Econ 103

72 terms by Eringeyen 

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for two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to...

have a comparative advantage in both activities

if the supply and demand of a product both decrease, then we would expect the...

equilibrium price change to be ambiguous and equilibrium quantity to decrease

economic models...

can be useful, even if they are not particularly realistic (descriptive)

mike and sandy are two woodworkers who both make tables and chairs. in one month, mike can make 4 tables or 20 chairs or constant combos in between, while sandy can make 6 tables or 18 chairs or constant combo in between. given this we know that...

mike has an absolute advantage in chairs

economists are particularly adept at understanding that people respond to...

incentives

the use of theory and observation is more difficult in economies than in sciences such as physics due to the difficulty in...

performing an experiment in an economic system

the opportunity cost of going to college is...

the value of the best opportunity a student gives up to attend college

for a good, a decrease in demand combined with an increase in supply results in...

a decrease in equilibrium price but the quantity change is ambiguous

buyers are able to buy all they want to buy and at the same time sellers are able to sell all they want to sell...

at the equilibrium price, but not above or below the equilibrium price

a PPF can shift outward if...

there is a technological improvement

if a surplus exists in the market then we know that the actual price is...

able the equilibrium price and quantity supplied if greater than quantity demanded

a rational decision maker takes action if and only if...

the marginal benefit of the action exceeds the marginal cost of the action

in a certain economy, peanuts and books are produced and the economy currently operates on its PPF. what event would allow the economy to produce more peanuts and more books relative to the quantities of those goods that are being produced now?

the economy experiences economic growth

when supply and demand both increase, equilibrium...

price will increase

production is efficient if the economy is producing at a point...

on the PPF

the marginal benefit john gets from eating a 4th cheeseburger at a picnic is...

the total benefit john gets from eating 4 cheeseburgers minus the total benefit john gets from eating 3 cheeseburgers

suppose that demand for a good increases and at the same time supply of the good decreased. what would happen in the market for the good?

equilibrium price would increase, but the impact on equilibrium quantity would be ambiguous

by definition exports are...

goods produced domestically and sold abroad

which famous economist developed the principle of comparative advantage as we know it today?

david ricardo

other things equal the demand for a good tends to be more elastic the...

longer the time period considered

when demand is perfectly inelastic, the price elasticity of demand...

is zero and the demand curve is vertical

willingness to pay...

measures the value that a buyer places on a good

the supply of a good will be more elastic the...

longer the time period being considered

on a graph, consumer surplus is the area...

below the demand curve and above the price

when demand is inelastic the absolute value of the price of elasticity of demand is...

less than 1, and price and total revenue will move in the same direction

if tax is levied on the SELLERS of a product (the sellers turn over the tax money to the govt) the demand curve...

will shift upward

a price ceiling...

is a legal maximum price at which a good can be sold

producer surplus is the area...

below the price and above the supply curve

consumer surplus...

is the difference between the amount that a consumer actually pays for a good and the amount that the consumer is willing to pay for the good

when small changes in price lead to infinite changes in quantity demanded demand is perfectly...

elastic and the demand curve will be horizontal

when demand in inelastic a decrease in price will cause...

a decrease in total revenue

economists compute the price elasticity of demand as the...

percentage change in quantity demanded divided by the percentage change in price

BUYERS of a good bear the larger share of the tax burden when a tax is placed on a product for which...

the supply is more elastic than the demand

suppose a producer is able to separate customers into two groups one having an inelastic demand and the other having an elastic demand. if the producers objective is to increase total revenue she should...

decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand

if the cross price elasticity of two goods is negative then those two goods are...

compliments

for a particular good a 3 percent increase in price causes a 10 percent decrease in quantity demanded. which of the following statements is most likely true...

there are many close substitutes for this good

the demand for salt is inelastic and the supply of salt is inelastic. the demand for caviar is elastic and the supply is inelastic. suppose that a tax of $1 per lb is levied on the sellers of salt and a tax of $1 per pound is levied on the buyers of caviar. we would expect that most of the burden of these taxes will fall on...

buyers of salt and sellers of caviar

when quantity demanded responds strongly to changes in price demand is said to be...

elastic

if demand is inelastic then...

buyers do not respond much to a change in price

the demand for kemps choco brownie fudge ice cream is likely...

elastic because there are many close subs for it

if a tax is imposed on a market with inelastic demand and elastic supply...

buyers will bear most of the burden of the tax

a perfectly elastic demand implies that...

any rise above that represented by the demand curve will result in quantity demanded of zero

a price ceiling is BINDING when it is set...

below the equilibrium price causing a shortage

which of the follow statements is consistent with a perfectly competitive firms PROFIT MAXIMIZING DECISION RULE...

of marginal revenue is greater than marginal cost the firm should increase its output

a positive externality in/from consumption occurs when...

jack receives a benefit from johns consumption of a certain good

when a factory is operating in the short run...

it cannot adjust the quantity of fixed inputs

the increase in total cost due to producing an additional unit of output is the firms...

marginal cost

average total cost (atc) is calculated as...

ATC=(total cost)/(quantity of output)

when a firms long run average total costs do NOT vary as output increases, the firm exhibits...

constant returns to scale

when price is greater than marginal cost for a firm in a perfectly competitive market...

there are opportunities to increase profit by increasing production

profit is defined as; total revenue...

minus total cost

the entry of new firms into a perfectly competitive market will...

increase market supply and decrease market price

an example of an opportunity cost that is also an IMPLICIT cost is...

the value of the business owners time if applied elsewhere

when the marginal product of an input is positive but declines as the quantity of that increases, the production function exhibits...

diminishing marginal product

in the long run for a perfectly competitive firm, assuming that the owner of the firm has positive opportunity costs associated with using her time to run the firm, the firm...

will earn zero economic profits but positive accounting profits

the intersection of a firms marginal revenue and marginal cost curves determines the level of output at which...

profit is maximized

the deadweight loss from a tax of a given size will be the LARGEST in a market with...

elastic supply and elastic demand

which of the following costs do NOT change the amount of output a firm produces changes...

total fixed costs

when some resources used in production are only available in limited quantities it is likely that the LONG RUN SUPPLY CURVE in a perfectly competitive market is...

upward sloping

in a perfectly competitive market...

no one seller can influence the price of the product

why does a firm in a PERFECTLY COMPETITIVE industry charge the market price...

if it charges less, it loses potential revenue. if it charges more it loses its customers to other firms. the firm can sell as many units of output as it wants to at the market price. answer on test=ALL THE ABOVE

the marginal product of an input in the production process is the increase in...

quantity of output obtained from adding an additional unit of that input

explicit costs...

require an outlay (expenditure) of money by the firm

in the short run a perfectly competitive firms SUPPLY CURVE is equal to the...

marginal cost curve above the average variable cost curve minimum

what happens to the total surplus in a market when the govt imposes a tax...

total surplus decreases

which of the following expressions is correct for a perfectly competitive firm...

profit=(quantity of output) x (price-average total cost)

a positive externality...

is a benefit to someone other than the producer and/or consumer of the good

when marginal cost is GREATER than average total cost...

average total cost must be rising

when negative externalities from production are present in a market (before any govt action to correct the situation)...

social costs will be greater than private costs

the length of the short run...

is different for different types of firms

economists assume that the goal of the firm is to maximize total...

profits

other things equal, the deadweight loss caused by a tax...

increases as the size of tax increases and the increase in deadweight loss is more rapid than the increase in the size of the tax

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