Economic Concept

Question 0

What’s the formula of elasticity of Demand?

Answer 0

Elasticity of Demand= % Change in Quantity/% Change in Price

Question 1

Formula for Marginal utility:

Answer 1

MU of x/price of x = MU of Y/ Price of Y

Question 2

Short-run cost concepts: what’s the formula for Average Fixed Cost (AFC) per unit fixed cost?

Answer 2

AFC=Total fixed cost/Units produced

Question 3

What’s the formula for Average Total Cost?

Answer 3

ATC= AFC+AVC

Question 4

In a perfect competition market, profit is maximized when…?

Answer 4

MR=MC (demand curve)

Question 5

In a perfect competition market the price is set by?

Answer 5

The market

Question 6

The demand curve in a perfect competition is?

Answer 6

Horizontal

Question 7

In a long-run in perfect competition MR=MC=LAC

Answer 7

True

Question 8

No firm in the long run in a perfect competition make profit. They will break even?

Answer 8

True

Question 9

In a long run the monopolistic firm produces at the quantity that maximizes revenue, will the firm use resources efficiently or inefficiently and will it’s price be higher or lower than in a competitive environment?

Answer 9

Inefficient and Higher price

Question 10

The formula for GDP Gap is?

Answer 10

Real GDP - Potential GDP

Question 11

Personal income formula:

Answer 11

PI = NI - Corporate profits - Social security deductions + Dividends and interest received by individuals + Government transfer payments to individuals

Question 12

What’s formula for Multiplier Effect?

Answer 12

ME = Initial change in spending x (1/(1-MPC))

Question 13

Marginal propensity to consume measures the change in consumption spending as the % change in disposal income.

Answer 13

True

Question 14

Average propensity to consume measures the % of disposable income spent on consumable goods.

Answer 14

True

Question 15

The model identifies factors that determine the operating attractiveness and likely long-run profitability of an industry is called?

Answer 15

The five forces Analysis

Question 16

The five forces analysis are:

Answer 16

1. Threat of entry into the market by new competition
2. Threat of substitute goods or services
3. Bargaining power of buyers (customers) of the industry good or service.
4. Bargaining power if supplier of the inputs used in the industry
5. Intensity of rivalry

Question 17

SWOT stands for?

Answer 17

Strength
weakness
Opportunity
Threats

Question 18

What analysis provides a framework for carrying out such an assessment of the relationship between an entity and an operating environment?

Answer 18

SWOT Analysis

Question 19

What are the 3 generic strategies that provide competitive advantage identified by Porter?

Answer 19

1. Cost leadership
2. Differentiation
3. Focus

Question 20

Major factors that affect elasticity are:

Answer 20

1. Nature of the good/service
2. Availability of substitute
3. Income available

Question 21

What measures the % change in quantity of a commodity demanded as a result of a given % change in the price of another commodity?

Answer 21

Cross Elasticity of Demand

Question 22

What measures the % change in quantity of a commodity demanded as a result of a given % change in income?

Answer 22

Income Elasticity of Demand

Question 23

The increase in units produced that results from an increase in production costs is called?

Answer 23

Return to scale

Question 24

What’s the formula for Return to scale?

Answer 24

% increase in output / % increase in input