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ECN 211 > Test 1 > Flashcards

Test 1 Flashcards

1
Q

What is a Demand Schedule?

A

table of price vs quantity demanded

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2
Q

What is a Demand Curve?

A

A graph of the relationship between price and quantity demanded.

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3
Q

What is a Product Market?

A

A market for goods and services.

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4
Q

What is quantity demanded?

A

The amount a consumer is willing/able to purchase at a given price.

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5
Q

What is a Competitive Market?

A

A market where there are many buyers and sellers; all firms are selling identical products, there are no barriers to new firms entering the market.

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6
Q

What are the factors for a Demand Curve shift?

A

Consumer income, tastes, population or demographics, expected future prices, prices of related goods.

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7
Q

What is a factor market?

A

A market for factors of production such as labor, natural resources and capital.

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8
Q

What is an Entrepreneur?

A

Operates a business that produces goods or services and brings together factors of production.

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9
Q

What is a Circular Flow Diagram?

A

Diagram showing how households and firms are linked through product and labor.

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10
Q

What is a Production Possibilities Frontier?

A

A curve that shows the max attainable goods with the available resources. Pts on the curve reflect efficiency, under the curve reflect inefficiency, outside show unattainable with current resources.

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11
Q

What is microeconomics?

A

The examination of individual markets.

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12
Q

What is GDP growth rate?

A

The economic growth rate. (Value (second period) - Value (first period))/Value (first period)

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13
Q

What is Positive Analysis?

A

Analysis concerned with what is.

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14
Q

What is Normative Analysis?

A

Analysis concerned with what should be.

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15
Q

What is macroeconomics?

A

The examination of the economy as a whole.

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16
Q

What is Marginal Cost?

A

The opportunity cost of a decision.

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17
Q

What is Marginal Benefit?

A

The benefit of a decision.

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18
Q

What is Scarcity?

A

When unlimited wants exceed limited resources: every choice involves an opportunity cost.

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19
Q

What is rational (economic)?

A

All available information is used in the decision making process and actions related.

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20
Q

What is market demand?

A

The demand by all consumers of a give good or service.

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21
Q

What is the law of demand?

A

Holding everything else constant, the quantity demanded increases when price decreases.

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22
Q

What are substitutes?

A

Goods that can be used for the same purpose.

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23
Q

What are complements?

A

Goods that are used together.

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24
Q

What is a normal good?

A

A good that increases when income increases.

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25
Q

What is an inferior good?

A

A good that demand decreases when income increases.

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26
Q

What is ceteris paribus?

A

All else equal.

27
Q

What is the difference between change in supply and change in quantity supplied?

A

quantity supplied is a result in the product’s own price and supply is caused by a variety of other variables other than price.

28
Q

What is quantity supplied?

A

The amount of good or service that a firm is willing/able to supply at a given price.

29
Q

What is a supply schedule?

A

A table that shows the relationship between price and the quantity supplied.

30
Q

What is the law of supply?

A

Holding all else constant: as price of a product increases the quantity supplied increases. Directly proportional.

31
Q

What are factors that shift the supply curve?

A

Prices of Inputs, Technological changes, Prices of substitutes, # firms in the market, expected future prices.

32
Q

What is a price ceiling?

A

A legally determined maximum price that sellers may charge.

33
Q

What is a price floor?

A

A legally determined minimum price that sellers may receive.

34
Q

What is market equilibrium?

A

When quantity demanded equals quantity supplied.

35
Q

What is a surplus?

A

When quantity supplied > quantity demanded.

36
Q

What do price floors cause?

A

A surplus.

37
Q

What is a shortage?

A

When quantity demanded > quantity supplied.

38
Q

What do price ceilings cause?

A

Shortages.

39
Q

What is the marginal benefit curve?

A

(demand curve) Shows the willingness of consumers to purchase a product at different prices.

40
Q

What is the marginal cost curve?

A

(supply curve) shows the willingness of firms to supply product at different prices.

41
Q

What is consumer surplus?

A

The difference between what a consumer is willing to pay and what the consumer actually pays.

42
Q

What is producer surplus?

A

The difference between the lowest price a firm is willing to accept and what the firm actually receives.

43
Q

What is economic surplus?

A

At a maximum (most efficient) when marginal benefit = marginal cost and consumer surplus = producer surplus.

44
Q

What is deadweight loss?

A

A reduction in economic surplus resulting from a market not being in equilibrium.

45
Q

What is a black market?

A

A market in which buying and selling occur at prices that violate market control.

46
Q

T/F Every good (except undesirable things) is scarce.

A

True.

47
Q

What is a sole proprietorship?

A

A firm owned by a single individual and not organized as a corporation.

48
Q

T/F If the demand and supply for a product both increase, the equilibrium quantity of the product must also increase.

A

True

49
Q

T/F If the demand and supply for a product both increase, the equilibrium price of the product must also increase.

A

False

50
Q

T/F If the demand for a product decreases and the supply of the product increases, the equilibrium price of the product may increase or decrease, depending on whether the supply or demand is shifted more.

A

False

51
Q

As the price of a good rises, consumer surplus —– , and as the price of a good falls, consumer surplus ——– .

A

decreases, increases

52
Q

As the price of a good rises, the producer surplus ——- , and as the price of the good falls the producer surplus ———.

A

increases, decreases

53
Q

What are the three major firms in the US called?

A

sole proprietorships, partnerships, corporations

54
Q

Limited liability becomes more important for firms trying to raise funds from a large number of investors rather than a small number of investors because:

A

investors that make a small investment in a firm may be unwilling to risk all of their personal assets if the firm fails.

55
Q

What is minimum wage law?

A

Dictates the lowest wage that firms may pay for labor.

56
Q

What takes place in the direct finance market?

A

Ownership in corporations is sold in the form of preferred stock.

57
Q

What is the primary purpose of patents and copyrights?

A

To encourage the expenditure of funds on research and development to create new products.

58
Q

What are the three fundamental questions that any economy must address?

A

what goods and services to produce; how will theses goods and services be produced, who receives them.

59
Q

What is an asset?

A

Something a company owns.

60
Q

What is a liability?

A

Something the company owes.

61
Q

What is a Balance Sheet?

A

A firm’s overall financial position.

62
Q

What is an income statement?

A

A firm’s revenues, costs, profits.

63
Q

What is an explicit cost?

A

A monetary opportunity cost.

64
Q

What is an implicit cost?

A

A non-monetary opportunity cost.

ECN 211 (1 decks)

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