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Economics Final
| Question | Answer |
|---|---|
| According to the law of Demand, all things constant, | As the price of a good raised, the quantity demanded falls |
| At a price at which quantity demanded exceeds quantity supplied, a ___ is present, which pushes the price ___ | shortage, upward |
| The basic economic problem concerns | how to satisfy our unlimited wants with our limited resources |
| When taking some action, the highest-valued alternative forgone is the | opportunity cost |
| If an increase in the price of a good good leads to a large reduction in quantity demanded, then demand is | elastic |
| A firm maximizes its profit when it produces an amount such that | MC=MR |
| If the government sets a price ceiling below the equilibrium price | a shortage will exist |
| Compared to a perfectly competitive market, a monopoly market will have | a lower quantity and higher price |
| Positive externalities cause the market to trade a quantity | smaller than the optimal level |
| Negative externalities cause the market to trade a quantity | greater than the optimal level |
| Which of the following will help solve the free-rider problem of public goods | the government should provide the good |
| wat is not a characteristic of a competitive market | firms set the price |
| A competitive firm will maximize profits when | MR=TC |
| a monopolistic firm will maximize profit when | MR=TC |
| Market failure can be caused by | externalities |
| Dioxin emission that results from the production of paper is a good example of a negative externality because | self-interested paper producers will not consider the full cost of the dioxin pollution they create |
| If a firm doubles its outputs, how would out find total revenue | add the amount received from moving from the first number of outputs to the last one. |
| Looking at a graph, if the price falls from one point to a point below the AVC curve, the firm finds | that it should shut down immediately |
| Looking at a graph, if the price of a product exceeds ATC and AVC | It can earn a positive profit |
| When a competitive firm decides to shut down, it is most likely because | price is below the firms average variable cost |
| The amount of money a wheat farmer could have earned if he had planted barley instead of wheat is | an implicit cost |
| When the marginal product of an input declines as the quantity of that input increases, the production function exhibits | diminishing marginal product |
| Diminishing marginal product suggests that the marginal | product of an extra worker is less than the previous worker's marginal product |
| Why is the MC curve U shaped? | law of diminishing returns |
| A consumer's willingness to pay directly measures | how much a buyer values a good |
| Consumer surplus in a market can be represented by | the area below the demand curve and above the price |
| The defining characteristic of a natural monopoly is | economies of scale over the relevant range of output |
| In order to sell more of its product, a monopolist must | lower its price |
Created by:
Alexandra7
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