What is a price floor in economics?

A minimum price below which prices cannot fall

Define price elasticity.

%Change in Quantity / %Change in Price

Explain tax incidence.

How the burden of a tax is distributed between buyers and sellers

What are compliment goods?

Goods that are often used or consumed together

Define productivity in an economic context.

The quantity of goods and services produced from each unit of input

How would you define efficiency in economic terms?

Maximizing output with the least input

What do economists mean by opportunity cost?

The loss of the value of the next best alternative

What does equilibrium in a market mean?

When quantity supplied equals quantity demanded

The exam should be...

Short answer with multiple choice, I don't care, Just short answer

Define absolute advantage.

Producing more of a good with the same resources than others

How do you calculate Total Revenue?

Total Revenue = Price x Quantity

What is comparative advantage?

Producing a good at a lower opportunity cost than others

What do we need for a market to be perfectly competitive?

Symmetric Information, Free entry and exit, Firms are price takers, Identical Products

What is the market for land, labor, and capital known as?

Market for the Factors of Production

What is consumer surplus?

The difference between what we are willing to pay and what we actually pay

Goods produced domestically and sold internationally

What is an inferior good in economics?

A good whose demand increases when consumer income decreases

What does PPF stand for, and what does it show?

Productions Possibilities Frontier; it shows the maximum output possible

What is income elasticity?

%Change in Quantity / %Change in Income

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Midterm Exam 1 Review

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Questions 31

Answers

1
What is a price floor in economics?
A maximum price above which prices cannot rise
The level of inflation adjustment in pricing
A minimum price below which prices cannot fall
The average market price over time
2
Explain the law of supply using symbols.
P↑ -> Qs↑
Qs = P
Qs↑ -> P↑
P↑ -> Qs↓
3
Consumer surplus should be greater than producer surplus.
False
True
4
People are not motivated by incentives.
False
True
5
Define price elasticity.
%Change in Quantity / %Change in Price
Change in Quantity / Change in Price
Quantity x Price
%Change in Quantity / %Change in Income
6
Explain tax incidence.
The total amount of tax revenue collected by the government
The rate at which taxes must be paid to avoid penalties
The frequency at which taxes are reassessed and adjusted
How the burden of a tax is distributed between buyers and sellers
7
What are compliment goods?
Goods with no relation
Goods that are substitutes
Goods competing for the same market
Goods that are often used or consumed together
8
What is scarcity in economics?
Surplus of products
Limited resources
Unlimited wants
Equilibrium of supply and demand
9
Define productivity in an economic context.
Increase in market share
The usefulness of each employee
The quantity of goods and services produced from each unit of input
Total sales revenue
10
How would you define efficiency in economic terms?
Maximizing output with the least input
Lowering employee wages
Ensuring all products are sold
Achieving the highest revenue
11
What do economists mean by opportunity cost?
Interest on investment
Direct monetary loss
The loss of the value of the next best alternative
Total expenditures
12
What does equilibrium in a market mean?
When supply exceeds demand
When demand exceeds supply
When prices are fixed
When quantity supplied equals quantity demanded
13
The exam should be...
Short answer with multiple choice
I don't care
Just short answer
14
What do firms "buy" from households?
Land
All of the Above
Capital
Labor
15
Define absolute advantage.
Ability to sell at a higher price
Dominating the local market
Producing more of a good with the same resources than others
Importing goods at a lower cost
16
Can you explain what a marginal change is?
Total output change
Fixed cost variations
Large, sudden shifts
Small, incremental adjustments
17
How do you calculate Total Revenue?
Total Revenue = Quantity x Cost of Goods Sold
Total Revenue = Price x Quantity
Total Revenue = Price + Cost
Total Revenue = Profit x Quantity
18
What is comparative advantage?
Producing a good at a lower opportunity cost than others
Producing at the highest total cost
Leveraging exclusive resources
Cutting production time in half
19
This should be a normative statement.
True
False
20
A surplus is when quantity demanded is greater than quantity supplied.
True
False
21
What do we need for a market to be perfectly competitive?
Symmetric Information
Free entry and exit
Firms are price takers
Identical Products
22
What is the market for land, labor, and capital known as?
Commodity Market
Stock Exchange
Consumer Goods Market
Market for the Factors of Production
23
What is consumer surplus?
The difference between what we are willing to pay and what we actually pay
The taxable income left after all deductions are made
The additional cost of purchasing more than one unit of a good
The total profit earned by producers in a market
24
Explain the law of demand using symbols.
P↑ -> Qd↓
Qd↓ -> P↑
P↑ -> Qd↑
Qd = P
25
What is an export?
Goods produced internationally and sold domestically
Goods produced domestically and sold internationally
Goods traded within a local market
Services produced within a country
26
A PPF is a market.
False
True
27
A mattress and a pillow are substitute goods.
False
True
28
What is an inferior good in economics?
A low-quality good
A good whose demand increases when consumer income decreases
A product with a low price tag
A luxury item
29
What does PPF stand for, and what does it show?
Price Performance Framework; it shows optimal pricing
Product Procurement Formula; it shows supply chain efficiency
Potential Profit Figures; it shows maximum potential profit
Productions Possibilities Frontier; it shows the maximum output possible
30
What does WTP stand for in economics?
Wholesale Trading Price
Withdrawing Total Profit
Weighted Transaction price
Willingness to Pay
31
What is income elasticity?
Change in Quantity / Change in Income
%Change in Quantity / %Change in Price
%Change in Income / %Change in Quantity
%Change in Quantity / %Change in Income

Midterm Exam 1 Review Flashcards | StudBud