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Economics Midterm #2 > Practice Exam #2 > Flashcards

Practice Exam #2 Flashcards

1
Q

E=_

A

Totally Elastic

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2
Q

E>1

A

Relatively Elastic

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3
Q

E=1

A

Unit Elastic

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4
Q

E<1

A

Relatively Inelastic

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5
Q

E=0

A

Totally Inelastic

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6
Q

True or False: An airplane is an example of a homogeneous product

A

FALSE

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7
Q

True or False: Assume the demand for tea in England would be able to increase its TR by burning part of the tea crop in a year of large production.

A

TRUE

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8
Q

True or False: If a small rise in the price of movie tickets leads to a decrease in ticket sales, the demand is relatively inelastic.

A

FALSE

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9
Q

True or False: If the government taxed the sale of rare cigars, the seller would bear the burden of the tax.

A

TRUE

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10
Q

True or False: Marginal utility was first studied by Edgeworth.

A

False, Menger

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11
Q

Monopolists prefer to minimize AC.

A

FALSE

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12
Q

Quantity demanded represents the total quantity sold.

A

FALSE

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13
Q

The availability to close substitutes tends to increase the elasticity of demand.

A

TRUE

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14
Q

The break-even point occurs when TR=VC

A

FALSE

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15
Q

The perfect competitor operates in the area of increasing MC.

A

TRUE

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16
Q

The perfect competitors’s MR does not vary with sales volume.

A

TRUE

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17
Q

TU is maximized when MY equal 0.

A

TRUE

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18
Q

When MC increases, AC will be increasing.

A

FALSE

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19
Q

When output equals zero, the variable cost will also equal zero.

A

TRUE

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20
Q

A unilateral transfer of payments form the government to the business sector.

A

Subsidy

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21
Q

To maximize output with given inputs.

A

Efficiency

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22
Q

What are the two systems of logic?

A

Inductive and Deductive

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23
Q

Quotas, Import Licenses and Exchange Control are examples of what?

A

Non-tariff trade barriers

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24
Q

Assuming what is true for the part to be true to the whole

A

Fallacy of Composition

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25
Q

Could a shift in your production possibility curve result from changes in production factors?

A

Yes

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26
Q

An autonomous economic activity with beneficial spreading effects

A

External Economy

27
Q

If these effects are detrimental?

A

External Diseconomy

28
Q

Paying an employee to produce nothing

A

Feather-Bedding

29
Q

A French Mercantilist

A

Colbert

30
Q

Who favor tariffs and subsidies?

A

Mercantilists

31
Q

A series of numbers increasing at a constant rate Ex: 1,2,4,8

A

Geometric

32
Q

Paying a premium to another party to bear your risk?

A

Hedging

33
Q

What numbers assign rank?

A

Ordinal

34
Q

A legal system that safeguards private property and permits free enterprise without government interference

A

Capitalism

35
Q

A simultaneous transaction in two or more markets, buying in the cheap one selling in the dear (high price) one?

A

Arbitrage

36
Q

Utility received but not paid for?

A

Consumer Surplus

37
Q

What are three factors of production?

A

Land, Labor, Capital

38
Q

Which one created wealth; land, labor or capital?

A

Land

39
Q

A single firm which can control the demand for a product

A

Monopoly

40
Q

A reverse auction where the offering price begins high and goes down

A

Dutch Auction

41
Q

To minimize inputs with the given output

A

Economize

42
Q

School of thought that agriculture is the source of all real growth, productivity, and wealth

A

Physiocracy

43
Q

Who believed in Just Price Just Wage?

A

St. Thomas Aquinas

44
Q

What is the equation for elasticity?

A

P_Q/Q_P

45
Q

What is the equation for profit?

A

TR-TC

46
Q

TC is the sum of what two costs?

A

Fixed Cost and Variable Cost (FC+VC)

47
Q

The total satisfaction derived from all units consumed is called what?

A

Total Utility (TU)

48
Q

What is the central bank in the US called which controls all demand and time deposits?

A

Fed

49
Q

What is the quantity theory of money?

A

Wealth=Goods+Services

50
Q

Demand is a function of what?

A

Utility

51
Q

Quantity demanded is a function of what?

A

Price

52
Q

Supply is a function of what?

A

Cost

53
Q

The consumer’s responsiveness to a price change is called?

A

Elasticity

54
Q

The change it total utility (TU) caused by the consumption of one additional unit is called

A

Marginal Utility

55
Q

What is the term used if either Total Utility and Marginal Utility is negative?

A

Disutility

56
Q

What is the equation for Total Cost (TC)?

A

Fixed Cost (FC)+Variable Cost(VC)

57
Q

What is the equation for Average Cost?

A

Total Cost/Q

58
Q

What is the equation for AVC?

A

VC/Q

59
Q

How do you calculate Total Revenue?

A

PXQ

60
Q

When is profit maximized?

A

MC=MR

61
Q

Where does MC intersect AC?

A

@Minimum AC

62
Q

In the long run, excess profits are expected to increase or decrease?

A

Decrease

63
Q

What is the break-even point?

A

Total Revenue (TR)=Total Cost (TC)

64
Q

What is the shutdown point?

A

Total Revenue(TR)=Variable Cost(VC)

Economics Midterm #2 (2 decks)

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