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Art - Music - Economics > economics 226-300 > Flashcards

economics 226-300 Flashcards

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1
Q

If demand for a good is highly elastic, then an increase in price will _______.

A

significantly decrease quantity demanded

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2
Q

What is the formula for price elasticity of demand?

A

PED = % change in quantity demanded / % change in price

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3
Q

If price elasticity of demand is greater than one, then demand is _____.

A

elastic

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4
Q

Pens and pocket protectors are complementary goods. The supply of pocket protectors decreases. What happens to the equilibrium price of pens?

A

decreases - the price of pocket protectors increases, which causes the demand for pens to decrease; as a result, the price of pens decreases

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5
Q

What does price elasticity of demand tell us?

A

Price elasticity of demand tells us how much quantity demanded will be affected by a change in price.

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6
Q

The equilibrium point is at the intersection of what two curves?

A

the supply curve and the demand curve

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7
Q

What does it mean for a market to “clear”?

A

A market “clears” at the price where the quantity demanded equals the quantity supplied, so there is no surplus or shortage.

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8
Q

What effect does a price floor set over the equilibrium price have on a market?

A

Suppliers supply more, and consumers demand a lesser quantity. A surplus results.

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9
Q

Which two curves interest at the point of market equilibrium?

A

supply and demand

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10
Q

What does the market “do” at the point of equilibrium?

A

it “clears”

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11
Q

What is the term for the quantity at which buyers and sellers ask the same price?

A

equilibrium quantity

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12
Q

What usually results from a price floor?

A

a surplus

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13
Q

In a market, what is the “common language” that helps a buyer and seller agree on the value of the resources, goods, and/or services to be exchanged?

A

price

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14
Q

Define “market equilibrium.”

A

The point at which quantity exchanged equals quantity supplied.

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15
Q

How do price signals affect markets?

A

Price signals are instrumental to markets. Depending on prices, consumers decide whether or not to consume and businesses decide whether or not to produce

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16
Q

True or false: A market consists of an exchange that takes place at a given location and at a particular time.

A

FALSE

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17
Q

What effect does a price ceiling set below the equilibrium price have on a market?

A

Suppliers supply less, and consumers demand a greater quantity. A shortage results.

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18
Q

A surplus is a normal result of a price (ceiling/floor).

A

floor

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19
Q

What usually results from a price ceiling?

A

a shortage

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20
Q

What do you call a buyer and a seller, exchanging resources, goods, and/or services?

A

a market

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21
Q

What effect does a price ceiling set over the equilibrium price have on a market?

A

none

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22
Q

Rent control is a price (ceiling/floor).

A

ceiling

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23
Q

To keep farmers in business, the government often sets a price (ceiling/floor) on agricultural goods.

A

floor

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24
Q

What is the common economic language that makes comparison of values easier?

A

prices

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25
Q

What determines price in free market economy?

A

te interaction of supply and demand

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26
Q

What is another term for the equilibrium price?

A

the market-clearing price

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27
Q

Does a market have to occur in a physical place?

A

No

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28
Q

Equilibrium is best represented as a (curve/straight line/single point)/

A

single point

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29
Q

What effect does a price ceiling have on demand?

A

none

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30
Q

As the price of a good increases, what happens to the quantity demanded of that good?

A

quantity demanded decreases

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31
Q

In general, as the price of a good decreases, quantity demanded of that good (increases/decreases/stays the same).

A

increases

32
Q

As price increases, the quantity demanded (increases/decreases).

A

decreases

33
Q

in a free market, (self-interest) results from the value of private property.

A

self-interest

34
Q

do economists think people are selfish?

A

no

35
Q

what law can explain the bowed-out shape of a typical production possibilities curve?

A

the law of increasing opportunity cost

36
Q

what will cause a production possibilities curve to shift inward?

A

a decrease in the amount of a factor of production

37
Q

what will cause a production possibilities to shift outward?

A

an increase in a factor of production

38
Q

describe the shape of a typical production possibilities curve.

A

bowed outward from the origin

39
Q

what must an economy do in order to consume at a point beyond its production possibilities curve?

A

it must engage in trade

40
Q

list two qualities of the points along a possibilities curve

A
  1. all points are attainable and 2. all points are efficient
41
Q

what dos PPC stand for?

A

production possibilities curve

42
Q

what happen to a production possibilities curve when the amount of a factor of production is increased?

A

the curve expands outward

43
Q

what happens to a production possibilities curve when the amount of a factor of production diminishes in availibility?

A

the curve shifts inward

44
Q

in which type of economic system are all resources owned by private fims and individuals?

A

a pure market system

45
Q

is economic regulation more likely to favor producers or consumers?

A

producers

46
Q

what type of economic system is in place in cuba?

A

a mostly command/ planned system

47
Q

What country has the most market-oriented economic system in the world?

A

the United States

48
Q

what drives self-interest in a market economy?

A

the value of private property and ownership

49
Q

if two countries have similar resources, but one has a command economic system and the other has a market system, which country will most likely have the higher income per capita?

A

the country with a market system

50
Q

what type of firm has the greatest amount of market power?

A

a monopoly

51
Q

what country has the most centrally-planned economic system in the world?

A

north korea

52
Q

in which type of economic system is a person who owns no resource most likely to starve?

A

a pure market system

53
Q

“pure capitalism” is another name for which type of economic system?

A

pure market economy, free enterprise system or free market system

54
Q

since the former soviet union dissolved, what type of economic system has been in place in the majority of the resulting independent republics?

A

mixed market systems; most are trying to increase privatization

55
Q

what does the herfindahl index measure?

A

the sales concentration among firms in a given industry; the degree of competition in the industry

56
Q

In a market economy, ho is the question of “what to produce”answered?

A

by market forces

57
Q

what is a horizontal merger?

A

a merger of two or more firms in the same market

58
Q

What type of economic system is in place un the U.S.?

A

a mixed market system

59
Q

What is a trade deficit?

A

a condition in which a nation spends more on imports than what it receives for its exports

60
Q

How does an embargo differ from a tariff or a quota?

A

Tariffs and quotas are intended to help domestic producers, but embargoes are intended to hurt foreign consumers

61
Q

How do two nations trade when they each use different currencies and different price structures?

A

Each nation uses an exchange rate to determine the value of its goods in terms of the other country’s currency

62
Q

How do political leaders tend to act toward foreign competition with domestic industries?

A

Many political leaders urge other countries to engage in free trade, but promote protectionist policies in their own countries

63
Q

What is a product market?

A

a market in which goods or services are bought and sold

64
Q

What kind of money is a gold coin?

A

commodity money

65
Q

What is a market system?

A

an economic system in which a group allows market forces and the behavior of buyers and sellers to influence economic decision-making

66
Q

What is an import?

A

a good produced in a foreign country but purchased by domestic consumers

67
Q

How do rational people decide how to specialize?

A

People specialize in the production of the good they can produce for the lowest opportunity cost

68
Q

What does a price floor have on demand?

A

none

69
Q

As the price of a good increases, what happens to the demand for that good?

A

nothing

70
Q

Define comparative advantage

A

the ability of one country to produce a good at a lower opportunity cost (with a greater efficiency relative to other goods) than another country

71
Q

True or False: a change in price results in a change in the quantity demanded

A

TRUE

72
Q

True or False: a change in price results in a change in the demand

A

FALSE

73
Q

A minimum wage is a price floor or ceiling

A

floor

74
Q

Movement along the demand curve represents a change in (demand or quantity demanded)

A

quantity demanded

75
Q

As price increases, the quantity supplied (increases or decreases)

A

increases

Art - Music - Economics (34 decks)

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