economics 301-375

Question 1

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

Answer 1

below

Question 2

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

Answer 2

above

Question 3

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

Answer 3

ceiling

Question 4

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?

Answer 4

a price floor

Question 5

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?

Answer 5

a price ceiling

Question 6

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

Answer 6

none

Question 7

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

Answer 7

unit elastic

Question 8

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

Answer 8

the two goods are complements

Question 9

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

Answer 9

have little effect on quantity demanded

Question 10

if price elasticity is less than one, then demand is

Answer 10

inelastic

Question 11

demand increases and supply decreases. what happens to equilibrium price

Answer 11

increases

Question 12

what are substitute goods?

Answer 12

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

Question 13

what are complementary goods

Answer 13

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

Question 14

demand decreases. what happens to equilibrium quantity & price

Answer 14

decreases

Question 15

demand increases and supply increases. what happens to equilibrium price

Answer 15

the change is indeterminate

Question 16

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

Answer 16

decreases

Question 17

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

Answer 17

decreases

Question 18

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

Answer 18

nothing- they are the same

Question 19

explain the budget constraint

Answer 19

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

Question 20

what is a durable good

Answer 20

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

Question 21

after competition, what happens to demand for flashcards?

Answer 21

it decreases

Question 22

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

Answer 22

normal or superior goods

Question 23

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

Answer 23

a pure market system

Question 24

what type of incentive is an individuals right to private property

Answer 24

positive and non monetary

Question 25

prior to 1978 what type of of economic system was in place in china?

Answer 25

a mostly command system

Question 26

what is market power?

Answer 26

a firms ability to raise prices without losing customers

Question 27

in which type of economic system are sellers free to produce and sell anything they expect to be profitable

Answer 27

a pure market system

Question 28

in a command economy, who or what answers the question of "who will receive the benefits of production?"

Answer 28

a central authority

Question 29

in a mixed market economy, how is the question "what to produce" answered?

Answer 29

by a combination of central authority and market forces

Question 30

what type of economic system was in place in the former soviet union?

Answer 30

a centrally-planned system

Question 31

what are the three main types of economic systems?

Answer 31

traditional, planned/command, and mixed market systems

Question 32

since 1978 what has been the general nature of the changes in chinas economic system?

Answer 32

the government has begun to relinquish some of its strict control and allow an increasing amount of market-oriented economic activity

Question 33

what kind of of industry is most likely to be a target of economic regulation?

Answer 33

any industry in which a monopoly seems possible or desireable

Question 34

what is a concentrated industry?

Answer 34

an industry in which only a few firms are responsible for the majority of sales

Question 35

(Absolute/Comparative) advantages depend on relative costs.

Answer 35

comparative (Economics by Paul Samuelson, p835)

Question 36

In a market economy, who or what answers the question of "who will receive the benefits of production"?

Answer 36

market forces

Question 37

What type of economic system is in place in North Korea?

Answer 37

a mostly command system

Question 38

What are the three basic economic questions that every system must answer?

Answer 38

What to produce (and in what quantity)? For whom to produce? How to produce?

Question 39

What is the most competitive kind of pure economic system?

Answer 39

a market system

Question 40

In a command ecnomy, how is the question of "what to produce" answered?

Answer 40

by a central authority

Question 41

In which type of economic system are all resources owned by the public?

Answer 41

a command/planned system

Question 42

In a market economy, what is a firm's incentive to eliminate competition?

Answer 42

to increase market power

Question 43

In which type of economic system do individuals have government protection for their rights to private property?

Answer 43

a mixed market system

Question 44

In a mixed market economy, who or what answers the question of "who will receive the benefits of production"?

Answer 44

either by a central authority or by market forces

Question 45

What is the least competitive kind of our economic system?

Answer 45

a command/planned economic system

Question 46

What type of economic system is in place in India?

Answer 46

a mixed market system, largely based on tradition

Question 47

what is the intended consqeuence of a decision?

Answer 47

the desired result of a decision; the reason the decision is made

Question 48

what is the unintended consequence of a decision?

Answer 48

the unwanted and inexpected result of a decision

Question 49

what would cause an economic decision to be difficult to make?

Answer 49

if there were only a small difference between the benefits and the costs of the alternatives

Question 50

what is the present consequence of a decision?

Answer 50

the result that happens when the decision us made or soon afterwards

Question 51

what type of consequences would a president facing reelection MOST be concerned with in regards to his actions?

Answer 51

the present consequences

Question 52

what two factors of production are non human resources?

Answer 52

land and capital

Question 53

what is a trade off

Answer 53

a decision to give up something in order to have something else

Question 54

what is the basic economic problem

Answer 54

scarcity

Question 55

in a market economy who or what answers the question of how to produce

Answer 55

either by a central authority or by market force

Question 56

in a command economy who or what answers the question of how to produce

Answer 56

a central authority

Question 57

do economists think people act out of self interest

Answer 57

yes

Question 58

many production possibilties frontiers compare the production of capital and ....... goods

Answer 58

consumer

Question 59

true or false- self interest is the same as selfishness

Answer 59

FALSE

Question 60

self interest is a result of the value of (public/private) property

Answer 60

private

Question 61

when a nation moves from one point on its production possibilities curve

Answer 61

not all resources are being used efficiently the economy could produce more but it is not doing so

Question 62

describe the shape of a production possibility curve for two goods that use the same productive inputs

Answer 62

a straight line

Question 63

why does the production possibility curve have a downward slope

Answer 63

any increase in the production of one good decreases the production of the other

Question 64

the trade off between guns and ..... is often used to refer to the choice between military and civilian goods

Answer 64

butter

Question 65

how does the law of increasing opportunity cost affect the shape of a typical production possibilities curve

Answer 65

it causes it to bow outward

Question 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

Answer 66

a production possibility curve

Question 67

typically, a nation's production possibility curve is bowed (inward/outward)

Answer 67

outward

Question 68

the production possibility curve us bowed outward due to the law of (increasing/decreasing) opportunity costs

Answer 68

increasing

Question 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?

Answer 69

the two goods use the exact same combination and amount of productive inputs

Question 70

the supply curve shiftsto the left. is there more or less produced at any given price?

Answer 70

less

Question 71

true or false- a change in the price of substitute goods changes demand for a good

Answer 71

TRUE

Question 72

the slope of the demand curve is

Answer 72

negative

Question 73

what is a non durable good?

Answer 73

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

Question 74

the prices of substitutes and complementary goods affect the (supply/demand) for a good

Answer 74

demand

Question 75

cost of production affect (supply/demand) in the market for a good

Answer 75

supply