Ferrell's Final Exam Flashcards
Who is the superstar of Price Theory?
Marshall
This is a form of a Natural Monopoly?
Price Decreasing Industry
Where does the monopolist want to operate?
Above the min AC
Homogeneity, Free enterprise and Market price are assumptions of which model?
Perfect Competition
The inflection point of the TC function is called what?
min MC
Where is the slope of the vector from the origin= slope of the TC function?
Min AC
A factor good is used in the production of what?
Another Good
A constant cost remains the same regardless of the number of units produced (T/F)
True
A fixed cost is only incurred when you increase the level of production (T/F)
False
A business with the absence of external tariffs or absence of internal tariffs is called?
Free Trade Area
This is a model that describes for whom the economy produces
Distribution Theory
The thing that A (one person or country) does better than B (another person or country), relative to everything else that A does is called
Comparative Advantage
The typical farmer prefers which type of program?
Government Purchase
Those concerned with the price of the food prefer which type of program?
Price Differential
Who believed in optimal theory?
Pareto
A market that permits free entry and exit by buyers and sellers is called?
Free enterprize
To tie or connect a commodity to money is called?
monetize
An increase in price followed by an increase in quantity demanded is called?
Reverse Substitution
The demand line for an item represents the total quantity purchased (T/F)
False
A business with an output that weighs significantly less than the raw materials used to manufacture is called?
Weight Decreasing Industry
Veblen’s thesis that some goods are preferred to others because of their social implication is called?
Conspicuous Consumption
An analysis that considers all variables over a time series is called Static (T/F)
False
Numbers that assign rank are called?
Ordinal
Who invented the concept of Arbitrage?
Keynes
Name the economist who contributed the concept of Negative Income Tax
Fridmen
Who wrote the Theory of the leisure Class?
Veblen
An increase in price will cause the MU/P ratio to increase (T/F)
False- Less bang for the buck
Numbers that assign specific value are called
Cardinal
Business Cycles
Marx
Quantity Theory of Money
Hume
Diminishing Marginal Utility
Menger
A good or service used by the business sector is called?
Investment Good
Classical economists believed in government intervention (T/F)
False
What year did the Industrial Revolution take place
1750
If I buy a low-priced computer, but now I have additional features (like the internet), and can only get them from the original seller, what kind of sale is this?
Tie-in-sale
What is the shut-down point?
TR=VC
Fixed supply is when quantity supplied remains the same regardless of price
True
What is the break-even point?
TR=TC
The condition that exists when no one can be made better off without making someone worse off is called?
Optimality Theory
A is preferred to B and B is preferred to C, therefore A is preferred to C represents which assumption?
Transitivity
What kind of function is an indifference curve where the quantity of what you’re measuring is the same regardless of where you are on the curve?
Isoquant
Ordinal Utility Analysis uses the law of?
Substitution
Who is the superstar of Ordinal Analysis?
Edgeworth
Ordinal analysis measures what?
Rank
What is a good or service used by the household sector called?
Consumption Good
A guarantee of a specific outcome is called a necessary condition (T/F)
False- Sufficient
What is the slope of 6x-2 +10
-12x-3
Marxism is distribution according to need, meritocracy is the distribution according to
Scarcity
Any quantity of production beyond the minimum point on the MC function is called?
Area of Increasing Marginal Cost
What is a French mercantilist called?
Colberist
Assume that TU=900q-9q2. Find MU
900-18q
Name 3 great utilitarians
Mill, Mill Senior, Bentham
Any quantity of production before the point of diminishing returns is called?
Area of decreasing Marginal Cost
Consumer Surplus, Theory of the Firm
Marshall
Capitalism will lead to democratic socialism
Schumpeter
Concept of demand, Father of European Stock Market
Monnett
Law of Comparative Advantage
Ricardo
Any quantity of production beyond the point of diminishing returns is called the area of increasing Marginal Cost (T/F)
True
What are the necessary conditions of an enforceable agreement?
Offer, Acceptance, Consideration
TC divided by number of units produced (q) equals AC (T/F)
True
What is the first degree of Price discrimination?
Perfect Price
Quotas, import licenses, and exchange controls are all examples of?
Non-Tariff Trade Barriers
Quotas on manufactured goods protect whom?
Domestic producer
Profits and losses, revenues and expenses, and depreciation are all reported on a company’s
Income Statement
The financial statement that reports the company’s position as of a single date is called?
Balance Sheet
Patents are what kind of assets?
Intangible Assets
Buildings, equipment, etc, are what kind of assets?
Fixed
A company’s reputation, location, and management team are examples of what kind of intangible assets?
Good will
Assets minus liabilities equal
Net worth
Cash and Accounts Receivable
Current
Land, Buildings, Equipment
Fixed
Patents, copyrights, goodwill
Intangible
If the net worth of a company is negative, the firm is said to be
insolvent
Can your opportunity costs go on your income statement as an expense?
No
The absence of non-economic barriers to leaving a market is called
Free Exit
A dutch auction is where the seller reserves the right to influence the price (T/F)
False
A good for which the elasticity of demand is less than one is called?
A necessity
What 3 countries are in the European community BENELUX?
Belgium, Netherlands, Luxembourg
Who is the father of the European community BENELUX
Monnett
The time it takes to change all factors of production
Long-Run
The amount of accounting profit required to maintain a business without attracting competitors is called
Normal Profit
Output is called what?
Production
Economic rent is payment to what?
Factor of production
A function that shows how much of one good it takes to make someone ambivalent to a given amount of some other good is called
Indifference Curve
An oligopsony is a few sellers (T/F)
False- Few buyers
This is called an enforceable agreement
Contract
Latin term for “this for that; something for nothing”
Quid pro quo
The price at which quantity supplied equals quantity demanded
Equilibrium price
Utility recieved but not paid for is called
Consumer Surplus
What is Consumer Surplus called by Pareto?
Welfare Triangle
Terms of trade is the Ricardian name for
Market Price
Both the ability and willingness to pay the current market price is called?
Effective Demand
The definition of production is
output
Productivity is
output per unit of input
The frontier line of maximum output possible when all available factors of production are fully employed at their highest and best use is called what?
Production Possibilities Curve (PPC)
Equilibrium Theory
Walras
Study of Natural Laws
Menger
Wage Fund Doctrine
Ricardo
Income Redistribution
Paredo
The ability and willingness to enter the market at some specific price is a sufficient condition (T/F)
False- Necessary
The ability and willingness to enter the market at some specific price is?
Demand
A premium in excess of economic rent paid to a factor of production
Quasi rent
Output per unit input is called
productivity
Quantity demand is a function of
Price
Describe productivity when proportional increases in input correspond to an output increase from 100 to 150 to 175
Decreasing Return to Scale
When quantity demanded is fixed at all levels, what is the elasticity of this good?
Totally Inelastic
When the price of fish goes down and quantity demanded decreases, what kind of effect is this?
Reverse income effect
What is utility a measure of?
Satisfaction
What kind of effect is it when the price of a good decreases and more of it is demanded?
Income effect
Market price is the competitively arrived at price of a number of goods, in one place, at one time (T/F)
False- one good, one price, one time
FC+VC=
TC
Customs duty on goods transported between members of an economic area
Internal Tariff
When all factors of production are being used at their highest level of production?
Capacity point
A few sellers
Oligopoly
This is the study of individual markets, prices, and firms
Microeconomics
The economic philosophy based on the premise that precious metal is wealth is called
Mercantilism
A business that is located with out regard to the factors of production is called
Footloose
An essential requirement for a specific outcome is called
Necessary condition
A function which continuously approaches a line or axis without meeting it at any finite distance is called
asymptote
Which economist has a stagnatist graph?
Ricardo
Who created Sunspot Theory?
Jevons
When two lines on a graph touch but do not cross, they are said to be
Tangent
What one does better than others is called
Absolute Advantage
An introspective unit of satisfaction is called the Law of Demand (T/F)
False
This is a straight line drawn from an initial point assumed to be the origin
Vector
A lawyer prepares a contract for his client in August 1998. This action is properly accounted for in 97-98 GNP. (T/F)
True
A factor that emits pollution in a neighborhood stream as a by-product of its production is creating a what?
External Diseconomy
If 2 goods were perfect complements, the indifference curve would be
Right Angle
As output increases AFC will remain constant (T/F)
False
Verbally describe the elasticity at the midpoint of a linear demand line, which extends to both axis
Unit Elastic
A tax on salt would fall on the consumer (T/F)
True
If one firm in an oligopolistic industry raises prices, most firms will follow (T/F)
False
If a perfect competitor produces where MR=MC=AC, excess profit must be
Zero
In indifference curve A is to the right of indifference curve B, it will be preferred by the consumer. This represents what mathematical assumption?
Rationality
According to Ricardo, what factor is the source of all value?
Labor
Ricardo was not a proponent of import tariffs (T/F)
True
Ricardo, like Marx, was a student of business cycles (T/F)
False
A good or service which has 2 characteristics of which both are necessary conditions is called
Normal Good
What is a good that is bought in larger quantities as income increases called?
Superior Good
If demand for wheat is totally elastic, the buyer is a price maker (T/F)
True
This is horizontal aggregation of MC functions beyond the point of diminishing returns for all member firms in a market is called
Supply Curve
What is the ultimate burden of tax called?
Incidence of tax
The notion that consumers derive less satisfaction with each unit of wealth
Diminishing MU
This is a product standardized by government regulation or industrial convention
Homogeneous Products
Monopolists operate in the long run or short run?
Short Run
Where does perfect knowledge take place?
Long-Run
As price falls, does the Welfare Triangle increase or decrease?
Increase
The MC function intersects the minimum point of what?
Min AC
In Perfect Competition, what is assumed about excess profits, where there is equilibrium?
Zero
Monopolists left to their own accord would want ⬆️ or ⬇️ Price Quantity Surplus Average Cost Excess Profit
Price⬆️ Quantity ⬇️ Surplus ⬇️ Average Cost⬆️ Excess Profit ⬆️
Classical factors of production
Land labor and capital
Primary factors of production
Land and Labor
Land and Labor exists
A priori- At the outset
Secondary factor of production
Capital
Classical economists believe that wealth is created by which factor?
Labor
Labor is represented by what shaped supply curve?
Convex
The Clayton Anti-Trust Act is the 1890 law that makes monopolistic restraint of trade illegal (T/F)
False-The Clayton antitrust act was passed in 1914 which authorized federal judges to issue preliminary injunction’s when they hear evidence that the Sherman Antitrust act has been violated
An Asymptote found by dividing FC by the number of units produced
AFC
The buyer is the price taker if demand is totally inelastic (T/F)
True
This is when all physical characteristics are identical
Homogeneous
Demand is the function of?
utility
Quantity Demanded is the function of
Price
Effective Demand is a ______ condition of a market transaction
Sufficient
Demand is a ____ condition
Necessary
A cost that is zero at zero production and increases as production increases
VC
The point on a TU function where satisfaction is maximized
Satiation Point
The Latin term for “all else remains constant”
Ceteris Paribus
This is the Act that forbids predatory pricing
Robinson-Patman Act
What is the numerical description of Unit Elastic?
1
The act of inducing different buyers to pay different prices for the same good
Price Discrimination
This is an agent of the seller
Shill
X/0=
Infinity
Which function of ordinal analysis does Arrow’s theorem explain?
Transitivity
Name the two lines that separate the quadrants of a graph
Axis
A value measured on the x axis is called ____, while a value measured on the y axis is called ____.
Abscissa
Ordinate
When is a firm said to be insolvent?
When net worth is negative
When is it from said to be illiquid
When current liabilities are greater than current assets
In accounting, what does the term “liquid” mean?
Convertible to cash
What kind of an asset is goodwill?
Intangible
Gross profit less operating expenses plus other revenues equals what?
Net income
This is a dynamic profit and loss report of the flow of income over a period of time
Income statement
This is a static report of a firms stock of assets and liabilities at a point in time
Balance sheet
The use of a capital good is considered an expense (T/F)
True-Depreciation expense
And indifference curve approaches but does not touch either axis, therefore this curve represents an
Asymptote
Concave indifference curve represents both
Addiction and tolerance
More is preferred to less is what theory?
Rationality
If the price of an inferior good is increased and you buy more of it, this is called a
Reverse substitution
If TU is increasing, consumption is ____ and MU is ____.
Increasing and Decreasing respectively.
When TU begins to decrease with consumption, MU starts to become positive or negative?
Negative
Paying an employee to produce nothing, to sleep on potato sacks, also known as disguised unemployment:
Featherbedding
First crop limitation is called:
Soil banking
What is the name of the law that allows the government to sell surplus grains to poor countries?
Public law 480
How do public law 480 countries pay for the grains?
Counterpart Funds
What is the government purchase program equation?
Parity price times change in Q
What is the equation for price differential?
Qe times change in price
What is the equation for TR
P times Q
Just price just wage
Saint Thomas Aquinas
Lyceum
Aristotle
Indifference Curve
Edgeworth
Social Security should be replaced by negative income tax
Friedman
Quantity theory of money
Hume
Scissor analogy/supply demand
Marshall
He said, “economics is an engine for the discovery of concrete truths”
Marshall
Das Kapital/ Business cycles
Marx
Theories of utilitarian and utility
Mill
founded the academy
Plato
Physiocracy
Quesnay
Classical rent doctrine/labor theory of value
Ricardo
Capitalism will lead to democratic socialism
Schumpeter
Wealth of Nations/invisible hand doctrine
Smith
Equilibrium Theory
Walras
What is the equation for finding the current value of a bond?
CV= R/r
What is the order of the queue?
PST or price size time
Cardinal
Value
Ordinal
Rank
3 degrees of price discrimination
Perfect price
Quantity discounts
Market separation
