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Flashcards in economics 301-375 Deck (75):
1

For a price ceiling to achieve its purpose, it must be imposed (above or below) market equilibrium

below

2

For a price floor to achieve its purpose, it must be imposed (above or below) market equilibrium

above

3

A shortage is a normal result of a price (floor or ceiling)

ceiling

4

If the government sets a minimum exchange price above market equilibrium, resulting in a quantity supplied in excess of quantity demanded, what has been imposed?

a price floor

5

If the government sets a maximum exchange price below market equilibrium, resulting in a quantity demanded in excess of quantity supplied, what has been imposed?

a price ceiling

6

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

none

7

prices go up on demidec CDROM software, and overall revenue stays the same. this means that demand is=n this price range is...

unit elastic

8

the price of one good goes up. as a result, the demand for another good decreases. what is the relationship of the two goods?

the two goods are complements

9

if demeand for a good is relatively inelastic, then an increase in price will

have little effect on quantity demanded

10

if price elasticity is less than one, then demand is

inelastic

11

demand increases and supply decreases. what happens to equilibrium price

increases

12

what are substitute goods?

goods that can replace one another or that are made with essentially the same resources

13

what are complementary goods

goods that are purchased together sch that the demand for one can directly affect the demand for the other. the classic exanple: hot dogs and hot dog buns

14

demand decreases. what happens to equilibrium quantity & price

decreases

15

demand increases and supply increases. what happens to equilibrium price

the change is indeterminate

16

the number of remote control producers shrinks. the supply of remote controls...

decreases

17

remote control producers learn that due to government intervention, the price of remote controls will increase in four weeks. short term supply....

decreases

18

what is the difference between a superior good and a normal good?

nothing- they are the same

19

explain the budget constraint

consumers are forced to sacrifice some wants for others because of limited income

20

what is a durable good

a good for which consumers have more elastic demand. if income changes or prices rise, consumers can reasonably hold off on buying durable goods, such as yachts, houses cars

21

after competition, what happens to demand for flashcards?

it decreases

22

when a person's income goes up, he buys more tomatoes. tomatoes are what kind of good?

normal or superior goods

23

in which type of economic system are consumers free to buy anything they can afford?

a pure market system

24

what type of incentive is an individuals right to private property

positive and non monetary

25

prior to 1978 what type of of economic system was in place in china?

a mostly command system

26

what is market power?

a firms ability to raise prices without losing customers

27

in which type of economic system are sellers free to produce and sell anything they expect to be profitable

a pure market system

28

in a command economy, who or what answers the question of "who will receive the benefits of production?"

a central authority

29

in a mixed market economy, how is the question "what to produce" answered?

by a combination of central authority and market forces

30

what type of economic system was in place in the former soviet union?

a centrally-planned system

31

what are the three main types of economic systems?

traditional, planned/command, and mixed market systems

32

since 1978 what has been the general nature of the changes in chinas economic system?

the government has begun to relinquish some of its strict control and allow an increasing amount of market-oriented economic activity

33

what kind of of industry is most likely to be a target of economic regulation?

any industry in which a monopoly seems possible or desireable

34

what is a concentrated industry?

an industry in which only a few firms are responsible for the majority of sales

35

(Absolute/Comparative) advantages depend on relative costs.

comparative (Economics by Paul Samuelson, p835)

36

In a market economy, who or what answers the question of "who will receive the benefits of production"?

market forces

37

What type of economic system is in place in North Korea?

a mostly command system

38

What are the three basic economic questions that every system must answer?

What to produce (and in what quantity)? For whom to produce? How to produce?

39

What is the most competitive kind of pure economic system?

a market system

40

In a command ecnomy, how is the question of "what to produce" answered?

by a central authority

41

In which type of economic system are all resources owned by the public?

a command/planned system

42

In a market economy, what is a firm's incentive to eliminate competition?

to increase market power

43

In which type of economic system do individuals have government protection for their rights to private property?

a mixed market system

44

In a mixed market economy, who or what answers the question of "who will receive the benefits of production"?

either by a central authority or by market forces

45

What is the least competitive kind of our economic system?

a command/planned economic system

46

What type of economic system is in place in India?

a mixed market system, largely based on tradition

47

what is the intended consqeuence of a decision?

the desired result of a decision; the reason the decision is made

48

what is the unintended consequence of a decision?

the unwanted and inexpected result of a decision

49

what would cause an economic decision to be difficult to make?

if there were only a small difference between the benefits and the costs of the alternatives

50

what is the present consequence of a decision?

the result that happens when the decision us made or soon afterwards

51

what type of consequences would a president facing reelection MOST be concerned with in regards to his actions?

the present consequences

52

what two factors of production are non human resources?

land and capital

53

what is a trade off

a decision to give up something in order to have something else

54

what is the basic economic problem

scarcity

55

in a market economy who or what answers the question of how to produce

either by a central authority or by market force

56

in a command economy who or what answers the question of how to produce

a central authority

57

do economists think people act out of self interest

yes

58

many production possibilties frontiers compare the production of capital and ....... goods

consumer

59

true or false- self interest is the same as selfishness

FALSE

60

self interest is a result of the value of (public/private) property

private

61

when a nation moves from one point on its production possibilities curve

not all resources are being used efficiently the economy could produce more but it is not doing so

62

describe the shape of a production possibility curve for two goods that use the same productive inputs

a straight line

63

why does the production possibility curve have a downward slope

any increase in the production of one good decreases the production of the other

64

the trade off between guns and ..... is often used to refer to the choice between military and civilian goods

butter

65

how does the law of increasing opportunity cost affect the shape of a typical production possibilities curve

it causes it to bow outward

66

a graph that shows all the combinations of guns and butter that a nation can produce is an example of what type of curve

a production possibility curve

67

typically, a nation's production possibility curve is bowed (inward/outward)

outward

68

the production possibility curve us bowed outward due to the law of (increasing/decreasing) opportunity costs

increasing

69

if the production possibilities of two goods can be represented graphically as a straight line what can we infer about the relationship between the two?

the two goods use the exact same combination and amount of productive inputs

70

the supply curve shiftsto the left. is there more or less produced at any given price?

less

71

true or false- a change in the price of substitute goods changes demand for a good

TRUE

72

the slope of the demand curve is

negative

73

what is a non durable good?

a good for which the consumers have mainly inelastic demand. although income may change or prices may rise, consumers cannot sacrifice many non-durable goods

74

the prices of substitutes and complementary goods affect the (supply/demand) for a good

demand

75

cost of production affect (supply/demand) in the market for a good

supply