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ECO 211 > ECO Final Exam Terms > Flashcards

ECO Final Exam Terms Flashcards

1
Q

fluctuations in economic activity, such as employment and production

A

business cycle

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2
Q

the study of how society manages its scarce resources

A

economics

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3
Q

the property of society getting the most it can from its scarce resources

A

efficiency

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4
Q

the property of distributing economic prosperity uniformly among the members of society

A

equality

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5
Q

the impact of one person’s actions on the well-being of a bystander

A

externality

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6
Q

something that induces a person to act

A

incentive

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7
Q

an increase in the overall level of prices in the economy

A

inflation

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8
Q

small incremental adjustments to a plan of action

A

marginal changes

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9
Q

an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services

A

market economy

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10
Q

a situation in which a market left on its own fails to allocate resources efficiently

A

market failure

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11
Q

the ability of a single economic actor (or small group of actors) to have a substantial influence on market prices

A

market power

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12
Q

whatever must be given up to obtain some item

A

opportunity cost

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13
Q

the quantity of goods and services produced from each unit of labor input

A

productivity

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14
Q

the ability of an individual to own and exercise control over scarce resources

A

property rights

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15
Q

people who systematically and purposefully do the best they can to achieve their objectives

A

rational people

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16
Q

the limited nature of society’s resources

A

scarcity

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17
Q

a visual model of the economy that shows how dollars flow through markets among households and firms

A

circular-flow diagram

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18
Q

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

A

macroeconomics

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19
Q

the study of how households and firms make decisions and how they interact in markets

A

microeconomics

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20
Q

claims that attempt to prescribe how the world should be

A

normative statements

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21
Q

claims that attempt to describe the world as it is

A

positive statements

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22
Q

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

A

production possibilities frontier

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23
Q

A plane from St. Louis to Orlando is about to take off, but it still has a few empty seats. If the average cost per seat is $500, the airline must charge standby passengers more than $500 to profit from the sale of the seat.a. True b. False

A

FALSE

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24
Q

Trade allows countries to specialize in what they do best and to enjoy a greater variety of goods and services.a. True b. False

A

TRUE

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25
Q

Externalities and market power are two common causes of market failure.a. True b. False

A

TRUE

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26
Q

An increase in the amount of money in the economy will increase inflation and, as a result, push unemployment higher in the short run.a. True b. False

A

FALSE

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27
Q

Government policies aimed at equalizing the distribution of economic well-beinga. often result in reductions in economic efficiency in the economy. b. usually fail due to the associated increases in government bureaucracy. c. will most likely cause high levels of inflation in the economy. d. almost always increase the level of efficiency in the economy.

A

A

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28
Q

Which of the following should not be included in the cost of going to college?a. tuition and fees b. the student’s time, which can no longer be devoted to earning a salary c. room and board (that cost the same amount he was paying before entering college) d. textbooks

A

C

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29
Q

The federal government enacted regulation in the 1960s requiring people to wear seatbelts in their cars. Which of the following did not occur as a result of this legislation?a. fewer deaths occurred per accident b. less pedestrians were killed in car accidents c. the frequency of accidents increased d. overall driver deaths due to car accidents changed very little in the United States

A

B

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30
Q

When two individuals voluntarily trade,a. both people generally gain from the exchange. b. the overall well-being of the two individuals remains unchanged. c. one person usually gains at the expense of the other. d. one person always gains at the expense of the other.

A

A

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31
Q

In a market economy, the decisions of what and how much to produce are generally made bya. the interaction of producers and consumers in the market. b. the President and Congress. c. non-governmental agencies. d. voters in elections.

A

A

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32
Q

Even though markets do a good job of organizing economic activity, governments are needed to do all of the following excepta. intervene when markets fail due to externalities. b. intervene when markets fail due to market power. c. decide what and how much to produce. d. establish and enforce property rights.

A

C

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33
Q

Living standards in the United States have risen dramatically over the years mainly due toa. the efforts of labor unions. b. successive increases in the minimum wage. c. trade protection from competition from countries with low wages, such as Thailand. d. increases in the productivity of labor over time.

A

D

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34
Q

Rapid and persistent inflation occurs mainly due toa. greedy firms that abuse consumers with high prices. b. rapid increases in the quantity of money in the economy. c. trade with other countries. d. high wage increases demanded by labor unions

A

B

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35
Q

When economists disagree it is always due to disagreement over normative views of the world, because all economists agree on the positive theory about how the world works.a. True b. False

A

False

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36
Q

Which of the following statements regarding the production possibilities frontier (PPF) is correct?a. Increases in the resources available for production will cause the PPF to shift in towards the origin. b. Any point inside the PPF represents a combination of output that is not feasible to produce. c. All points on the PPF represent efficient levels of production. d. The opportunity cost of producing one more unit of one of the goods is constant as we move along the PPF.

A

C

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37
Q

Economic models area. typically represented by equations and diagrams. b. often composed of a number of simplifying assumptions. c. simplified versions of the world around us. d. All of these choices are true.

A

D

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38
Q

Microeconomics is the study ofa. how governments can reduce inflation. b. economy-wide phenomena, including inflation, unemployment, and economic growth. c. how governments can pull the economy out of recessions. d. how households and firms make decisions and how they interact in the market.

A

D

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39
Q

Points lying on the production possibilities frontier are efficient outcomes while points lying inside the production possibilities frontier are inefficient outcomes.a. True b. False

A

TRUE

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40
Q

a market in which there are many buyers and many sellers so that each has a negligible impact on the market price

A

competitive market

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41
Q

two goods for which an increase in the price of one leads to a decrease in the demand for the other

A

complements

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42
Q

a graph of the relationship between the price of a good and the quantity demanded

A

demand curve

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43
Q

a table that shows the relationship between the price of a good and the quantity demanded

A

demand schedule

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44
Q

a situation in which the market price has reached the level at which quantity supplied equals quantity demanded

A

equilibrium

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45
Q

the price that balances quantity supplied and quantity demanded

A

equilibrium price

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46
Q

the quantity supplied and the quantity demanded at the equilibrium price

A

equilibrium quantity

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47
Q

a good for which, other things equal, an increase in income leads to a decrease in demand

A

inferior good

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48
Q

the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises

A

law of demand

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49
Q

the claim that, other things equal, the quantity supplied of a good rises when the price of the good rises

A

law of supply

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50
Q

the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance

A

law of supply and demand

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51
Q

a group of buyers and sellers of a particular good or service

A

market

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52
Q

a good for which, other things equal, an increase in income leads to an increase in demand

A

normal good

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53
Q

the amount of a good that buyers are willing and able to purchase

A

quantity demanded

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54
Q

the amount of a good that sellers are willing and able to sell

A

quantity supplied

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55
Q

a situation in which quantity demanded is greater than quantity supplied

A

shortage

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56
Q

two goods for which an increase in the price of one leads to an increase in the demand for the other

A

substitutes

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57
Q

a graph of the relationship between the price of a good and the quantity supplied

A

supply curve

58
Q

a table that shows the relationship between the price of a good and the quantity supplied

A

supply schedule

59
Q

a situation in which quantity supplied is greater than quantity demanded

A

surplus

60
Q

Arises when a person engages in an activity that influences the well being of a bystander but neither pays nor receives any compensation for that effect.

A

externality

61
Q

Impact on the bystnader is adverse

A

negative externality

62
Q

Impact on the bystander is beneficial

A

positive externality

63
Q

Altering incentives so that people take account of the external effects of their actions

A

internalizing the externality

64
Q

_____externalities lead markets to produce a larger quantity than is socially desirable; to remedy the problem, the government can internalize by taxing goods

A

Negative

65
Q

_____ externalities lead markets to produce a smaller quantity than is socially desirable; ; to remedy the problem, the government can internalize by subsidizing goods

A

Positive

66
Q

A firm that is the sole seller of a product without close substitutesEx. One FirmTap Water, Cable TV

A

Monopoly

67
Q

A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

A

Natural Monopoly

68
Q

A market structure in which only a few sellers offer similar or identical productsEx. Few FirmsTennis Balls, Cigarettes

A

Oligopoly

69
Q

A market structure in which many firms sell products that are similar but not identicalEx. Many Firms - Differentiated ProductsNovels, Movies

A

Monopolistic Competition

70
Q

A market with many buyers and sellers trading identical products so that each buyer and seller is a price takerEx. Many Firms - Identical ProductsWheat, Milk

A

Perfect Competition

71
Q

a measure of how much the quantity demanded of one good responds to a change in the price of another good, computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

A

cross-price elasticity of demand

72
Q

a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants

A

elasticity

73
Q

a measure of how much the quantity demanded of a good responds to a change in consumers’ income, computed as the percentage change in quantity demanded / percentage change in income(End - Beg / Mid )

A

income elasticity of demand

74
Q

a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in quantity demanded / percentage change in price(End - Beg / Mid )

A

price elasticity of demand

75
Q

a measure of how much the quantity supplied of a good responds to a change in the price of that good, computed as the percentage change in quantity supplied / percentage change in price(End - Beg / Mid )

A

price elasticity of supply

76
Q

the amount paid by buyers and received by sellers of a good, computed as the price good X quantity sold

A

total revenue

77
Q

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

A

price ceiling

78
Q

a legal minimum on the price at which a good can be sold

A

price floor

79
Q

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

A

consumer surplus

80
Q

the value of everything a seller must give up to produce a good

A

cost

81
Q

the property of a resource allocation of maximizing the total surplus received by all members of society

A

efficiency

82
Q

the property of distributing economic prosperity uniformly among the members of society

A

equality

83
Q

the amount a seller is paid for a good minus the seller’s cost of providing it

A

producer surplus

84
Q

the study of how the allocation of resources affects economic well-being

A

welfare economics

85
Q

the maximum amount that a buyer will pay for a good

A

willingness to pay

86
Q

total revenue - total explicit cost

A

accounting profit

87
Q

fixed cost / quantity of output

A

average fixed cost

88
Q

total cost / quantity of output

A

average total cost

89
Q

variable cost / quantity of output

A

average variable cost

90
Q

the property whereby long-run average total cost stays the same as the quantity of output changes

A

constant returns to scale

91
Q

the property whereby the marginal product of an input declines as the quantity of the input increases

A

diminishing marginal product

92
Q

the property whereby long-run average total cost rises as the quantity of output increases

A

diseconomies of scale

93
Q

total revenue minus total cost, including both explicit and implicit costs

A

economic profit

94
Q

the property whereby long-run average total cost falls as the quantity of output increases

A

economies of scale

95
Q

the quantity of output that minimizes average total cost

A

efficient scale

96
Q

input costs that require an outlay of money by the firm

A

explicit costs

97
Q

costs that do not vary with the quantity of output produced

A

fixed costs

98
Q

input costs that do not require an outlay of money by the firm

A

implicit costs

99
Q

the increase in total cost that arises from an extra unit of production

A

marginal cost

100
Q

the increase in output that arises from an additional unit of input

A

marginal product

101
Q

the relationship between quantity of inputs used to make a good and the quantity of output of that good

A

production function

102
Q

total revenue - total cost

A

profit

103
Q

the market value of the inputs a firm uses in production

A

total cost

104
Q

the amount a firm receives for the sale of its output P x Q

A

total revenue

105
Q

costs that vary with the quantity of output produced

A

variable costs

106
Q

When the demand curve is inelastic… the extra revenue from selling at a higher price… is greater than the lost revenue from selling fewer units

A

When the demand curve is elastic… the extra revenue from selling at a higher price… is less than the lost revenue from selling fewer units

107
Q

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

A

price ceiling

108
Q

a legal minimum on the price at which a good can be sold

A

price floor

109
Q

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

A

consumer surplus

110
Q

the value of everything a seller must give up to produce a good

A

cost

111
Q

the property of a resource allocation of maximizing the total surplus received by all members of society

A

efficiency

112
Q

the property of distributing economic prosperity uniformly among the members of society

A

equality

113
Q

the amount a seller is paid for a good minus the seller’s cost of providing it

A

producer surplus

114
Q

the study of how the allocation of resources affects economic well-being

A

welfare economics

115
Q

the maximum amount that a buyer will pay for a good

A

willingness to pay

116
Q

total revenue minus total explicit cost

A

accounting profit

117
Q

fixed cost divided by the quantity of output

A

average fixed cost

118
Q

total cost divided by the quantity of output

A

average total cost

119
Q

variable cost divided by the quantity of output

A

average variable cost

120
Q

the property whereby long-run average total cost stays the same as the quantity of output changes

A

constant returns to scale

121
Q

the property whereby the marginal product of an input declines as the quantity of the input increases

A

diminishing marginal product

122
Q

the property whereby long-run average total cost rises as the quantity of output increases

A

diseconomies of scale

123
Q

total revenue minus total cost, including both explicit and implicit costs

A

economic profit

124
Q

the property whereby long-run average total cost falls as the quantity of output increases

A

economies of scale

125
Q

the quantity of output that minimizes average total cost

A

efficient scale

126
Q

input costs that require an outlay of money by the firm

A

explicit costs

127
Q

costs that do not vary with the quantity of output produced

A

fixed costs

128
Q

input costs that do not require an outlay of money by the firm

A

implicit costs

129
Q

the increase in total cost that arises from an extra unit of production

A

marginal cost

130
Q

the increase in output that arises from an additional unit of input

A

marginal product

131
Q

the relationship between quantity of inputs used to make a good and the quantity of output of that good

A

production function

132
Q

total revenue minus total cost

A

profit

133
Q

the market value of the inputs a firm uses in production

A

total cost

134
Q

the amount a firm receives for the sale of its output

A

total revenue

135
Q

costs that vary with the quantity of output produced

A

variable costs

136
Q

total revenue by the quantity sold

A

Average Revenue

137
Q

a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker

A

competitive market

138
Q

the change in total revenue from an additional unit sold

A

marginal revenue

139
Q

a cost that has already been committed and cannot be recovered

A

sunk cost

140
Q

a firm that is the sole seller of a product without close substitutes

A

monopoly

141
Q

a monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms

A

natural monopoly

142
Q

the business practice of selling the same good at different prices to different customers

A

price discrimination

ECO 211 (2 decks)

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