MicroEcon

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Equilibrium: a market condition that occurs at any price and quantity where the quantity demanded and the quantity supplied are equal.
Microeconomics: the branch of economics that studies decision making by a singles individual, household, firm, industry, or level of government.
What is a positive economic statement?: if the price of gasoline rises, a smaller quantity of it will be bought.
An increase in the price of grapefruit will work through substitution effect to cause?: a decrease in the quantity demanded of grapefruit.
A characteristic of the long run is?: there are no fixed inputs.
Why does voluntary exchange increase economic efficiency?: because neither the buyer nor the seller would agree to a trade unless they both benefit.
What is the difference between an increase in demand and an increase in quantity demanded?: An increase in demand is respresented by a rightward shift of the demand curve while an increase in quantity demanded is represented by a movement along a given demand curve.
Normal Good: any good for which there is a direct relationship between changes in income and its demand curve.
Externality: a cost or benefit imposed on people other than te consumers and producers of a good or service.
Opportunity Cost: the best alternative sacrificed for a chosen alternative.
On a production possibilities curve, the opportunity cost of good X in terms of good Y is represented by?: the movement along the curve.
Substitue Good: a good that competes with another good for consumer purchases.
Pollution from cars is an example of a?: negative externality.
Comparative advantage in the production of good occurs?: when an economy can produce that good at a lower opportunity cost than its competitors.
Which is when production reflects consumer prefernces?: allocative efficiency.
Implicit costs are the opportunity costs of using the resources of?: owners.
What is true about elasticity of demand?: demand is more elastic in a long time period than it is in a short time period.
A production possibilities frontier shows?: the maximum attainable combinations of two goods that can be produced with the available resources.
Short Run: a period of time so long that all inputs are variable.
Price Floor: a legally established minimum price a seller can be paid.
Capital: a resource that is the physical plants, machinery, and equipment used to produce other goods. They are goods that are human-made and that do not directly satisfy human wants.
The minimum of average total costs is?: at a larger level of output thatn the minimum of average variable costs.
Any point inside the production possibilities curve is an?: efficient point.
A public good may be defined as any good or service that?: allows users to collectively consume benefits.
What equation is true of profit?: economic profit=total revenue - implicit costs - explicit costs.
Land: a resource that is any natural resource provided by nature.
What is not a resource?: money
What is a problem inherent in centrally planned countries?: production managers do not satisfy consumer wants but the governments orders.
The income effect of a price change refers to the impact of change in?: the price of a good on the consumers purchasing power.
Economics: the study of how society chooses to allocate its scarce resources to the production of goods and services in order to satisfy unlimted wants.
Microeconomics approaches the study of economics from the viewpoint of?: individual or specific markets.
What product has the most inelastic demand?: necessities.
How are the fundamental economic questions answered in a market economy?: Househols and firms interact in a market to decide.
What is not an example of spending on goods and services in the circular flow model?: salaries paid to administrative assistants at your college.
Markte failure occurs when supply and demand curves only reflect?: private or market costs and benefits.
Ceteris Paribus: A latin phrase that means while certain variables change, "all other things remain constant".
What are the three fundmental questions that any economy must answer?: What will be produced, how will these goods be produced, and how can these goods be fairly distributed.
Who unltimately decides what goods and services will be produced in a market economy?: Consumers
A nation can accalerate its economic growth by?: adding to its stock of capital.
Scarcity exists?: in all countries of the world.
If a firm doubles all of its inputs in the long run and it finds its average cost of production has decreased, then it has?: economies of scale.
Long Run: a period of time so long that all inputs are variable.
Economics is the study of?: people making choices because of the problem of scarcity.
Explicit costs are payments to?: hourly employees, insurance companies, utility companies.
Macroeconomics: the branch of economics that studies decision making for the economy as a whole.
A person that brings together factors of production to produce goods and services in called an?: entrepenuer
To derive a market supply curve from individual producers' supply curves, you would?: sum up the curves horizontally, adding up the quantities supplied at each price.
If the equilibrium price set by supply and demand is lower than the price ceiling set by the government, the result will be?: that quantity demanded is equal to quantity supplied.
If a firm decreases plant size and finds that its long run average costs have decreased, then its?: diseconomies of scale are less.
What would cause the production possibilities frontier to shift?: an increase in the unemployment rate.
What assumptions about humans to economists make?: people are rational and respond to incentives.
What is a normative economic statement?: an analysis based on valued judgements, an individual or collective opinion (good,bad need, should, ought to).
An improvement is technology causes a?: firm to supply a larger quantity at any given price.
The relationship between different amounts of inputs and the resulting level of output is a?: production function.
Labor: a resource that is the mental and physical capacity of workers to produce goods and services.
Collusive action among producers creates higher prices for consumers because it?: allows producers to artificially restrict their supply.
A market consequence of a price floor program is that?: a surplus of the product will develop.
The range of possible values for the elasticity of demand value is?: zero to minus infinity.
Price floors are used as a method to?: ensure sellers a minimum price for their goods.
Increasing marginal opportunity costs along a bowed out production possibilities frontier occurs because?: some factors of production are not equally suited to producing both goods and services.
The production possibilities frontier illustrates what economic principle?: trade-offs, opportunity costs, technical effiency in production
What determines the price elasticity of supply value?: how quickly firms can change the quantity supplied when price changes.
Scarcity: occurs because of unlimted wants and limited resources available to fulfill the wants.
What would eliminate scarcity as an economic problem?: nothing, because scarcity cannot be eliminated.
What would result in an increase in total revenue?: price decreases when demand is elastic.
Fixed Input: any resource for which the quantity cannot change during the period of time under consideration.
When there are many good substitutes available for a good, demand tends to be?: relatively elastic.
Inelastic Demand: when demand of the elasticity coeffecient is less than 1.
When demand is price inelastic, a fall in price causes total revenue to fall because?: the increase in quantity sold is not large enough to offset the drop in price.
What decisions must be made by all economies?: what to produce, how to produce it, and for whom to produce it for.
Diseconomies of Scale: a situation in which the long run average cost curve rises as the firm increases output.
If average product is decreasing, we know that?: marginal product is smaller than average product.
Opportunity cost is?: the best option given up as a result of choosing an alternative.
Fixed inputs are factors of production that?: cannot be increased or decreased as output changes.
Complimentary Good: a good that is jointly consumed with another good.
Explicit Costs: payments to nonowners of a firm for their resources.
Fixed costs per unit of output in the short run?: fall as long as output is increased.
What is not a determinant of supply?: consumers' tastes and preferences.
A characteristic of the long run is?: all inputs can be varied, there are no fixed inputs.
What explains the effiency of markets?: markets promote competition and voluntary exchange.
The average total cost of production is the?: total cost of production divided by the level of output.
What is equity in economic affairs?: a fair distribution of economic benefits.
In the circular flow diagram?: households are suppliers in the factor market.
A horizontal demand curve is ?: perfectly elastic.
A good that provides external benefits to society has?: too few resources devoted to its production.
The price elasticity of demand for a horizontal demand curve is?: perfectly elastic.
Every society faces economic tradeoffs, which means?: producing less of one good means more of another good can be produced.
If one says that supply increases, it means that?: the supply curve has shifted to the right.
Marginal cost is U-shaped because of the?: law of diminishing returns.
Price Ceiling: a legally established maximum price a seller can charge.
In the short run if marginal product is at its maximum then?: marginal cost is at its maximum.
Which is when production is at the lowest possible cost?: productive efficiency.
What is not a basis of comparative advantage?: regulations against outsourcing to protect domestic industries.
If a firm is producing nothing in the short run, then?: fixed costs are positive.
Computer programs or software are an example of?: capital.
Marginal Analysis: An examination of the effects of additions to or subtractions from a current situation.
What is not a capital resource?: 100 shares of GM stock.
Implicit Costs: the oppurtunity costs of using resources owned by the firm.
A minimum wage that is set below the equilibrium wage will?: have no effect on unemployment.
Total revenue equals?: price per unti times the quantity sold.
An increase in consumer income, other things being equal, will?: shift the demand curve for an inferior good to the left.
What is the best example of a public good?: defense.
What does marginal analysis involve?: comparing marginal costs to marginal benefits.
What is a microeconimics question?: What factors determines the price of carrots?
Law of Diminishing Returns.: the principle that beyond some point the marginal product decreases as additional units of a variable factor ore added to a fixed factor.
Price elasticity of demand measures?: how responsive quantity demanded is to a change in price.
The short run marginal product of labor increasing at first then falling is an example of the law of?: diminishing returns.
Variable Input: any resource for which the quantity can change during the period of time under consideration.
A factor of production that generally is fixed in the short run is?: a building
Economics: the choices everybody makes to attain their goals, given their scarce resources.
Inferior Good: any good for which there is an inverse relationship between changes in income and its demand curve.
Elastic Demand: when demand of the elaticity coefficient is greater than 1.
The short run is?: as long as it takes a particular form to change its plant capacity.
The distribution of income primarily determines?: Who will receive the goods and services produced.
A reason marginal product of labor might increase ar first when more workers are hired in the short run is?: the more a worker does one task, the more proficient at the task the worker becomes.
An output combination is technically efficient if?: it is not possibel to produce more of one good without producing less of another good.
The law of demand states that the quantity demanded of a good changes, other things being equal, when?: the price of the good changes.
If the price of SUV's were to increase, one would expect?: the demand for gasoline to decrease

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Number of cards 118