economics 301-375 Flashcards

1
Q

For a price ceiling to achieve its purpose, it must be imposed (above or below) market equilibrium

A

below

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2
Q

For a price floor to achieve its purpose, it must be imposed (above or below) market equilibrium

A

above

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3
Q

A shortage is a normal result of a price (floor or ceiling)

A

ceiling

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4
Q

If the government sets a minimum exchange price above market equilibrium, resulting in a quantity supplied in excess of quantity demanded, what has been imposed?

A

a price floor

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5
Q

If the government sets a maximum exchange price below market equilibrium, resulting in a quantity demanded in excess of quantity supplied, what has been imposed?

A

a price ceiling

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6
Q

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

A

none

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7
Q

prices go up on demidec CDROM software, and overall revenue stays the same. this means that demand is=n this price range is…

A

unit elastic

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8
Q

the price of one good goes up. as a result, the demand for another good decreases. what is the relationship of the two goods?

A

the two goods are complements

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9
Q

if demeand for a good is relatively inelastic, then an increase in price will

A

have little effect on quantity demanded

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10
Q

if price elasticity is less than one, then demand is

A

inelastic

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11
Q

demand increases and supply decreases. what happens to equilibrium price

A

increases

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12
Q

what are substitute goods?

A

goods that can replace one another or that are made with essentially the same resources

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13
Q

what are complementary goods

A

goods that are purchased together sch that the demand for one can directly affect the demand for the other. the classic exanple: hot dogs and hot dog buns

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14
Q

demand decreases. what happens to equilibrium quantity & price

A

decreases

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15
Q

demand increases and supply increases. what happens to equilibrium price

A

the change is indeterminate

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16
Q

the number of remote control producers shrinks. the supply of remote controls…

A

decreases

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17
Q

remote control producers learn that due to government intervention, the price of remote controls will increase in four weeks. short term supply….

A

decreases

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18
Q

what is the difference between a superior good and a normal good?

A

nothing- they are the same

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19
Q

explain the budget constraint

A

consumers are forced to sacrifice some wants for others because of limited income

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20
Q

what is a durable good

A

a good for which consumers have more elastic demand. if income changes or prices rise, consumers can reasonably hold off on buying durable goods, such as yachts, houses cars

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21
Q

after competition, what happens to demand for flashcards?

A

it decreases

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22
Q

when a person’s income goes up, he buys more tomatoes. tomatoes are what kind of good?

A

normal or superior goods

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23
Q

in which type of economic system are consumers free to buy anything they can afford?

A

a pure market system

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24
Q

what type of incentive is an individuals right to private property

A

positive and non monetary

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25
prior to 1978 what type of of economic system was in place in china?
a mostly command system
26
what is market power?
a firms ability to raise prices without losing customers
27
in which type of economic system are sellers free to produce and sell anything they expect to be profitable
a pure market system
28
in a command economy, who or what answers the question of "who will receive the benefits of production?"
a central authority
29
in a mixed market economy, how is the question "what to produce" answered?
by a combination of central authority and market forces
30
what type of economic system was in place in the former soviet union?
a centrally-planned system
31
what are the three main types of economic systems?
traditional, planned/command, and mixed market systems
32
since 1978 what has been the general nature of the changes in chinas economic system?
the government has begun to relinquish some of its strict control and allow an increasing amount of market-oriented economic activity
33
what kind of of industry is most likely to be a target of economic regulation?
any industry in which a monopoly seems possible or desireable
34
what is a concentrated industry?
an industry in which only a few firms are responsible for the majority of sales
35
(Absolute/Comparative) advantages depend on relative costs.
comparative (Economics by Paul Samuelson, p835)
36
In a market economy, who or what answers the question of "who will receive the benefits of production"?
market forces
37
What type of economic system is in place in North Korea?
a mostly command system
38
What are the three basic economic questions that every system must answer?
What to produce (and in what quantity)? For whom to produce? How to produce?
39
What is the most competitive kind of pure economic system?
a market system
40
In a command ecnomy, how is the question of "what to produce" answered?
by a central authority
41
In which type of economic system are all resources owned by the public?
a command/planned system
42
In a market economy, what is a firm's incentive to eliminate competition?
to increase market power
43
In which type of economic system do individuals have government protection for their rights to private property?
a mixed market system
44
In a mixed market economy, who or what answers the question of "who will receive the benefits of production"?
either by a central authority or by market forces
45
What is the least competitive kind of our economic system?
a command/planned economic system
46
What type of economic system is in place in India?
a mixed market system, largely based on tradition
47
what is the intended consqeuence of a decision?
the desired result of a decision; the reason the decision is made
48
what is the unintended consequence of a decision?
the unwanted and inexpected result of a decision
49
what would cause an economic decision to be difficult to make?
if there were only a small difference between the benefits and the costs of the alternatives
50
what is the present consequence of a decision?
the result that happens when the decision us made or soon afterwards
51
what type of consequences would a president facing reelection MOST be concerned with in regards to his actions?
the present consequences
52
what two factors of production are non human resources?
land and capital
53
what is a trade off
a decision to give up something in order to have something else
54
what is the basic economic problem
scarcity
55
in a market economy who or what answers the question of how to produce
either by a central authority or by market force
56
in a command economy who or what answers the question of how to produce
a central authority
57
do economists think people act out of self interest
yes
58
many production possibilties frontiers compare the production of capital and ....... goods
consumer
59
true or false- self interest is the same as selfishness
FALSE
60
self interest is a result of the value of (public/private) property
private
61
when a nation moves from one point on its production possibilities curve
not all resources are being used efficiently the economy could produce more but it is not doing so
62
describe the shape of a production possibility curve for two goods that use the same productive inputs
a straight line
63
why does the production possibility curve have a downward slope
any increase in the production of one good decreases the production of the other
64
the trade off between guns and ..... is often used to refer to the choice between military and civilian goods
butter
65
how does the law of increasing opportunity cost affect the shape of a typical production possibilities curve
it causes it to bow outward
66
a graph that shows all the combinations of guns and butter that a nation can produce is an example of what type of curve
a production possibility curve
67
typically, a nation's production possibility curve is bowed (inward/outward)
outward
68
the production possibility curve us bowed outward due to the law of (increasing/decreasing) opportunity costs
increasing
69
if the production possibilities of two goods can be represented graphically as a straight line what can we infer about the relationship between the two?
the two goods use the exact same combination and amount of productive inputs
70
the supply curve shiftsto the left. is there more or less produced at any given price?
less
71
true or false- a change in the price of substitute goods changes demand for a good
TRUE
72
the slope of the demand curve is
negative
73
what is a non durable good?
a good for which the consumers have mainly inelastic demand. although income may change or prices may rise, consumers cannot sacrifice many non-durable goods
74
the prices of substitutes and complementary goods affect the (supply/demand) for a good
demand
75
cost of production affect (supply/demand) in the market for a good
supply