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Econ Test 1
Quizzes
35
Economics
Undergraduate 3
09/24/2013

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Term
Economics can best be described as the study of:
Definition
How people, institutions, and societies make choices under conditions of scarcity.
Term
The term “scarcity” in economics can refer to the fact that:
Definition
No country can produce enough products to satisfy everybody’s economic wants.
Term
The study of how a single business firm sets its prices would fall under the study of:
Definition
Microeconomics
Term
Which of the following would be primarily determined in the resource market?
A. The price of compact discs.
B. The wage rates for electricians.
C. The number of automobiles produced.
D. The amount of money in circulation.
Definition
B
Term
The opportunity cost of a new national park is the:
Definition
Alternative uses for the land and funding for the park.
Term
Suppose a consumer has an income of $16, the price of an apple is $2, and the price of a banana is $1. Which combination is on the consumer’s budget line?
Definition
5 apples and 6 bananas
Term
Economic systems differ according to what two main characteristics?
Definition
Ownership of resources and methods of coordinating economic activity.
Term
A market system is best characterized by:
Definition
The private production of most capital goods.
Term
In the product market, Businesses sell __________
Definition
goods and services to households.
Term
an institution or mechanism that brings together buyers and sellers.
Definition
A market
Term
The demand curve shows the relationship between:
Definition
Price and quantity demanded.
Term
According to the law of demand, if the price of toy cars falls from $2.00 to $1.75:
Definition
A larger quantity of toy cars will be demanded.
Term
price elasticity of demand is a measure of the:
Definition
Responsiveness of quantity demanded to a change in price.
Term
Which is a characteristic of a product with relatively inelastic demand?
Definition
The good is regarded by consumers as a necessity.
Term
The price elasticity of demand increases (becomes more elastic) with the length of the period to which the demand curve pertains because:
Definition
Consumers will be better able to find substitutes.
Term
Which product is most likely to be price inelastic?
A. Pepsi
B. EyeGlasses
C. iPods
D. Riding Lawn Mower
Definition
eye glasses
Term
Graphically, the market demand curve is :
Definition
The sum of all quantities for each individual demand.
Term
demand for Neapolitan ice Cream is likely quite elastic because:
Definition
Other flavors of ice cream are good substitutes for this particular flavor.
Term
Atog says he would buy one cup of coffee per day regardless of the price. If this is true, then Atog’s demand for coffee is represented by Demand Curve:
Definition
Inelastic Good
Term
The law of supply indicates that:
Definition
Producers will offer more of a product at higher prices than they will at lower prices
Term
A market is in equilibrium:
Definition
If the amount producers want to sell is equal to the amount consumers want to buy.
Term
The supply curve for cars will be more elastic the:
Definition
Longer the time interval considered
Term
In the past few years the demand for donuts has greatly increased. This increase in demand might best be explained by:
Definition
A change in buyers tastes for donuts.
Term
If there is a shortage of product X:
Definition
The price of the product will rise.
Term
Assume a drought in the Great Plains reduces the supply of wheat. Since wheat is a basic ingredient in the production of bread, we would expect:
Definition
The supply of bread to decrease.
Term
When an economist says that the demand for a product has increased, this means that:
Definition
Consumers are now willing to purchase more of this product at each possible price.
Term
An improvement in production technology will:
Definition
shift the supply curve to the right
Term
The law of supply indicates that:
Definition
Producers will offer less of a product at low prices than they will at high prices.
Term
Suppose that tacos and pizza are substitutes, and soda and pizza are complements. We would expect an increase in the price of pizza to:
Definition
reduce the demand for soda and increase the demand for tacos.
Term
In a competitive market the equilibrium price and quantity occur where:
Definition
The downward sloping demand curve intersects the upward sloping supply curve.
Term
There will be a surplus of a product when:
Definition
consumers want to buy less than producers offer for sale
Term
A decrease in demand means that:
Definition
The demand curve has shifted to the left.
Term
The supply for umbrellas will be more inelastic the:
Definition
Shorter the time interval considered.
Term
In which of these cases will the tax burden fall most heavily on the sellers of the good?
a. Cigarettes
b. Groceries
c. Private Airplanes
d. Utilities
Definition
C
Term
Suppose that in a particular market, the supply curve is highly elastic and the demand curve is highly inelastic. If a tax is imposed in this market, then
Definition
The buyers bear a greater burden of the tax than the sellers.
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