Unit 2 Flashcards
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?
$2
Which of these is not likely to lead directly to a black market?
Rationing
What happens to a monopolistically competitive firm that begins to change an excessive price for its product?
Consumers will substitute a rivals product
Why do companies are practice price discrimination?
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
What kind of table lists the quantity of a good that a person will buy at different prices?
Demand schedule
Which of the following is an example of lower production costs brought about by he use of technology?
The use of email to replace slower surface mail
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?
Inelastic
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?
$2.00 for 250 slices
Sunshine island has 3 large supermarkets hat supply most of the groceries. How would you describe the market for groceries on seaside island?
Oligopoly
What determines the price and the quantity produced of most goods?
The interaction of supply and demand
According to figure 4.4, how many slices of pizza will Ashley buy if the price is $1.00 per slice?
Two
Complete the following sentence: at the most profitable level of production, a firm’s margins cost will be ____ the market place.
Equal to
According to figure 6.3, in the market, a price of $1.00 would be…
Price ceiling
Which of the following industries have been deregulated in recent years?
Airlines
When prices rise, which of the following happens to income?
It buys less
Which of the following is a fixed cost for a store
Rent
In response to rising traffic, demands for bicycles has increased the new equilibrium point will show
More bicycles sold, but at a higher price
What is monopolistic competition?
Many companies selling similar but not identical products
How much control over price do companies in a perfect competitive market have
None
What determines how a change in prices will affect total revenue for a company
Elasticity of demand
Based on Ashley’s demand curve in figure 4.4 which of the following statement is true
Ashley will buy 2 fewer slice of pizza
Which of the following is an example of government influences on supply
Subsides
According to figure 6.2 in this market, a price of $1.50 would be
The equilibrium price
What is the definition of an oligopoly
Two to four firms producing about 70% to 80% of the output
Which of the following events could cause he demand curve for a sports magazine to shift to the right
A star basketball player interests 1000s of people in professional sport for the first time
Which of the following is an example of search costs
Elena missed two days of work at the supermarket to visit different apartments available for rent
In terms of capital and labor the baker has…
Decreasing marginal returns
When the government deregulates a product or service, what happens to it?
Some government regulations over the industry are eliminated
Which of the following is true about profits in a monopolistically competitive market?
Many firms will earn profits in the short term, but they must constantly innovate and compete to earn profit in the long term
How is the current demand for a good related to its future price?
If the price is expected to drop, current demand will fail.
What is the effect of import restrictions on prices
Cause prices the rise
According to figure 5.4 what is the elasticity of supply as the price decreases form $3.00 to $1.50 a slice
$0.86
Based on figure 6.2 what is a possible equilibrium point in this market after it has been affected by a supply stock
$2.00 , 150 slices
Which of these industries has NOT been considered a natural monopoly in the past 30 years
Diamonds
Movie ticket prices raise from 7 to 9 dollars. What is the likely affect of the change in price?
Quantity demanded if movie tickets will decrease
…How many will produced at the new price?
125,000
Technological process has reduced the cost of manufacturing mp3 players, if demand is unchanged…
More MP3 players will be sold at a lower price
Which of the following is NOT a condition for perfect competition
Sellers offer wide variety of products
Complete the following sentence: in a monopoly market, the market quantity sold will be ____ the quantity sold in a perfect competitive market
Less than
What kind of change would be expected in the demand of a country that has a growing population?
A ride in demand for shelter
Which of the following receives government subsides that are in place to protect the population rather than for economic reasons
Small formers from France
What is the name of the smallest amount that can legally be paid to most workers for an hour of work
Minimum wage
What is one kind of monopoly that the US government generally permits
Professional sports leagues
A monopolist will set its production at a level when marginal cost is equal to
Marginal revenue
Ceteris Paribus or “all other things held constant” is an assumption on that had which of the following effects on a demand schedule
It takes only prices into account
Based on figure 4.4 which combo of prices and quantity demanded would you expect to find on her new demand curve
$2.00, one slice
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
2,500
According to figure 6.2 at the equilibrium price, how many slices of pizza will be sold
200 slices
What is one effect that the Internet has had on business
Reduced start up costs for many businesses
Which of the following would likely to be bought in the same quantity even if it doubled in price?
Pencils
