academic team

If the quantity demanded of a good increases as an individual's real income increases what kind of good is it?

Normal Good

OPEC is an example of what type of market structure, where there is an open and formal agreement among firms to collude?

Cartel

A market structure in which a large number of firms sell a differentiated product, no barriers to entry exist, and no firm is a price taker is known as?

Monopolistic Competition

If one person, firm, or country can produce more of something with the same amount of effort and resources, what do they have over other producers?

An absolute advantage

What depicts all the different combinations of goods a country or firm can produce while using all its resources efficiently with the best available technology?

A production-possibilities frontier (or transformation curve)

Extensive form is another name for what graphical representation in game theory?

A game tree

What type of demand curve does a perfectly competitive firm face?

Perfectly Elastic or Horizontal

As price decreases, the quantity demanded increases. What economic principle does this represent?

Law of Demand

Normal profit equals ______ minus ______

Total Revenue, Total (explicit) Costs

The personal income forgone by someone going to college is what kind of cost?

Opportunity cost (or implicit costs)

Consumer surplus is the difference between the value the consumer places on the good and the ______?

the price (paid for the good)

A curve showing all bundles of goods yielding the same level of utility is called a(n)________?

Indifference curve

The practice by monopolists of charging different prices to different consumers is called _____ _____

Price Discrimination

When would marginal revenue be greater than demand?

When the demand curve has a positive slope

What economic concept measures the cost of a college education compared to wages foregone from the time pursuing a degree?

Opportunity Cost

A local department store found that when the price of shoes increased, the demand for slacks fell. What type of relation is implied?

Complementary

What is happening to the long-run average cost curve if diseconomies of size are present?

It is rising

What economic term is used for the satisfaction consumers derive from goods and services?

Utility

Which costs are the normal "out of pocket" costs of the inputs purchased for use in producing a product?

Explicit

A commodity seller who is unable to affect the commodity price by changing the quantity it sells is referred to by what term?

Price Taker

What curve represents the least-cost combination of two inputs that can be used to produce increasing quantities of a product?

Expansion Path

The income elasticity of demand for what type of good is positive?

Normal Good

The income elasticity of demand for what type of goods is positive but less than one?

Necessities

Over the relevant range of output, what can be said about the long run average cost curve of a "natural" monopoly?

It is decreasing

If a consumer prefers bundle A to B, and prefers bundle B to C, what rationality axiom says bundle A must be preferred to bundle C?

Trasitivity Axiom

A local grocery store found that when they lowered the price of bananas, the sales of apples decreased. What type of relationship is implied between bananas and apples?

Substitutes

When a firm's revenue received is exactly equal to the sum of all costs including opportunnity costs of family management, labor and invested capital, the firm is said to be earning ________ profits.

Normal

The output level where the Average Physical Product and Marginal Physical Product curves intersect divides Stage II and __________

Stage I

What law states that as the amount of a good consumed increases, the marginal utility of that good tends to diminish.

Law of Diminishing Marginal Utility

The practice of selling a certain product of given quality and cost per unit at different prices to different buyers.

Price Discrimination

If the inverse demand equation is P=10-2Q, what is the equation for the Marginal Revenue Curve?

MR=10-4Q

What will result in a change in demand?

A change in ceteris paribus conditions (e.g. change in price of alternative goods, income, tastes and preferences, population)

What characterizes a risk lover?

A person will always take a "fair bet" (i.e. one where the expected value of gain equals the expected value of the loss)

What production term describes two goods whose cross-price elasticity of supply is negative?

Supplementary

What term describes goods, such as those used in national defense, which play an important role in the survival or well being of a nation?

Strategic

A change in demand is graphically represented by what change in the demand curve?

A shift

What line shows all possible combinations of goods that a consumer can buy for a given money income?

Budget Line

How do we refer to the area above the supply curve and below the price?

Producer Surplus

The income elasticity of demand for normal goods has what sign?

Positive

If the price that a competitive firm gets for its product does not change as output does, the firm's demand curve is also which other curve?

Marginal Revenue

How are the changes in price and quantity related if the price elasticity is -1?

Quantity chang is equivalent (=) to price change

Assume that TC (Q) = 100+25Q. What will be the change in total costs if a company decides to increase production form 100 to 110 units?

Total costs will increase by $250

What graphic device is most requently used to illustrate the contract curve in an exchange economy?

Edgeworth Box

A freeze in Florida results in significant loss in orange production; however, total revenues for oranges increases. What does this indicate about the elasticity of demand for oranges?

The demand is inelastic

The idea that as a goods price goes down it is perceived as being of lower quality and people buy less of the good is called:

Veblen Effect

In the 1970's, President Nixon imposed price cielings. What was the result of this action?

The quantity demanded exceeded the quantity supplied OR shortages existed in the market

Why is the production possibilities curve of 2 goods usually drawn concave from the origin?

Not all resources can be used equally efficiently in the production of each good

What represents the different combinations of 2 products that a business can efficiently produce with its existing resources and technology?

Production Possibilities (Frontier)

What characterizes a normal good?

A positive relationship between quantity and income or income elasticity >=1

The slope of an indifference curve is called:

Marginal Rate of Substitution (MRS)

If it pays to produce at all, production should always occur where Marginal ________ equals Marginal ______

Revenue; Cost

What is the slope of an isoquant called?

Marginal rate of technical substitution (MRTS). If they say marginal rate of substitution, ask them to expand or be more explicit

What type of solution to an indifference curve problem exists if one product is not preferred at all?

Corner Solution

What curve represents the set of efficient (or Pareto optimal) allocations among individuals in an exchange economy?

Contract Curve

Given a classical three-stage production function, during what stage is the elasticity of production less than zero?

Stage III

Who was one of the earliest (1766-1834) contributors to modern environmental thought and depicted an unhappy world with growing population and declining food supplies?

Thomas Malthus

What is the difference between the long-run average varibale cost and the long-run average total cost?

Zero (everything is variable in the LR)

What term refers to the specific cost of hiring one worker for one hour?

Wage

Economic thought that suggests the government ought to play a very limited role in economic activity is reffered to as:

Laissez Faire

A new or modified product launched under an already successful brand name is called:

Brand extension

What is the term for a long run shift or movement in the time series, observable over several periods of time?

Trend

An undifferentiated marketing strategy is based upon what assumption about the target market?

The market has no individual segments and is best served with a single marketing mix

In terms of dollar value, what country represents the largest U.S. agricultural export market?

Japan

What per unit cost declines as long as output increases?

Average Fixed Cost

What term describes the unemployment rate when the economy is in long-run equilibrium?

Natural Unemployment Rate

Name two instruments of monetary policy used by the Central Bank.

Rewerve requirement, discount rate, open market operations, moral suasion (or jawboning)

In Canadian agricultural policy, what does the acronym WGTA stand for?

Western Grain Transportation Act

What is the request for additional money that a futures trader is required to deposit if an adverse price move significantly devalues his or her initial deposit?

Margin Call

What is the line that shows the combinations of two products that can be produced with a given level of inputs?

Production Possibilities Curve

The Engel Curve shows the relationship between quantity purchased of a particular good or service and ________

Income

Opportunity cost is defined as the ______ to a resource in its next best alternative use.

Return

In dynamic markets (decisions over time) firms will invest up to the point at which the marginal rate of return from the last investment is equal to the ______

Interest rate

In perfectly competitve markets prices are freely determined by the interaction of ________

Supply and Demand

At the inflection point, total product changes from increasing at an increasing rate to increasing at a decreasing rate, what is the corresponding point on the marginal product curve?

maximum

Define the addition to total output attributable to the addition of one unit of the variable input in the production process, all other inputs remaining constant.

Marginal Product

Given a production function where TPP= 1000+200Q-2Q^2, what is the level of Q?

Q=50

From a production function, the change in total variable costs divided by the change in output is defined as ____?

Marginal Cost

The ______ is the locus of combinations or bundles of goods that can be purchased if the entire money income is spent. Its slope is the negative of the price ratio.

Budget Line

The curve that defines the current limits on production capabilities in a given economic situation due to the physical restraints on resource supply and technology?

The production possibilities frontier curve (PPF or PPC)

According to Adam Smith, each individual's pursuit of their own self interest leads to the general good of society. Name this concept.

The Invisible Hand

What is the shape of an indifference curve that exhibits diminishing marginal returns?

Convex

What term describes the situation in which a fall in the price of a normal good causes an increase in the quantity purchased along an individual's indifference curve?

Substitution Effect

If Scott prefers A to B and he prefers B to C, then he must also prefer A to C according to what axiom of choice?

Transitivity

The marginal value product of a factor of production is defined as:

marginal (physical) product X output price

The range of production in which the long run average total cost is constant as output increases is called:

constant returns to scale

An oligopoly that consists of two firms is called what?

A duopoly

_____ ______ often develop in the presence of price controls, when goods are sold illegally at a price higher than the legal maximum?

Black Markets

______ ______ is equal to the maximum amount a consumer is willing and able to pay for a particular good less the amount he or she actually pays for it.

Consumer Surplus

What type of utility cannot be quantified but only measured through rankings of preferences?

Ordinal Utility

A(n) _____ ____ represents the different combinations of two inputs or factors of production that can be purchased with a given sum of money.

Isocost line (budget line is not acceptable)

What depicts the relationship between the equilibrium quantity purchased of a good (typically food) and the consumer's level of income?

an Engel Curve

When a firm sells a product for less than it cost the firm to produce it, this action is generally known as?

Dumping

____ costs include a frim's ordinary expenses in production, such as payroll, raw materials, etc., while ______ costs include the opportunity costs of the firm's resources.

Explicit, Implicit

What type of costs are irrevocable and should not be used to influence current decisions?

Sunk Costs

What is the incorrect assumption that what works for parts of the economy, such as households or businesses, also works for the aggregate, or macroeconomy?

Fallacy of Composition

The change in total cost due to a one unit change in the rate of output is ________

Marginal Cost

A tax on imported goods is called a(n) ______.

Tariff

A net loss in total surplus is called a(n) _____ loss.

Deadweight

If income increases, the demand for an inferior good _____.

Decreases

Long run economic profits of a firm in a perfectly competitive market equal ______.

Zero