ECON CHAP 9&11

Question 1

Tariff

Answer 1

A tax imposed by a government on imports of goods into a country

Question 2

Imports

Answer 2

Goods and services bought domestically but produced in other countries

Question 3

Exports

Answer 3

Goods and services produced domestically but sold in other countries

Question 4

China

Answer 4

Is the worlds largest exporter

Question 5

The U.S is a major exporter of goods and services

Answer 5

This trade is less important to the U.S economy because of our size

Question 6

Comparative Advantage

Answer 6

The ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors. The country has a lower relative cost than other countries.

Question 7

Opportunity Cost

Answer 7

The highest valued alternative that must be given up to engage in an activity

Question 8

Absolute Advantage

Answer 8

The ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

Question 9

Autarky

Answer 9

A situation in which a country does not trade with other countries

Question 10

Terms of trade

Answer 10

The ratio at which country can trade its exports for imports from other countries

Question 11

Not all good and services can be traded internationally

Answer 11

Medical services for example

Question 12

Production of many goods involves increasing opportunity cost

Answer 12

So small amounts of production are likely to take place in several countries

Question 13

Tastes for products differ

Answer 13

Countries might have comparative advantage in different subtypes of products

Question 14

Some individual firms and consumers

Answer 14

Will lose out due to international trade
In the example- China would lose wheat farm workers and U.S would lose smartphone firms and workers

Question 15

Comparative Advantage can derive form a variety of sources

Answer 15

1) Climate and natural resource
2) Relative abduance of labor and capital
3) Technology
4) External Economics

Question 16

Free trade

Answer 16

Trade between countries that is without government restrictions

Question 17

Overall economic surplus falls by C+D:

Answer 17

Deadweight Loss

Question 18

Quota

Answer 18

Are imposed unilaterally (one country imposes restrictions on another country), whereas VERs are negotiated agreements (countries work together).

Question 19

Technology

Answer 19

The processes a firm uses to turn inputs into outputs of good and services

Question 20

Technological Change

Answer 20

A positive and negative change in the ability of a firm to produce a given level of output with a given or set quantity of inputs

Question 21

Short run

Answer 21

The period of time during which at least one of a firms inputs is fixed

Question 22

Long run

Answer 22

The firm can vary all of its inputs adopt new technology and increase or decrease the size of its physical plant

Question 23

Variable Cost

Answer 23

Costs that change as outputs changes

Question 24

Fixed costs

Answer 24

Costs that remain constant as output changes

Question 25

Total costs

Answer 25

The cost of all the inputs a firm uses in production

Question 26

Total cost= Fixed cost + Variable Cost

Answer 26

TC= FC+ VC TC/Q=FC/Q + VC/Q

Question 27

In the long run all of a firms costs are

Answer 27

Variable costs

Question 28

Explicit Costs

Answer 28

Costs that involve spending money

Question 29

Implicit costs

Answer 29

Nonmonetary opportunity costs

Question 30

Economic Depreciation

Answer 30

Decrease in resale value

Question 31

Production Function

Answer 31

The relationship between the inputs employed by a firm and the maximum output it can produce with those inputs

Question 32

Average Total Cost (no change)

Answer 32

Divide the total cost of the pizzas by the quantity of pizzas to get the average cost of the pizzas.

Question 33

MC formula (Has change)

Answer 33

MC=Change in total cost/ Change in output

Question 34

By hiring another worker tasks could be divided up allowing for some

Answer 34

Specialization

Question 35

Division of labor

Answer 35

Splitting a job into smaller interconnected tasks

Question 36

Marginal product of labor

Answer 36

The additional output a firm produces as a result of hiring one more worker holding everything else constant

Question 37

Law of Diminishing Returns

Answer 37

The principle states at some point adding more variable inputs such as labor to the same amount of a fixed input such as capital will cause the marginal product of the variable input to decline

Question 38

If Average cost looks like U shaped-

Answer 38

It follows the Marginal Cost curve

Question 39

Average Product of Labor

Answer 39

Total output by a firm/ the quantity of workers.

Question 40

Long Run Average Cost

Answer 40

Shows the lowest cost at which a firm can produce a given quantity of output in the long run when no inputs are fixed

Question 41

Economies of scale

Answer 41

The firms long run average costs falls as it increases the quantity of output it produces

Question 42

Minimum Efficient Scale

Answer 42

The level of output at which all economies of scale are exhausted

Question 43

Constant Returns to Scale

Answer 43

The situation in which a firms Long Run Average Costs remains unchanged as it increases output

Question 44

Diseconomies of scale

Answer 44

(Upward curve) A situation in which a firms Long Run Average Costs rise as the firm increases output

Question 45

Protectionism

Answer 45

Saving jobs, Protecting domestic industries, protecting national security