IB economics Terms

If the price of a good is below the equilibrium price,

The atc crosses the mc at the minimum of the marginal cost curve.

The price elasticity of demand is defined as

If the price of a good is above the equilibrium price,

A price ceiling set below the equilibrium price causes a surplus.

pes tends to be more inelastic as the firm's production facility reaches maximum capacity.

equilibrium p of gas is €1.00 government places price ceiling on gas of €1.50 =shortage

The surplus caused by a binding price floor will be greatest if

apples & oranges are substitutes, increase in price of apples will decrease demand for oranges

Points on the production possibilities frontier are

satisfaction or pleasure that an individual derives from the consumption of a good or service

perfectly competitive market consists of products that are slightly different from one another

measure of the responsiveness of the demand for 1 good to a change in price for another good

total revenue received divided by the number of units sold

shows the maximum combination of outputs that can be produced by an economy in a given time

If tr is €100, explicit costs are €50, and implicit costs are €30, accounting profit equals €50

ped is defined as the %change in p of that good divided by the %change in qd of that good

Which of the following will not shift a country's production possibilities frontier outward?

If medicine is a necessity, the burden of a tax probably fall more on the buyers of medicine.

Point F represents

demand for aspirin over one month should be more elastic than demand for aspirin over one year

increase in p of pencils .10 -.20 reduces qd from 100 to 50 pencils, then d is unit elastic

increase in incomes leads to decrease in demand for camping equipment then equipment is

Which of the following would cause a demand curve for a good to be price inelastic?

The market supply curve is the horizontal summation of the individual supply curves.

If there is a shortage of a good, then the price of that good tends to fall.

additional cost of producing one more unit of output

If the qd of a good is sensitive to change in price of that good, demand is price inelastic.

limited availability of economic resources relative to societys unlimited demand

10% increase in MW is more likely to raise unemployment w/teenage than mid-career professional

An inferior good is one for which an increase in income causes a(n)

In general, a flatter demand curve is more likely to be

As we move from point A to point D,

as the price of a good rises the quantity supplied rises

Average total costs are total costs divided by marginal costs.

law of demand states that an increase in the price of a good decreases the demand for that good

minimum wage helps all teenagers because they receive higher wages than they would otherwise.

A binding price ceiling creates

A price floor set above the equilibrium price is a binding constraint.

Fixed costs plus variable costs equal total costs.

willingness & ability to purchase quantity of a good/service at a certain price & time period

The atc in the long run is flatter than the average total cost curve in the short run.

Which of the following is an example of a price floor?

market structure w/large # of firms, same good, price takers, no barriers & perfect knowledge

beneficial effects that are enjoyed by a third party when a good is produced or consumed

In general, a steeper supply curve is more likely to be

The demand for which of the following is likely to be the most price inelastic?

the aggregate revenue gained by a firm from the sale of a particular quantity of output

A perfectly competitive market has

Wages and salaries paid to workers are an example of implicit costs of production.

The efficient scale for a firm is the quantity of output that minimizes marginal cost.

market structure with few large firms that dominate the market. Many different prices or output

A price floor

If there are implicit costs of production, accounting profits will exceed economic profits.

the period of time in which at least one factor of production is fixed

matters of economics that are based upon opinion & are incapable of being proven right or wrong

The supply of cars for this week is likely to be more price inelastic than for this year.

the level of output where marginal cost is equal to average revenue.

total cost/quantity produced. the ____cost of production per unit

measure of the responsiveness of the quantity supplied of a good when a change in its price

TR equals the quantity of output the firm produces times the price at which it sells its output

If consumers expect the price of shoes to rise, an increase in the demand for shoes today

If the price of a good is equal to the equilibrium price,

an economy where the means of production are privetly held by individuals and firms.

Economic growth is depicted by

as a price of a good falls, quantity demanded increases

A tax collected from buyers has an equivalent impact to a same size tax collected from sellers.

increase in supply accompanied by a decrease in demand, a decrease in equilibrium price

demand for a good is price inelastic, an increase in price will increase tr in that market.

pencils and paper complements, increase in price of pencils causes demand for paper to decrease

If a supply curve for a good is price elastic, then

If the economy were operating at point E,

If economy is operating at point C, the opportunity cost of producing 20 units of bacon more is

If a demand curve is linear, the price elasticity of demand is constant along it.

A price floor in a market always creates a surplus in that market.

situation with only enough economies of scale available in a market to support one firm

all other things are being held equal

Which of the following statements is normative?

an indirect tax where a percentage is added to the selling price of each unit

An increase (rightward shift) in the demand for a good will tend to cause

A decrease (leftward shift) in the supply for a good will tend to cause

market structure with many buyers and sellers, producing differentiated products, no barriers

The shortage of housing caused by a binding rent control is likely to be more severe in the LR

Which of the following shifts the demand for watches to the right?

law of supply increase in price of a good increases quantity supplied of good along its curve

When marginal costs are below average total costs, average total costs must be falling.

That the supply curve for ice cream cones is upward sloping indicates that

Within the supply and demand model, a tax collected from the sellers of a good shifts the

Coke & Pepsi substitutes, increase in price of Coke will cause increase in equilibrium price

an economy where the means of production are owned by the state

matters of economics that can be proven to be right or wrong by looking at the facts

The law of supply states that an increase in the price of a good

When the price of a good is below the equilibrium price, it causes a surplus of this good.

The ultimate burden of a tax falls most heavily on the side of the market that is less elastic.

The burden of a tax falls more heavily on the sellers in a market when

When a production function gets flatter, the marginal product is increasing.

If firm has fc of production & mc increases, as the q produced ↑, corresponding atc is U-shape

golf clubs & golf balls are complements increase in price of clubs decrease demand for balls.

increase in price of blue jeans leads to decrease in demand for tennis shoes, they are

The law of demand states that an increase in the price of a good

The demand for a necessity such as petrol tends to be elastic.

government can choose to put tax burden on buyers by collecting tax from buyers not sellers

In a perfectly competitive market each seller has a negligible impact on the market price.

An increase in the price of steel will shift the supply of cars to the right.