Econ Test #2

Question 1

Factors that affect trade costs (and may result in less trade)

Answer 1

shipping costs, tariffs, taxes, language barriers, time zone challenges, etc

Question 2

what factors affect trade that may result in MORE trade?

Answer 2

geographically close to one another,
share a common language, or are a part of a trade agreement that reduces costs of trade.

Question 3

when looking at winners and losers, what else do you need to include?

Answer 3

deadweight loss and net gains/losses. Talk about how society gains or loses in a whole.

Question 4

what happened to US income distribution since 1930? Use exact numbers if possible

Answer 4

do this

Question 5

charge calculator

Answer 5

do this

Question 6

marginal private cost is equal to which curve

Answer 6

supply curve

Question 7

not sure if something is a monoploy or something else?

Answer 7

use if then statements

Question 8

externalities what lines do you use

Answer 8

MPC and MSC

Question 9

What are the 2 categories to regulate monopolies and bring competition?

Answer 9

1. ensure competition thrives 2. minimize the harmful ways that businesses might exploit their market power

Question 10

to ways to minimize market power

Answer 10

anti collusion laws and price ceilings

Question 11

why does the number of firms in a market affect power

Answer 11

when there are more SUBSTITIUTES there is less power. This makes demand curve MORE elastic

Question 12

When writing answers

Answer 12

make it stupidly obvious. over explain.

Question 13

how does demand need to be if a firm stays open?

Answer 13

demand needs to be equal to or greater than average cost

Question 14

which firms make differentiated products?

Answer 14

monopolistic competition and monopoly

Question 15

which firms have q < q*

Answer 15

monopolistic competition and monopoly

Question 16

pick q so that MR=MC

Answer 16

monopolistic competition and monopoly

Question 17

pick q so that P=MC

Answer 17

perfect competition

Question 18

earn economic profit in the long run

Answer 18

monopoly

Question 19

face a downward sloping demand curve

Answer 19

monopolistic competition and monopoly

Question 20

have MR less than price

Answer 20

monopolistic competition and monopoly

Question 21

face the entry of other firms

Answer 21

perfect competition and monopolistic competition

Question 22

if oligopies interact more than once, are they cloer to a monoploy or competative?

Answer 22

LOOK THIS UP

Question 23

what has happened to income inequality in the us since 1930?

Answer 23

learn this

Question 24

what has happened to income inequality in the us since 1970?

Answer 24

explain?

Question 25

absolute advantage

Answer 25

the ability to do a task using fewer inputs (comparing task A for one country to task A for another)

Question 26

comparative advantage

Answer 26

the ability to do a task at a lower opportunity cost (the fractions for each country)

Question 27

theory of comparative advantage (economic theory)

Answer 27

countries will specialize in production in which they have comparative advantage. They will export these products and import those of which other countries have comparative advantage

Question 28

domestic demand curve

Answer 28

shows the quantity of a good that all domestic consumers added together plan to buy at each price

Question 29

domestic supply curve

Answer 29

shows the quantity of good that all domestic supplies added together plan to sell at each price

Question 30

tariff is meant to protect whom

Answer 30

producers of a good (domestic)

Question 31

import quota

Answer 31

a limit on the quantity of a good that can be imported

Question 32

externality

Answer 32

the affect of something on bystanders

Question 33

marginal private cost

Answer 33

extra cost paid by the seler from one extra unit

Question 34

marginal external cost

Answer 34

extra external beneift accuring to bystanders from one extra unity

Question 35

marginal social benefit

Answer 35

all marignal benefits no matter who gets them

Question 36

marginal social benefit equation

Answer 36

= MPB+MEB

Question 37

rational rule for society

Answer 37

produce more of an item if its marginal social benefit is greater than or equal to marginal social cost

Question 38

corrective tax is = ?

Answer 38

= marginal external COST

Question 39

corrective subsidy = ?

Answer 39

marginal external BENEFIT

Question 40

private good

Answer 40

rival and excludable

toilet paper

Question 41

common resource

Answer 41

nonexcludable and rival

public tissue box

Question 42

club goods

Answer 42

nonrival and excludable

gym membership

Question 43

public goods

Answer 43

nonexludable and nonrival

air and sunlight

Question 44

gini coefficient

Answer 44

a / (A+B)

if gini = 0 then perfect equality. if = to 1, then perfect inequality

Question 45

accounting profit

Answer 45

the total revenue a business receives, less its explicit costs

Question 46

accounting profit equation

Answer 46

= total revenue- explicit financial costs

Question 47

economic profit

Answer 47

= total revenue-explicit financial costs - entrepreuuer’s implicit costs

Question 48

average revenue

Answer 48

total revenue/quantity supplied

if you charge everyone at same price then AV is = price

Question 49

how can a firm get to max economic profit

Answer 49

min. costs, increase demand, make demand inelastic, reduce demand for substitutes.

Question 50

first degree price discrimination

Answer 50

firm charges maximum price for each unit consumed (think ebay)

Question 51

second degree price discrimination

Answer 51

looking at which demand curve someone is in and changing price based on this. charge higher to groupe with less elastic demand

Question 52

demand =

Answer 52

MB

Question 53

supply=

Answer 53

MC