Test 1 Agricultural Economics Flashcards
(113 cards)
1
Q
t/f the word equality means distributing society’s resources in the most efficient manner
A
false
2
Q
what is an example of a tradeoff
A
choosing not to attend a concert so that you can study for your exam
3
Q
t/f efficiency means everyone i the economy should receive an equal share of goods and services
A
False
4
Q
t/f equality refers to how the pie is divided and efficiency refers to the size of the economic pie
A
True
5
Q
what would happen to accountants opportunity cost if their wages rose?
A
their opportunity cost would go up
6
Q
what is market failure
A
a situation in which the market does not allocate resources efficiently
7
Q
what do you normally give up when you increase equality?
A
efficiency
8
Q
what is one way the government can improve market outcomes
A
ensure that individuals are able to own and exercise control over their scarce resources
9
Q
how do rational people make decisions at the margin
A
by comparing marginal cost and marginal benefits
10
Q
why would Olivia not factor in expense of applying when deciding between 2 schools
A
that expense has already been accounted for and is in the past
11
Q
economists view normative statements as…
A
prescriptive, making a claim about how the world ought to be
12
Q
what allows countries to consume outside their production frontier
A
trade
13
Q
t/f opportunity cost refers to how many inputs a producer requires to produce a good
A
false
14
Q
what can you not have in both goods if you already have the comparative advantage in a market
A
absolute advantage
15
Q
self sufficiency
A
can only consume what one produces
16
Q
what allows for gains in trade
A
the differences in opportunity cost `
17
Q
t/f trade allows a person to obtain goods at prices that are less than that person’s opportunity cost because each person specializes in the activity for which he or she has the lower opportunity cost
A
True
18
Q
t/f if one producer is able o produce a good at a lower opportunity cost than some other producer, then the producers with the lower opportunity cost is said to have an absolute advantage in the production of that good
A
false
19
Q
t/f international trade can make some individuals within a country worse off, even as it makes the country as a whole better
A
true
20
Q
Formula for finding quantity opportunity cost
A
other good divided by asked about good
21
Q
formula for finding time opportunity cost
A
asked about good divided by other good
22
Q
in what kind of market are all goods offered for sale exactly the same
A
perfectly competitive
23
Q
t/f all goods and services are sold in a perfectly competitive market
A
false
24
Q
t/f a movement upward and to the left along a given demand curve is called a decrease in demand
A
false
25
t/f an increase in the price of pizza will shift the demand curve for pizza to the left
false (goes long demand curve)
26
t/f a decrease in the price of a complement will shift the demand curve for a good to the left
false
27
quantity supplied for sellers
the amount that sellers are willing and able to sell at a particular price
28
what does a decrease in supply do
shirts the supply curve to the left
29
t/f when a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now
false
30
t/f in a market the price of any good adjusts until quantity demanded equals quantity supplied
true
31
t/f when a supply curve or a demand curve shifts, the equilibrium price and quantity change
true
32
t/f an increase in the price of maple syrup will decrease both the equilibrium price and the quantity in the market for pancakes on a suply curve
true
33
what does an increase in quantity demanded do
results in a movement downward and to the right along the demand curve
34
if an increase in income decreases the demand for a good then the good is a...
inferior good
35
a decrease in the price of a good will...
decrease quantity supplied
36
a decrease in quantity supplied...
results in a movement downward and to the left along a fixed supply curve
37
what do market economies use to allocate scarce resources
supply and demand
38
in a market economy supply and demand determine
both the quantity of each good produced and the price at which it is sold
39
a competitive market is one in which
there are so many buyers and so many sellers that each has a negligible impact on the price of the product
40
in markets prices move toward equilibrium because of
the actions of buyers and sellers
41
scarcity
the limited nature of societies resources
42
economics
the study of how society manages its scarce resources
43
efficiency
the property of society getting the most it can from its scarce resources
size of economic pie
44
equality
the property of distributing economic prosperity uniformly among the members of society
how the pie is divided into individual slices
45
opportunity cost
whatever must be given up to obtain some item
46
rational people
people who systematically and purposefully do the best they can to achieve their objectives
47
marginal change
a small incremental adjustment to a plan of action
48
incentive
something that induces a person to act
49
market economy
an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services
50
property rights
the ability of an individual to own and exercise control over scarce resources
51
market failure
a situation in which a market left on its own fails to allocate resources efficiently
52
externality
the impact of one person's actions on the well-being of a bystander
53
market power
the ability of a single economic factor (or small group of factors) to have a substantial influence on market prices
54
productivity
the quantity of goods and services produced from each unit of labor input
55
inflation
an increase in the overall level of prices in the economy
56
business cycle
fluctuations in economic activity, such as employment and production
57
circular-flow diagram
a visual model of the economy that shows how dollars flow through markets among households and firms
58
production possibilities frontier
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
59
microeconomics
the study of how households and firms make decisions and how they interact in markets
60
macroeconomics
the study of economy-wide phenomena, including inflation, unemployment, and economic growth
61
positive statements
claims that attempt to describe the world as it is
| facts
62
normative statements
claims that attempt to prescribe how the world should be
| opinion
63
absolute advantage
the ability to produce a good using fewer inputs than another producer
64
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
65
imports
goods produced abroad and sold domestically
66
exports
goods produced domestically and sold abroad
67
market
a group of buyers and sellers of a particular good or service
68
quantity demanded
the amount of a good that buyers are willing and able to purchase
69
law of demand
the claim that, other things equal, the quantity demanded of a good falls when then price of a good rises
70
demand schedule
a table that shows the relationship between the quantity demanded
71
demand curve
a graph of the relationship between the price of a good and the quantity demanded
72
normal good
a good for which other things equal and increase in income leads to an increase in demand
73
inferior good
a good for which other things equal an increase in income leads to a decrease in demand
74
substitutes
two goods for which an increase in the price of one leads to an increase in the demand for the other
75
complements
two goods for which an increase in the price of one leads to a decrease in the demand for another
76
quantity supplied
the amount of a good that sellers are willing and able to sell
77
law of supply
the claim that other things equal the quantity supplied of a good rises when the price of the good rises
78
supply schedule
a table that shows the relationship between the price of a good and the quantity supplied
79
supply curve
a graph of the relationship between the price of a good and the quantity supplied
80
equilibrium
a situation in which the market price has reached the level at which quantity supplied equals quantity demanded
81
equilibrium price
the price that balances quantity supplied and quantity demanded
82
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
83
surplus
a situation in which quantity supplied is greater than quantity demanded
84
shortage
a situation in which quantity demanded is greater than quantity supplied
85
law of supply and demand
the claim that the price of any good adjusts to bring the quantity supplied and the quantity demanded for that good into balance
86
elasticity
a measure of the responsiveness of quantity supplied to a change in one of its determinants
87
price elasticity of demand
a measure of how much the quantity demanded of a good responds to a change in the price of that good computed as the percentage change in quantity demanded divided by the percentage change in price
88
total revenue
the amount paid by buyers and received by sellers of a good computed as the price of the good times the quantity sold
89
price elasticity of supply
a measure of how much the quantity supplied of a good responds to a change in the price of that good computed as the percentage change in quantity supplied divided by the percentage change in price
90
t/f the price elasticity of demand is defined as the percentage change in price divided by the percentage change in quantity demand
false
91
t/f the flatter the demand curve that passes through a given point, the more elastic the demand
true
92
t/f the demand for soap is more elastic than the demand for dove soap
false
93
t/f the demand for bread is likely to be more elastic than the demand for solid gold bread plates
false
94
t/f if a firm is facing elastic demand, then the firm should decrease price to increase revenue
true
95
t/f demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount
false
96
what happens to slope and elasticity as we move downward and to the right along a linear, downward sloping, demand curve
slope remains constant but elasticity changes
97
would milk have an elastic or inelastic demand
inelastic
98
the greater the price elasticity of demand, the...
greater the responsiveness of quantity demanded to a change in price
99
moving downward and to the right along a linear demand curve, we know that total revenue...
first increases, the decreases
100
t/f government policies that improve equality usually increases efficiency at the same time
false, decrease
101
t/f an individual deciding how to allocate her limited time is dealing with both scarcity and tradeoffs
true
102
t/f the demand curve is the upward sloping line relating price and quantity demanded
false, downward
103
t/f two countries can receive gains from trade even if one country has the absolute advantage in the production of both goods
true
104
t/f to produce 100 bushels of wheat, Farmer A requires fewer inputs than Farmer B does. We can conclude that Farmer A has an absolute advantage in producing wheat over Farmer B
true
105
t/f individual demand curves are summed vertically to obtain the market demand curve
false, horizontally
106
t/f the flatter the demand curve that passes through a given point, the more elastic the demand
true
107
t/f along the elastic portion of a linear demand curve, total revenue rises as price rises
false, falls
108
t/f elasticity measures how responsive quantity is to changes in price
true
109
"allowing all individuals access to Medicare and Medicaid for health insurance is the fair thing to do" is an example of what kin of statement
normative statement
110
what is not a determinant of demand
the price of a resource that is used to produce the good
111
a movement along the demand curve might be caused by a change in what
the price of a good or service that is being demanded
112
lead is an important input in the production of crystal. If the price of lead decreases, then we would expect the supply of crystal to....
increase
113
suppose you are in charge of setting prices at a local sandwich shop. The business needs to increase its total revenue, and your job is on the line. If the demand for sandwiches is elastic, you...
should decrease the price for sandwiches
