Final Review | ECON 2020 - Principles of Microeconomics, Quizzes of Microeconomics

Download Final Review | ECON 2020 - Principles of Microeconomics and more Quizzes Microeconomics in PDF only on Docsity! TERM 1 The economic problem: DEFINITION 1 Society must decide how to allocate available resources TERM 2 Marginalism DEFINITION 2 The process of analyzing the additional cost or benefit TERM 3 You bought a ticket to a concrt but went to the party instead. The ticket price is a _. DEFINITION 3 Sunk cost TERM 4 A market in which profit opportunites are elimanted instantaneously DEFINITION 4 Efficient TERM 5 Describes the economy and how it works DEFINITION 5 Positive economics TERM 6 If the price of a product falls then the QD will raise- is a __ statement DEFINITION 6 Positive TERM 7 "Will the level of teenage unemployement increase?" Nominal or Positive Question DEFINITION 7 Postive TERM 8 Descriptive Economics Examples DEFINITION 8 data is collected TERM 9 To isolate the impact of one single factor , economists use _. DEFINITION 9 ceteris paribus TERM 10 Voluntary exchange is when both parties are ___after the exhange than __. DEFINITION 10 better off, before TERM 21 Opportunity cost increases as QD increases b/c DEFINITION 21 resources are not equally well suited to producing all goods and as more of a good is produced it is necessary to use resources less well suitd to the production of that good. TERM 22 In Iraq when oil refineries were destoyed would be represented by __. DEFINITION 22 a shift in thePPF curve towards the origin. TERM 23 For an economy to produce past its PPF it must_. DEFINITION 23 increase its resource base TERM 24 An economy in which people pursue thier own self interst w/o gov regulation DEFINITION 24 laissez- faire TERM 25 Consumer Sovereignty DEFINITION 25 The idea that consumers determine what is produced in the economy through thier demands TERM 26 Households are on the _ side of input and on the _ side of outputs. DEFINITION 26 Supply; demand TERM 27 _ causes a shift in demand. DEFINITION 27 Change in price of a substitue TERM 28 What is held constant along a demand curve? DEFINITION 28 Income TERM 29 As a person continues to consume more a product then satisfaction will _. DEFINITION 29 succesively less satisfaction TERM 30 As long as households have limited incomes and wealth then _ curves will intersect at at _ axis DEFINITION 30 Demand, Price TERM 31 When the decrease of one good causes another to increase they are_. DEFINITION 31 Substitutes TERM 32 A change in price leads to a change in _ and a _the demand curve. DEFINITION 32 QD; movement along TERM 33 accoring to the law of supply, DEFINITION 33 positive relationship btwn price and quanity supplied TERM 34 the price of computer chips rises. this will lead to a _ in the _ of PCs. DEFINITION 34 decrease;supply TERM 35 The tire market has an excess supply .You predict that the price_, QD_, and Qs_. DEFINITION 35 fall, rise, fall TERM 46 If P* increased while D stays constant then your consumer surplus _. DEFINITION 46 decreases TERM 47 When buyer and seller trade at Q* then _. DEFINITION 47 minimize dead wieght loss TERM 48 There will be deadweight in a market if __. DEFINITION 48 the actual quanity traded is not Q* TERM 49 If gov sets price floor above P* tehn consumer surplus will __. DEFINITION 49 fall TERM 50 Price ceiling above P* DEFINITION 50 no rationing system needed TERM 51 If P* increases but demand stays the same, then the consumer surplus __. DEFINITION 51 decreases TERM 52 Increase revenue in perfectly competitive market DEFINITION 52 keep price the same but produce more to increase sales TERM 53 Perfectly Competitive Industry Example DEFINITION 53 Agriculture TERM 54 If economic profit is 0, the the rate of return is __. DEFINITION 54 normal TERM 55 In a perfectly competitive industry in price is raised above market price DEFINITION 55 sales will drop to 0 TERM 56 free entry DEFINITION 56 if firms in the industry are making high profits, new firms are likely to enter the industry TERM 57 Fast food is not considered perfectly competitve b/c DEFINITION 57 the products are not homogenous TERM 58 An example of production DEFINITION 58 a local nonprofessional theatre company performing a play TERM 59 Average Product Equation DEFINITION 59 Total Produc / Labor TERM 60 At the point where Total product is maximized, marginal product_ DEFINITION 60 is 0 but average product is still positive TERM 71 The substitutes there are for an item the _____the demand for the product is. DEFINITION 71 more elastic TERM 72 If price elasticity is 2, then price increases 2%, the result is __ in QD? DEFINITION 72 4 TERM 73 in output markets, the elasticty of supply tends to be ___ DEFINITION 73 positive TERM 74 in the short run __ DEFINITION 74 all firms have costs that they must bear regardless of their output TERM 75 ___ is a fixed input in the short run. DEFINITION 75 capital TERM 76 Total Cost Formula DEFINITION 76 TC= TVC+ TFC TERM 77 Firms have ___ over their ___ costs in the short run. DEFINITION 77 no control; fixed TERM 78 Average Fixed Costs Formula DEFINITION 78 AFC= TFC/ Q TERM 79 As output increases, AFC ___ DEFINITION 79 decreases TERM 80 Short run costs that depends on the level of output are ______. DEFINITION 80 total variable cost and total cost TERM 81 What is most likely to be a varible cost for a firm? DEFINITION 81 the payroll taxes that are paid on employee wages TERM 82 A firm will experience diminshing returns will set in where ___ DEFINITION 82 marginal cost increases TERM 83 In the short run when MP of labor __, then MC of each unit _. DEFINITION 83 rises; falls TERM 84 Marginal Cost Formula DEFINITION 84 change in TVC/ Change in q TERM 85 B/c marginal cost is always _ in the short run, TVC always _ when ouput increases. DEFINITION 85 positive in the short run, increases TERM 96 In a perfectly competitive market, if demand increases MR will _ and profit max point wil _. DEFINITION 96 increase; increase TERM 97 If a firms break even then new investors _attracted to the industry; current ones _run. DEFINITION 97 are not; are not running TERM 98 If a firm earns an operating profit DEFINITION 98 revenues exceed varaible costs of production TERM 99 If operating profit is 0 then DEFINITION 99 TR = TVC TERM 100 A profit maximizing strategy becomes a loss minim. strategy in a perfectly compet. when_ DEFINITION 100 AVC TERM 101 Economic Profit is _. DEFINITION 101 (P-ATC)q TERM 102 A firm w/ economic loss will decide wht to do based on _. DEFINITION 102 whether revenues cover variable costs TERM 103 A firm will shut down in the short run if _. DEFINITION 103 variable costs exceed revenues TERM 104 As long as price can cover _, the firm should operate in the short run rather than shutting down. DEFINITION 104 AVC TERM 105 The rising part of a perfectly competitive firm's marginal cost curve on its AVC is DEFINITION 105 short run supply curve TERM 106 If TR>TVC but TR DEFINITION 106 operate in the short run, then exit in the long run TERM 107 The shape of a firm's _ run AVC depends on how costs vary w/ _. DEFINITION 107 long; scale of operations TERM 108 For economies of scale, a _in a firm's scale of production leads to _ ATC. DEFINITION 108 increase; lower TERM 109 If a firm experiences both economies of scale and disconomies the long run_. DEFINITION 109 cost curve will be U shaped TERM 110 Wht is neccesary for long run equlibrium for perfectly competitve firm? DEFINITION 110 P=SRMC=SRAC=LRAC