Test #1 Flashcards
Market Demand Curve
shows the relationship between price and quantity demanded of a particular good or service by all the consumers participating in the market
Market Supply Curve
shows the relationship between price and quantity supplied of a particular good or service by all the producers participating in the market
Equilibrium
the point at which the market clears
Equilibrium Price
the price that satisfies both the consumers and producers
Shortage
quantity supplied by producers is less than the quantity demanded by consumers
Surplus
quantity supplied by producers is larger than the quantity demanded by consumers
Tax
payment to the government on the production or consumption of a good or service
Subsidy
payment by the government on the production or consumption of a good or service
Incidence
the economic effect on the producer or consumer of a tax or subsidy
Price Floor
an established minimum price at which a good may be sold
Price Ceiling
an established maximum price at which a good may be sold
Willingness to Pay
shows the relationship between price and quantity supplied of a particular good or service by all the producers participation in that market
Consumer Surplus
the difference between what a consumer is willing to pay and the price they actually pay
Utility
the satisfaction arising from consumption
Marginal Utility
the additional satisfaction an individual consumer derives from an additional unit of a good/service. while keeping all other consumption constant.
Rational
the assumption that consumers will use their money to acquire the goods/services leading to the highest possible level of satisfaction
Total Utility
the total amount of satisfaction derived from consuming a certain quantity
Marginal Utilities of Income
different individuals derive different levels of satisfaction for each additional dollar
Indifference Curve
the curve delineating the line where different combinations of two goods offer a consumer equal satisfaction
Fixed Costs
costs that are the same regardless of output level
Variable Costs
costs that change with the output level
Sunk Costs
previously incurred costs that are not relevant to current decisions
Opportunity Costs
the alternatives you give up in exchange for a good or service
Marginal Costs
are the costs to produce one more unit of output.
Maximize Profits
marginal costs should equal marginal benefits.
Long Run Costs are always variable
true
Shut Down
when the marginal revenue (price) is less than or equal to average variable costs.
Break Even
where marginal revenue (price) equals average total cost.
Changes in labor costs cause movement along the supply curve.
False
A shift in the demand curve but not in the supply curve will cause a change in the equilibrium price.
True
In the market for a specific good, both the demand and supply curves increase at the same time. Which of the following is true:
Overall market quantity increases.
The analysis of interrelationships among markets and cross-price effects is called _______ equilibrium analysis.
general
Perfectly competitive markets have the following characteristics:
- Many consumers and producers.
- Indistinguishable products.
- Easy entrance and exit from the market.
In a competitive market, individual consumers and producers can greatly influence the market price for goods and services.
False
At a price of $15, Joseph would buy 30 pieces of bubble gum and Emma would buy 5 pieces. The aggregate demand between the two of them at $15 is:
35
Pick the Jeremy Bentham quote.
The purpose of society is to promote “the greatest happiness of the greatest number.
To maximize satisfaction consumers should allocate their monetary expenditures so that the last dollar on each product yields:
the same amount of marginal utility.
You run a firm that produces watches. You have 1 employee who receives 100 dollars a day regardless of the amount of watches she produces. For every watch you produce, you must pay 3 dollars for parts. What are the total costs for producing 50 watches in one day?
250
You produce 10 doughnuts. Your fixed costs are $5 and your variable costs are $0.50. What are your average total costs per doughnut?
((10x.5)+5)/10= 1
if you increase the amount of doughnuts you produce to 20, what are your new average total costs per doughnut?
((20x.5)+5)/20= .75
