Final Exam Flashcards
The argument that purchases of minivans cause large families is an example of
reverse causality
in economics, capital refers to
buildings and machines used in the production process
equilibrium quantity must decrease when demand
increases and supply does not change, when demand does not change and supply decreases, and when both demand and supply decrease
if the price elasticy of supply for a good is equal to infinity, then the
supply curve is horizontal
Suppose this economy is producing at point W (inefficient), which of the following statements would best explain this situation
there is unemployment in the economy
suppose that someone makes the argument that because empty alcohol containers are found at many accidents, the containers cause accidents. this would be an example of
omitted variables
total revenue
remains unchanged as price increases when demand is unit elastic
when a tax is placed on the buyers of a product, the
size of the market decreases, the demand for the product decreases, and effective priced received by sellers decreases and the price paid by buyers increase
total surplus is represented by the area below the
demand curve and above the supply curve, up to the equilibrium quantity.
when two variables move in opposite directions, the curve relating them is
downward sloping, and we say the variables are negatively related
which of the following does not shift the damand curve for mp3 players
a decrease in the price of mp3 players
for a particular good, a 10% increase in price causes a 3% decrease in quantity demanded. Which of the following statements is most likely applicable to this good
the relevant time horizon is short
is goods a and b are complements, then an increase in the price of good A will result in
less of good B being sold
if a price floor is not binding, then
the equilibrium price is above the price floor
is a tax is imposed on a market with inelastic demand and elastic supply then
buyers will bear most of the burden of the tax
when supply and demand both increase, equilibrium
price may increase, decrease, or remain unchanged
when a tax is imposed on a good the
equilibrium quantity of the good always decreases
why does a firm in a competitive industry charge the market price
if a firm charges less, looses potential revenue
if a firm charges more, looses customers to other firms and firms can sell as many outputs as they want at market price
a negative externality will cause a private market to produce
more than is socially desirable
the law of diminishing marginal utility is
the principal that the extra satisfaction of a good or service declines as people consume more in a given period
consumer equilibrium
is a condition in which total utility cannot increase by spending more of a given budget on one good and spending less on another good
competitive firms face
horizontal demand curve and they can sell as much output as they desire at the market price
when new firms have an incentive to enter a competitive market, their entry will
drive down profits of existing firms in the market
when profit maximizing firms in competitive market are earning profits
new firms will enter the market
