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Terms in this set (20)
The marginal utility of carrots is 6. The harginal utility of tomatoes is 24. The price of carrots is $1. What is the price of tomatoes, assuming the consumer mazimizes utility?
If demand for a good is inelastic, and goods price increases, what will happen to total expeniture on the good?
In Econ 202, what does equity mean?
A production possibilites frontier with a straight ling (constant) slope indicates what?
Constant opportunity cost
What does teh lain phase ceteris paribus mean?
all else equal.
What is teh name of the principle by which the market demand curve is created out of individual households demand curves?
Which fo the following will not result in an increase of production possibilityes frontier?
An increase in unemployment
Which of the following is NOT true about market equilibrium?
It is predominatley determined by quanitiy not price
You can either sleep in or go to your econ class. What best represents a decrease in the opportunity cost of sleeping in?
class was canceled.
What happens when the cost of production decreases?
Price decreases, quantitiy increases. (supply increases when the cost of production decreases)
Which of the following is least likely to change demand for cars?
An increase in the price of cars.
What role do firms play in output markets aka product markets?
They supply goods and serivices.
Which of the following must be displayed as a positive number?
The own-price elasticity of supply
What does the slope of budget contraint reflect?
THe opportunity cost of the good on the horizontal axis.
what will probably happen if the government sets a price ceiling below the equilibrium price?
quantitiy supplied will be less than quanitity demanded
Which of the following statements is the best example of normative economics?
Mandatory health insurance is the best way to solve the nations health care problems.
If the interest rate decreases, what happens?
The income effect says savings increases and teh subtitutions effect says it decreases
what happens when the wage rate increases?
The income effect syas hours worked decreases and teh subsititudtion effect says it increases.
which good will probably have the most elastic demand?
Good with many substitutes, and the comprirse a large share of a households budget.
Suppose rice is a normal good. what happens whn its price falls?
Both the income effect and teh substitution effect say consumption of rise increases.
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