Econ 202 final

Question 1

IEdI<1

Answer 1

inelastic

Question 2

IEdI>1

Answer 2

elastic

Question 3

IEdI=1

Answer 3

unit elasticity

Question 4

IEdI is negative is it a complement or substitute

Answer 4

complement

Question 5

IEdI is positive is it a complement or substitute

Answer 5

substitute

Question 6

goods that have a more elastic demand tend to …

Answer 6

have a long time horizon for adjustment

Question 7

is income elasticity is Negative or positive for a inferior good.

Answer 7

negative

Question 8

is income elasticity is Negative or positive for a normal good.

Answer 8

positive

Question 9

what are the elements of a good theory

Answer 9

simple, general, and useful

Question 10

how do you find MU

Answer 10

MUx/MUy

Question 11

what is a normative statement?

Answer 11

a statement that has opinions. uses words like should

Question 12

what is a positive statement

Answer 12

a statement that is a fact

Question 13

a shortage is…

Answer 13

when quantity demanded is greater than quantity supplied

Question 14

a surplus is..

Answer 14

when quantity supplied is greater then quantity demanded

Question 15

equation for own price elasticity

Answer 15

derivitive qd/px *px/qd

Question 16

equation for income elasticity

Answer 16

derivitive qd/I *I/qd

Question 17

An isoquant refers to…

Answer 17

a curve that shows all possible combinations that yield the same outcome.

Question 18

if a firm is going to be convinced produce one more unit of a good, the price it receives must
be at least equal to the…

Answer 18

Marginal cost

Question 19

fixed cost that cannot be recovered should be considered…

Answer 19

sunk and shouldn’t be considered in future decisions

Question 20

what is a giffen good

Answer 20

an inferior good that consumers buy more of when price goes up (rice, bread generally cheap goods)

Question 21

the slope of a short run total production curve with labor on the x-axis is the

Answer 21

marginal product of labor

Question 22

the substitution effect is

Answer 22

The change in the amount of a good x consumed associated with a change in the price of good x

Question 23

the difference between short run and long run are

Answer 23

the time it rakes for any fixed input to be changed

Question 24

A reduction in the price of a normal good will cause the substitution effect to be _____ and
the income effect to be _____.

Answer 24

positive, positive

Question 25

what is a kink

Answer 25

the price at which more consumer purchase a good

Question 26

the difference between producer surplus and economic profit is?

Answer 26

fixed cost

Question 27

The supply of a good is perfectly elastic and demand slopes downward. The government levies
a tax on the suppliers of this good. what percent of the tax do demanders bear

Answer 27

100%

Question 28

an efficient market will have

Answer 28

maximized the sum of consumer and producer surplus

Question 29

A price support policy…

Answer 29

Has government expenditures that are greater than the increase in producer surplus.

Question 30

If the government imposes a tariff on imported goods, then…

Answer 30

Deadweight loss is created in that market.

Question 31

for price taking firms what is marginal revenue equal to

Answer 31

price

Question 32

the laffer curve implies

Answer 32

it is possible to have a tax rate is so high that lowering the tax rate would increase tax revenue

Question 33

The market for a good is more likely to have price taker producers when…

Answer 33

Each firm in the industry produces a homogenous good.

Question 34

pass through fraction on tax equation

Answer 34

PES/PES-PED

Question 35

markup equation

Answer 35

P-MC

Question 36

markup percentage equation

Answer 36

P-MC/P