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Study Guides > Unit 2 > Flashcards

Unit 2 Flashcards

1
Q

An entrepreneur knits sweaters for sale. The entrepreneur has a fixed cost of $100. When he makes 10 sweaters in one month, he must spend $15 on wool. To make eleven sweaters on one month, he must spend $17 on wool. If he has no other costs, what is the marginal cost of the eleventh sweater?

A

$2

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2
Q

Which of these is not likely to lead directly to a black market?

A

Rationing

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3
Q

What happens to a monopolistically competitive firm that begins to change an excessive price for its product?

A

Consumers will substitute a rivals product

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4
Q

Why do companies are practice price discrimination?

A

Price discrimination recognizes that groups of consumers are willing and able to pay different amounts and maximizes profits by charging each group a different price

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5
Q

What kind of table lists the quantity of a good that a person will buy at different prices?

A

Demand schedule

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6
Q

Which of the following is an example of lower production costs brought about by he use of technology?

A

The use of email to replace slower surface mail

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7
Q

According to figure 5.4 what term describes elasticity of supply in this market as the price increases from $1.00 to $2.00 a slice?

A

Inelastic

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8
Q

A new office building has opened and the demand for pizza has increased. The new demand curve states that consumers will buy 200 slices at $2.50 each and 300 slices at $1.50 each. Based on figure 6.2, if the slope of the curve has not changed, what is the new equilibrium price and quantity supplied?

A

$2.00 for 250 slices

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9
Q

Sunshine island has 3 large supermarkets hat supply most of the groceries. How would you describe the market for groceries on seaside island?

A

Oligopoly

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10
Q

What determines the price and the quantity produced of most goods?

A

The interaction of supply and demand

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11
Q

According to figure 4.4, how many slices of pizza will Ashley buy if the price is $1.00 per slice?

A

Two

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12
Q

Complete the following sentence: at the most profitable level of production, a firm’s margins cost will be ____ the market place.

A

Equal to

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13
Q

According to figure 6.3, in the market, a price of $1.00 would be…

A

Price ceiling

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14
Q

Which of the following industries have been deregulated in recent years?

A

Airlines

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15
Q

When prices rise, which of the following happens to income?

A

It buys less

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16
Q

Which of the following is a fixed cost for a store

A

Rent

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17
Q

In response to rising traffic, demands for bicycles has increased the new equilibrium point will show

A

More bicycles sold, but at a higher price

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18
Q

What is monopolistic competition?

A

Many companies selling similar but not identical products

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19
Q

How much control over price do companies in a perfect competitive market have

A

None

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20
Q

What determines how a change in prices will affect total revenue for a company

A

Elasticity of demand

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21
Q

Based on Ashley’s demand curve in figure 4.4 which of the following statement is true

A

Ashley will buy 2 fewer slice of pizza

22
Q

Which of the following is an example of government influences on supply

A

Subsides

23
Q

According to figure 6.2 in this market, a price of $1.50 would be

A

The equilibrium price

24
Q

What is the definition of an oligopoly

A

Two to four firms producing about 70% to 80% of the output

25
Q

Which of the following events could cause he demand curve for a sports magazine to shift to the right

A

A star basketball player interests 1000s of people in professional sport for the first time

26
Q

Which of the following is an example of search costs

A

Elena missed two days of work at the supermarket to visit different apartments available for rent

27
Q

In terms of capital and labor the baker has…

A

Decreasing marginal returns

28
Q

When the government deregulates a product or service, what happens to it?

A

Some government regulations over the industry are eliminated

29
Q

Which of the following is true about profits in a monopolistically competitive market?

A

Many firms will earn profits in the short term, but they must constantly innovate and compete to earn profit in the long term

30
Q

How is the current demand for a good related to its future price?

A

If the price is expected to drop, current demand will fail.

31
Q

What is the effect of import restrictions on prices

A

Cause prices the rise

32
Q

According to figure 5.4 what is the elasticity of supply as the price decreases form $3.00 to $1.50 a slice

A

$0.86

33
Q

Based on figure 6.2 what is a possible equilibrium point in this market after it has been affected by a supply stock

A

$2.00 , 150 slices

34
Q

Which of these industries has NOT been considered a natural monopoly in the past 30 years

A

Diamonds

35
Q

Movie ticket prices raise from 7 to 9 dollars. What is the likely affect of the change in price?

A

Quantity demanded if movie tickets will decrease

36
Q

…How many will produced at the new price?

A

125,000

37
Q

Technological process has reduced the cost of manufacturing mp3 players, if demand is unchanged…

A

More MP3 players will be sold at a lower price

38
Q

Which of the following is NOT a condition for perfect competition

A

Sellers offer wide variety of products

39
Q

Complete the following sentence: in a monopoly market, the market quantity sold will be ____ the quantity sold in a perfect competitive market

A

Less than

40
Q

What kind of change would be expected in the demand of a country that has a growing population?

A

A ride in demand for shelter

41
Q

Which of the following receives government subsides that are in place to protect the population rather than for economic reasons

A

Small formers from France

42
Q

What is the name of the smallest amount that can legally be paid to most workers for an hour of work

A

Minimum wage

43
Q

What is one kind of monopoly that the US government generally permits

A

Professional sports leagues

44
Q

A monopolist will set its production at a level when marginal cost is equal to

A

Marginal revenue

45
Q

Ceteris Paribus or “all other things held constant” is an assumption on that had which of the following effects on a demand schedule

A

It takes only prices into account

46
Q

Based on figure 4.4 which combo of prices and quantity demanded would you expect to find on her new demand curve

A

$2.00, one slice

47
Q

Market price for a slice of pizza is $2.00. How many slices will be supplied by all producers in the market according to figure 5.4

A

2,500

48
Q

According to figure 6.2 at the equilibrium price, how many slices of pizza will be sold

A

200 slices

49
Q

What is one effect that the Internet has had on business

A

Reduced start up costs for many businesses

50
Q

Which of the following would likely to be bought in the same quantity even if it doubled in price?

A

Pencils

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