economics 226-300 Flashcards Preview

Academic Decathlon > economics 226-300 > Flashcards

Flashcards in economics 226-300 Deck (75):
1

If demand for a good is highly elastic, then an increase in price will _______.

significantly decrease quantity demanded

2

What is the formula for price elasticity of demand?

PED = % change in quantity demanded / % change in price

3

If price elasticity of demand is greater than one, then demand is _____.

elastic

4

Pens and pocket protectors are complementary goods. The supply of pocket protectors decreases. What happens to the equilibrium price of pens?

decreases - the price of pocket protectors increases, which causes the demand for pens to decrease; as a result, the price of pens decreases

5

What does price elasticity of demand tell us?

Price elasticity of demand tells us how much quantity demanded will be affected by a change in price.

6

The equilibrium point is at the intersection of what two curves?

the supply curve and the demand curve

7

What does it mean for a market to "clear"?

A market "clears" at the price where the quantity demanded equals the quantity supplied, so there is no surplus or shortage.

8

What effect does a price floor set over the equilibrium price have on a market?

Suppliers supply more, and consumers demand a lesser quantity. A surplus results.

9

Which two curves interest at the point of market equilibrium?

supply and demand

10

What does the market "do" at the point of equilibrium?

it "clears"

11

What is the term for the quantity at which buyers and sellers ask the same price?

equilibrium quantity

12

What usually results from a price floor?

a surplus

13

In a market, what is the "common language" that helps a buyer and seller agree on the value of the resources, goods, and/or services to be exchanged?

price

14

Define "market equilibrium."

The point at which quantity exchanged equals quantity supplied.

15

How do price signals affect markets?

Price signals are instrumental to markets. Depending on prices, consumers decide whether or not to consume and businesses decide whether or not to produce

16

True or false: A market consists of an exchange that takes place at a given location and at a particular time.

FALSE

17

What effect does a price ceiling set below the equilibrium price have on a market?

Suppliers supply less, and consumers demand a greater quantity. A shortage results.

18

A surplus is a normal result of a price (ceiling/floor).

floor

19

What usually results from a price ceiling?

a shortage

20

What do you call a buyer and a seller, exchanging resources, goods, and/or services?

a market

21

What effect does a price ceiling set over the equilibrium price have on a market?

none

22

Rent control is a price (ceiling/floor).

ceiling

23

To keep farmers in business, the government often sets a price (ceiling/floor) on agricultural goods.

floor

24

What is the common economic language that makes comparison of values easier?

prices

25

What determines price in free market economy?

te interaction of supply and demand

26

What is another term for the equilibrium price?

the market-clearing price

27

Does a market have to occur in a physical place?

No

28

Equilibrium is best represented as a (curve/straight line/single point)/

single point

29

What effect does a price ceiling have on demand?

none

30

As the price of a good increases, what happens to the quantity demanded of that good?

quantity demanded decreases

31

In general, as the price of a good decreases, quantity demanded of that good (increases/decreases/stays the same).

increases

32

As price increases, the quantity demanded (increases/decreases).

decreases

33

in a free market, (self-interest) results from the value of private property.

self-interest

34

do economists think people are selfish?

no

35

what law can explain the bowed-out shape of a typical production possibilities curve?

the law of increasing opportunity cost

36

what will cause a production possibilities curve to shift inward?

a decrease in the amount of a factor of production

37

what will cause a production possibilities to shift outward?

an increase in a factor of production

38

describe the shape of a typical production possibilities curve.

bowed outward from the origin

39

what must an economy do in order to consume at a point beyond its production possibilities curve?

it must engage in trade

40

list two qualities of the points along a possibilities curve

1. all points are attainable and 2. all points are efficient

41

what dos PPC stand for?

production possibilities curve

42

what happen to a production possibilities curve when the amount of a factor of production is increased?

the curve expands outward

43

what happens to a production possibilities curve when the amount of a factor of production diminishes in availibility?

the curve shifts inward

44

in which type of economic system are all resources owned by private fims and individuals?

a pure market system

45

is economic regulation more likely to favor producers or consumers?

producers

46

what type of economic system is in place in cuba?

a mostly command/ planned system

47

What country has the most market-oriented economic system in the world?

the United States

48

what drives self-interest in a market economy?

the value of private property and ownership

49

if two countries have similar resources, but one has a command economic system and the other has a market system, which country will most likely have the higher income per capita?

the country with a market system

50

what type of firm has the greatest amount of market power?

a monopoly

51

what country has the most centrally-planned economic system in the world?

north korea

52

in which type of economic system is a person who owns no resource most likely to starve?

a pure market system

53

"pure capitalism" is another name for which type of economic system?

pure market economy, free enterprise system or free market system

54

since the former soviet union dissolved, what type of economic system has been in place in the majority of the resulting independent republics?

mixed market systems; most are trying to increase privatization

55

what does the herfindahl index measure?

the sales concentration among firms in a given industry; the degree of competition in the industry

56

In a market economy, ho is the question of "what to produce"answered?

by market forces

57

what is a horizontal merger?

a merger of two or more firms in the same market

58

What type of economic system is in place un the U.S.?

a mixed market system

59

What is a trade deficit?

a condition in which a nation spends more on imports than what it receives for its exports

60

How does an embargo differ from a tariff or a quota?

Tariffs and quotas are intended to help domestic producers, but embargoes are intended to hurt foreign consumers

61

How do two nations trade when they each use different currencies and different price structures?

Each nation uses an exchange rate to determine the value of its goods in terms of the other country's currency

62

How do political leaders tend to act toward foreign competition with domestic industries?

Many political leaders urge other countries to engage in free trade, but promote protectionist policies in their own countries

63

What is a product market?

a market in which goods or services are bought and sold

64

What kind of money is a gold coin?

commodity money

65

What is a market system?

an economic system in which a group allows market forces and the behavior of buyers and sellers to influence economic decision-making

66

What is an import?

a good produced in a foreign country but purchased by domestic consumers

67

How do rational people decide how to specialize?

People specialize in the production of the good they can produce for the lowest opportunity cost

68

What does a price floor have on demand?

none

69

As the price of a good increases, what happens to the demand for that good?

nothing

70

Define comparative advantage

the ability of one country to produce a good at a lower opportunity cost (with a greater efficiency relative to other goods) than another country

71

True or False: a change in price results in a change in the quantity demanded

TRUE

72

True or False: a change in price results in a change in the demand

FALSE

73

A minimum wage is a price floor or ceiling

floor

74

Movement along the demand curve represents a change in (demand or quantity demanded)

quantity demanded

75

As price increases, the quantity supplied (increases or decreases)

increases