from a choice or decision

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Sunk Costs

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costs that cannot be avoided because they have already been incurred

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Efficient Market

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a market in which profit opportunities are eliminated almost instantaneously

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Microeconomics

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the branch or economics that examines the functioning of individual industries and the behavior of individual decision-making units (firms and households)

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Macroeconomics

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the branch f economics that examines the economy behavior of aggregates- income, employment, output on a national scale

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Positive Economics

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an approach to economics that seeks to understand behavior and the operations of systems without making judgement

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Normative Economics

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an approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe a course of action

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Descriptive Economics

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the complication of data that describe phenomena and facts

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Economic Theory

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a statement or set of related statements about cause and effect, action and reaction

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Model

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a formal statement of a theory, usually a mathematical statement of a presumed relationship between two or more variables

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Variable

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a measure that can change from time to time or observation to observation

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Ockham's Razor

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the principle that irrelevant detail should be cut away

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Ceteris Paribus

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"all else equal"; a device use to analyze the relationship between two variables while the values of other variables are held constant

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Empirical Economics

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the collection and use of data to test economic theories

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Efficiency

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an efficient economy is one that produces what people want as the least possible cost

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Equity

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fairness

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Economic Growth

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an increase in the total output of an economy

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Stability

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a condition in which national output is growing steadily, with low inflation and full employment of resources

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Capital

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things tat are produced and then used in the production of other goods and services

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Factors of Production

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the inputs into the process of production (land, labor, and capital)

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Production

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the process that transforms scarce resources into useful goods and services

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Inputs or Resources

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anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants

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Outputs

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goods and services of value to households

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Theory of Comparative Advantage

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Ricardo's theory that specialization and free trade will benefit all trading parties, even those that may be absolutely more efficient producers

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Absolute advantage

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a producer has an absolute advantage over another in the production of a good or service if he or she can produce that product using fewer resources

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Comparative Advantage

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a producer has an absolute advantage over another in the production of a good or service if he or she can produce that product at a lower opportunity cost

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Consumer good

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goods produced for present consumption

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Investment

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the process of using resources to produce new capital

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PPF

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a graph that shows all the combinations of goods and services that can be produced if all society's resources are used efficiently

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Marginal Rate of Transformation

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the slope of the PPF

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Economic Growth

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an increase in the total output of an economy

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Command Economy

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an economy in which a central government either directly or indirectly sets output targets, incomes, and prices

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Laissez-faire Economy

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an economy in which individual people and firms pursue their own self-interest without any central direction or regulation

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Market

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the institution through which buyers and sellers interact and engage in exchange

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Consumer Sovereignty

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the idea that consumers ultimately dictate what will be produced by choosing what to purchase

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Free Enterprise

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the freedom of individuals to start and operate private businesses in search of profits

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Firm

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an organization that transforms resources into products

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Entrepreneur

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a person who organizes, manages, and assumes the risks of a firm, taking a new idea or a new product and turning it into a successful business

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Households

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the consuming units in an economy

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Product or Output Markets

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the markets in which goods and services are exchanged

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Input or Factor Markets

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the markets in which the resources used to produce goods and services are exchanged

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Labor Market

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the input/factor market in which households supply work for wages to firms that demand labor

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Capital Market

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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

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Land Market

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the input/output market in which households supply land or other real property in exchange for rent

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Quantity Demanded

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the amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price

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Profit

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the difference between revenues and costs

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Quantity Supplied

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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

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Supply Schedule

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a table showing how much of a product firms will sell at alternative prices

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Law of Supply

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the positive relationship between price and quantity of a good supplied

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Supply Curve

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a graph illustrating how much of a product a firm will sell at different prices

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Movement Along a Supply Curve

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the change in quantity supplied brought about by a change in price

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Shift of Supply Curve

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the change that takes place in a supply curve corresponding to a new relationship between quantity supplied of a good and the price of that good brought about by a change in the original conditions

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Market Supply

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the sum of all that is supplied each period by all producers of a single product

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Demand Schedule

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a table showing how much of a given product a household would be willing to buy at different prices

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Demand Curve

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a graph illustrating how much of a given product a household would be willing to buy at different prices

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Law of Demand

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the negative relationship between price and quantity demanded

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Income

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the sum of all a household's wages, salaries, profits, interest payments, rents, and other forms of earnings in a given period of time

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Wealth

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the total value of what a household own minus what it owes

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Normal Goods

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goods for which demand goes up when income is higher and for which demand goes down when income is lower

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Inferior Goods

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goods for which demand tends to fall when income rises

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Substitutes

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goods that can serve as replacements for one another, when the price of one increases, demand for the other increases

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Perfect Substitutes

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identical products

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Complements

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goods that "go together"; a decrease in the price of one results in an increase in demand for the other and vice versa

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Shift of a Demand Curve

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the change that takes place in a demand curve corresponding to a new relationship between quantity demanded of a good and price of that good

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Movement Along a Demand Curve

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the change in quantity demanded brought about by a change in price

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Market Demand

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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

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Equilibrium

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the condition that exists when quantity supplied and quantity demanded are equal

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Shortage

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the condition that exists when quantity demanded exceeds quantity supplied at the current price

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Surplus

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the condition that exists when quantity supplied exceeds quantity demanded at the current price

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Price Rationing

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the process by which price tends towards equilibrium when there is a shortage

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Price Ceiling

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a maximum price that sellers may charge for a good, usually set by government

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Queuing

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waiting in line as a means of distributing goods and services

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Favored Customers

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those who receive special treatment from dealers during situations of excess demand

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Ration coupons

answer

tickets or coupons that entitle individuals to purchase a certain amount of a given product per month

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Black Market

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a market in which illegal trading takes place at market determined prices

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Price Floor

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a minimum price below which exchange is not permitted

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Minimum Wage

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a price floor set for the price of labor

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Consumer Surplus

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the difference between the maximum amount a person is willing to pay for a good and its current market price

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Producer Surplus

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the difference between the current market price and the full cost of production for the firm

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Deadweight Loss

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the total loss of producer and consumer surplus from underproduction or overproduction

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Elasticity

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a general concept used to quantify the response in one variable when another variable changes

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Elastic Demand

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a demand relationship in which the percentage change in quantity demanded is larger than the percentage change in price in absolute value

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Inelastic Demand

answer

demand that corresponds somewhat, but not a great deal, to changes in price

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