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Terms in this set (60)
You are looking at the market for blue jeans. consider these two things happening seperately
1. The price of cotton, an input to blue jeans, increases
2. The income of buyers of blue jeans increases, and blue jeans are a normal good. What happen to the supply and demand curve
#1 will shift the supply curve left and #2 will shift the demand curve right
The demand for your product is P=640-6Q. The supply of your product is P=64+2Q. Assume your market is in equilibrium. What is the consumer surplus
15,552
The difference between allocative efficiency and productvie efficiency is that...
Productive efficiency means that
goods/services are produced at the lowest possible cost
and
Allocative efficiency means that goods/services are produced in accordance with consumers' preferences
You are looking at the market for Apple Pies. Consider these two things happening separately
1. The price of cherry pies, a demand subs. for apple pies increases
2. The bakers of apple pies install new ovens, improving technology used for making apple pies
Whcih will shift
the supply of apple pies to the left
Niether 1 or 2
What does the term "ceteris paribus" mean?
All other things held constant
You are looking at the market for tortilla chips, consider these two things happening at the same time
1. The price of salsa decreases
2. The price of corn, an input to tortiall chips
increases
What willl we see in the market for tortilla chips regarding P&Q
A higher equilibrium pricer and we coannot say about equilibrium quantity
Your demand equation is P=190-2Q and your supply equation is P=10+3Q. Market is at equilibrium. Calculate equilibrium P&Q. Now assume the sellers in this market expect the price to increase in the future. After any/all curves have shifted which of the
following is most likely to be the NEW quantity in the market? Why?
a 40
b 48
c 32
d 54
32
Supply curve will shift left so less supply
Assume 32 is your Q at equilibrium and your demand equation is P=190-2Q and your supply equation is p=10=3Q what is the consumer surplus in this market
Consumer surplus of 1024
P=190-2Q and P=10+3Q Q=36. If a price ceiling of $100 is establishhed in this market what will we see as a result
a shortage of 15 units
Product X and Y are compliments. if P of product Y increases, what will we see in the market for product X recagding demand, increase or decrease?
Demand shift left, which is a decrease in demand
Looking at market for cable t.v. You open the paper and read 1. All cable t.v. companies have upgraded their networks (improved technology) and, at the same time the price of satellite t.v., a subs. for cable t.v., has decreased. In the market for cable tv we will see demand and suppy
Demand shift left and supply shift right
***The price of cotton, an input to blue jeans, has decreased. At the same time, the makers of blue jeans have installed new tech. In the market for blue jeans after any/all curves have shifted what will we see
a lower equalibrium price and a higher equalibrium quantity
If sellers of hoverboards expect price to decrease in future supply will shift _____ today and if buyers of hoverboards expect the price to decrease in the future we will see demand shift ____ today
shift right; shift left
***YOur demand eqn is P=140-Q and your supply eqn is P=20+3Q. $20 unit tax is placed on the seller of this good. where is the majority of the burden
The majority of the burden of this $20 tax willl fall on the seller of this product
The market for running shoes, that market is in equilibrium. Now assume the makers of running shoes introduced
new/improved tech for making shoes, after any/all curves have shifted what happens to
consumer surplus
producer surplus
economic surplus
CS increased
PS increased
ES increased
Product X and Y are complements' if the price of Y increases the demand curve for X will shift....
left
A normative statement
opinion
A positive statement
fact
Which is the best example of a product/service that is excludable but nonrival
A. new pair of running shoes
B. An outdoor fireworks display
C. A movie you can stream form Netflix
D. starbucks latte
C.
The demand for chili chees fritos would be more _____ than the demand for snack chips in general
elastic
What percent of ppl in the U.S do not have health insurance and is this % increasing, decreasing, or staying the same
10% decreasing
You have product X, you know product X is an inferior good. now you also have product Y, and when product Y decreased, demand for product X increased, What do we know for sure are they substitutes or complements
Product X and Y are complements
if X (an inferior good) and Y are complements what do we know about the income elasticity of demand for X
and
the cross-price elasticity between X and Y
negative
and negative
elasticity of demand eqn
Q2-Q1
-------
avg Q2 and Q1
------------------
P2-P1
-------
avg P2 and P1
Price elasticity for Product A is .60
Price elasticity for Product B is 1.25
The Q for A is 450 and P for A is $40
The Q for B is 250 and the P for B is $35
which products price would you increase to increase revenues, and increase the price by 20%. which of the following comes closest to the
new Q that will be demanded of that product after the price increase
A. 230
B 96
C 212
D 422
B 96
Revenue eqn
price*units sold
which were factors that were and were not key drives of increasing health care
1. individuals are treated in emergency froom if they are not uninsured
2. doctors must pay for
malpractice insurance
3. increased buereaucracy
all NOT key factors
Prodcut Z exhibits a negative externality so what would you do to incorporate this externality in reality
placing a tax on this good
if 1.11 is the price elasticity of demand and the price elasticity of supply is .70. then where does the "burden" fall if a tax is placed on this good
The 'burden' would fall on the seller
match countries to healthcare
third party system
socialized medicine
single payer
universal insurance
Japan
Uk
Us
Canada
US - 3rd party
UK - socialized medicine
Canada - single payer
Japan - Universal
If income elasticity of deman is a positive number and is small like, .09, what do we know
normal good and a necessity
Demand curve is P=240-4Q, what is the price elasticity of demand for this good as the price changes from 64 to 56
.31
The Affordable Care Act requires what of all employers
employers with more than 200 full time employees must offer health insurance to their employees
When one party to a transaction has more information than the other party AND USES THIS INFO TO TAKE ADVANTAGE of the party with less information
Adverse Selection
if your product is a necessity and is also a small part of the consumers' budgets, how would you price your product to increase revenues
increase price because demand is inelastic
market failure
when the market... left to its own... fails to produce the best/optimal output
Which can be described as non-rival but excludable
Fish in the ocean
mcdonalds cheeseburger
national defense
a toll road
toll road
Assume a country is engaged in free trade, and then either a tariff/quota is placed on imports. Which is most likely to happen
-tariff will reduce PS, compared to free trade, quota wont
-tariff will increase CS, compared to free trade, qouta wont
-a tariff will reduce Q imported, compared to free trade, quota will not
-none will occur
none will occur
What are the 4 sources of compartitive advantage
Relative abundance of labor
External Economics
Natural Resources & Climate
Technology
fixed costs are 40. When Q=8. total costs =450. Q=9 marginal cost =13. what is the AVC when Q= 9
47
Greece can produce 100 tons of wine or 60 tons of olives what is the opportunity cost of producing 1 ton of olives to ___ tons of wine
1.67 tons of wine
laor is your only variable input. $300 wage per worker. when you are emplying 5 workers total output is 375 units. What is the AVC when you are producing this level of output.
$4
marginal product is the change in ______ divided by the change in ______ , while marginal cost is the change in _____ divided by the change in ______
change in total quantity
--------------------
change in total output
change in total costs
-----------------------
change in total output
none of the above on test
in long-run phonomenon where your avg total costs, or cost per unit, decreases as you produce more output
economies of scale
Largest countires to whome U.S exports in order
Canada Mexico China
****you own a pizza restuarant. you hire as many cooks as you want. if you higher 2 cooks the AP is 36 pizzas. if you hire a 4th cook the MP of the 4th cook is 12 pizzas. Upon hiring 4 cooks your TP is ______ and your AP is ______
120;30
your firm is a coffee shop. you Fixed costs are the shop, $1200. your variable costs are the workers , $160. employing 3 workers your average product is 48 cups of coffee your average total cost is
about $11.67
an arguement in support of tariffs and quotas
tariffs are a good way to increase government revenues and reduce the deficit
Barriers to entry include
Economies of scale
control of key inputs
government grants like patents
assume your firm operates in a perfectly competitive market. you are producing output of 12 ( Q=12). and at that level of output, P=$22 and FC $136, and VC=$80. what is profit per unit at output = 12
4
which do these two statements describe
1. individual firm faces a downward sloping curve
2. firm will (if allowed) charge P > MC
between monolistic competiton and monopoly
describes both monolistic competition and monopoly
That market for lawn mowing and trimming service in KC metro area is considered.....
monolistic competiton
in perfect competiton the firm will "shut down" if the mark price is below what
Average Variable Cost
if the herfindahl index for this market is 2500>x>1500 and a merger is proposed between two firms than
the merger might be challenged depending on the change to the herfindahl index
If a firm is gaining profits and operates in a monopolistically competitive market what will happen next in the market
new firms will enter the market
1. the market for electricity in LFK ( not regulated)
2. the market for fast food in LFK
3. the market for overnight delivery service in LFK (to the east coast
if these 3 markets were placed in order of "most" market power first to
"least" market power third what would be the correct order
1 3 2
four firm concentration ratio
% of the market controlled by the 4 largest firms in the market
The supply curve for the perfectly competitive firm is also the firms
marginal cost curve
because in monopolistic competiton products are differentiated even after all the firms have entered the market P will
not equal MC
because P=ATC>MC
1. Easy to enter the market as a seller
2. Individual firm's MR curve is downward sloping
which describes perfect competion
1 but not 2
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