Econ exam 2

If the change in price is 20% and the change in quantity
demanded is 10%, what type of elasticity is present?

Inelastic

If the price elasticity of demand for a product is _______, it is
considered elastic

Greater than 1

For negotiations to eliminate an externality to be successful

Both parties must agree on a mutually beneficial trade

Which of the following is most likely to be overconsumed due to unclear or unenforceable property rights?

Donuts sitting in the common study area in the dorm

The ability of a product to provide satisfaction is known as

Utility 

Marginal utility can be

Positive, negative, or zero

Generally, accounting profits are

greater than economic profits, because accounting profits do not consider implicit costs

Average fixed cost

declines continually as output expands

Decision-making assumptions 

1.        Rational

2.        Rank prefernces

3.        Limited income

4.        Know prices

what type of a good is a cheeseburger?

private good because it is 

Define Coase Theorem

If a property right is well defined and transaction costs are low, resources will naturally gravitate to their highest-valued use, regardless of who owns the property right.

Define Total Utility

The total satisfaction or happiness received
from the consumption of a good, service, or combination of goods and services

Define marginal utility

The additional satisfaction or happiness
received from the consumption of an additional unit of a good or service.

Budget Line

A line showing the different combinations of two products that can be purchased with a given budget and at a known set of prices.

total cost =

fixed cost + variable cost

Implicit cost

The opportunity costs of using owned resources; costs for which no monetary payment is explicitly made.

Explicit cost

Monetary payments made by individuals, firms, and governments for the use of land, labor, capital, and entrepreneurial ability owned by others. Also known as
accounting costs.