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Economics Flashcards

0
Q

What is diseconomies of scale??

A

Increases in cost per unit as a result of inefficient use of technology or a poor mix of the factors of production

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1
Q

4 types of profits??

A

Accounting
Monopolistic
Economic
Normal

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2
Q

What is an oligopoly?? Example

A

A form of imperfect competition characterized by the domination of a few large companies.

Oil
Airplanes

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3
Q

What is an monopoly?? Example

A

An extreme form of imperfect competition characterized by the total domination of the market by one company.

Public schools and utilities

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4
Q

Two aspects of an oligopoly??

A

Compete for product differentiation, quality, and advertisement

Form of imperfect competition

Domination over a few large companies

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5
Q

Two aspects of a monopoly??

A

Extreme form of imperfect competition

No perfect substitutions for a product

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6
Q

Name three thing that economic competition brings about??

A

Drives lower prices
Duplication
Waste
Use of advertisement

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7
Q

Three aspects of imperfect competition??

A

Downward demand curve
Product differentiation
Use of advertisement

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8
Q

Where does pure competition mainly exist in ( what industry)?

A

Agriculture

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9
Q

What type of demand curve does a company face under pure competition??

A

Flat, perfectly elastic

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10
Q

Who does the US trade with the most??

A

Canada

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11
Q

What are a few products that have a weak product differentiation between brands?

A

Gasoline

Wheat

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12
Q

Three aspects of pure competition??

A

Products are homogenous
Have a large number of independent buyers and large number of independent sellers
Buyers and sellers must be free to enter and exit the market

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13
Q

Once you have a business up and running, _____________ cost are ___________.

A

Marginal costs are low.

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14
Q

Under pure competition, a sellers demand curve is perfectly flat. What does that mean??

A

Elastic

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15
Q

What is economies of scale??

A

Reduction in cost per unit as a result of the use of improved technology or a better mix of the factors of production.

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16
Q

When does an entrepreneur know when he has reached the right mix of all the factors of production??

A

Marginal revenue = marginal cost

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17
Q

The power of advertising is most common under what form of competition??

A

Imperfect competition

Oligopoly

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18
Q

What type of profit is difficult to put a dollar amount to because it varies from business to business??

A

Normal profit

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19
Q

What type of profit is also called pure profit??

A

Economic profit

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20
Q

What do you call the type of profit that allows an investor or potential entrepreneur to compare one industry with another by looking at profit as a trade-off for taking risks??

A

Return of equity

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21
Q

If there is no shift in the demand curve, the quantity demanded will demand on ___________.

A

Price

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22
Q

What is a factor that doesn’t influence demand??

A

Supply

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23
Q

What is elasticity of demand??

A

A situation in which the quantity demanded varies greatly to a price change.

24
Q

What is inelasticity of demand??

A

A situation in which the quantity demanded varies little when the price changes

25
Q

In what direction does the supply curve shift??

A

Rises upward and to the right

26
Q

What is supply??

A

The amount of goods and services producers are willing and able to put up for sale at all possible prices.

27
Q

A supple curve shift indicates a change in the amount of goods and services that will supplied with no change in __________.

A

Price

28
Q

The price where the amount sellers are willing to supply equals the amount buyers are willing to buy is called??

A

Equilibrium point or called the market price

29
Q

Communism??

A

Economic system which all private property has been abolished and turned over to the people as a whole.

30
Q

Socialism??

A

Economic system which the essential means of production are owned and directed by the state in the name of the people.

31
Q

A term used by the communists to mean “the capitalist class” is??

A

Bourgeoisie

32
Q

The process by which private industry is taken over by the state??

A

Nationalization

33
Q

One way in which entrepreneurs maximize production??

A

Specialization

34
Q

Opposite of compounding??

A

Discounting

35
Q

What is the law of diminishing returns??

A

A principle of production that states when one factor of production is increased while the others are held constant.

36
Q

What is comparative advantages??

A

A principle that a nation should specialize in producing and exporting those goods which it can produce most efficiently relative to other nations.

37
Q

What is a round lot purchase of stock??

A

100 shares

38
Q

What is a traditional economy??

A

An economy based on old customs and habits.

39
Q

What is a command economy??

A

An economy based on the dictates of a central authority rather than individual choice.

40
Q

What is a market economy??

A

An economy based in free choice by consumers and producers.

41
Q

What is an opportunity cost??

A

The value of what we give up in order to have something else.

42
Q

If the supply of oil is increased in the market place, what usually happens??

A

The price decreases

43
Q

Inflation as measured by the CPI, has averaged approximately what percent over the past 60 years???

A

3 %

44
Q

In a free market economy, who determines the price for goods and services??

A

Consumers

45
Q

What does it mean if a company’s production possibilities graph shows more points below the line than on the line??

A

The resources are used inefficiently.

46
Q

When an investor talks about the ‘risk free’ rate on an investment, what investment is he or she referring to??

A

Government bonds

Treasury bills

47
Q

In what type of economy might you find products for which there are no buyers and with shortages of products that are in great demand?

A

Command economy

48
Q

Difference between simple and compound interest???

A

Simple interest earns interest on principal only

49
Q

Two major drawbacks to socialism

A

Heavy tax burden

Welfare

50
Q

3 characteristics of a mutual fund??

Mutual fund NAV formula

A

Low risk
Open- ended
Liquid

Liabilities - assets / total number of shares outstanding

51
Q

List 3 parts to calculate the cost of a car loan?

A

Cost ( amount borrowed)
Interest rate
Loan term

52
Q

Example of command economy?

A

Capitalism

53
Q

Price and quantity demanded for a particular good or service are…..

A

Inversely related

54
Q

What should have paid the highest interest rate???

A

30 year treasury bond

55
Q

In countries like china and India, you would expect a ________ intensive method of production??

A

Labor intensive

56
Q

Specialization can be defined as the method of production that emphasizes more narrowly defined operations to the ___________ of others??

A

Exclusion

57
Q

If you think that a particular company’s stock value is going to fall, you would???

A

Short sell the stock

58
Q

You’ve just won the NJ state lottery and you were elected to receive your winnings in an up front lump sum. The lottery commission wants to use the _______ _________ rate possible in order to pay you the _________ amount of money today.

A

Highest, discount, least

Cooking (2 decks)

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