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MidTerm Prep Part 1 Flashcards | StudBud
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MidTerm Prep Part 1
MidTerm Prep Part 1
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1
The principal-agent problem is that?
the goals of the corporate managers may not match the goals of employees
Goals of corporate managers may not match the goals of the corporate owner
it is costly for the corporate owners to obtain a corporate charter
the federal government taxes both corporate profits & dividends paid
2
Macroeconomics deals with:
The economy as a whole
Financial health and wellness within markets
Decisions made by households
Decision make in small mom and pop shops
3
Creative destruction can be defined as:
New products destroy existing products
Market systems destroy economies
Lack of innovation and imagination
Unwillingness to grow as an organization
4
Microeconomics deals with:
Inflation
The economy as a whole
Unemployment
Individual Units
5
Determinant of Supply includes all of the following except:
Technology
Producer expectations,
Number of buyers in the market
Resource prices, taxes and subsidies, prices of other goods
6
The four general categories of economic resources are:
Land, Labor, Capital, Entrepreneurial Ability
Land, Currency, Capital, Taxes
Entrepreneurial Ability, Labor, Rules, Regulations
Land, Labor, Socialism, Capital
7
The term government failure refers to what?
Government failing to bail out big businesses
Inefficiencies in resource allocation caused by problems public sector
Government taxing on public goods
The governments limited involvement in capitalism
8
What is the market effect of a substitute good?
If price for 1 falls, demand for the other increases
Consumption increases as income rises
Consumption declines as income rises
If price for 1 falls, demand for the other falls Price rises, demand rises
9
What is the market effect of a complimentary good?
When price of one falls, the demand for the other increases
Consumption declines as income rises
When the price of one falls, the demand for the other falls
Consumption increases as income rise.
10
What does a demand curve show us?
Shows the relationship between price and quantity supplied/demanded
Shows the relationship between quantity demanded and total income to spend
Show the relationship between supply and demand
Shows the relationship between economic rule and regulation
11
A market is:
Must be within a business to be considered a market
A place that brings together buyers and sellers
Buying and selling run entirely by the government
A place where the bartering is the medium of exchange
12
What is the market effect of a normal good?
Consumption increases if income, also falls if income increases
Consumption stays relatively the same regardless of income variants.
Consumption increases when income increases, falls when income decreases
Consumption decreases when income increases, goes up when it decreases
13
Determinant of Demand include all of the following except:
Number of buyers
Technology
Tastes and Consumer Expectations
Income and prices of related goods
14
Private goods are distinguished by what?
No government involvement in the process
They strict adherence to government rules and regulations
Rivalry and Excluability
NonRivalry and Nonexcludability
15
Provide an example of a quasi-public good
Military Protection
Firefighters and EMS
Library
Restaurants
16
The economic perspective and economizing problem can be explained how?
The inability to make good choices due to scarcity.
Balancing wealth and finances
Government regulations to protect the consumer
Scarcity means we have to make rational choices. Done through utility & MA
17
Which statement is true regarding a price ceiling:
A legally established minimum price for a good or service
Occur quite frequently in the United States
A legally established maximum price for a good or service
Normally set above equilibrium
18
What is the market effect of a inferior good?
Scarcity limits the amount of inferior goods in the market
Consumption increases as income rises
Consumption declines as income rises
Consumption is always lower than a normal good
19
Laissez Faire "Let it Be" Capitalism means:
Full government involvment
Command Market
Limited government involvment
Socialism
20
Your education helps you, but also benefits society. This is called?
Labor
Inclusion
Excludability
Positive Externality
21
Opportunity cost can be defined as:
Cost of products within the market
The next best alternative you didn't pick
Only available in certain markets
Opportunities to pay for product in installments
22
Which is true about a price floor?
A legally established maximum price for a good or service.
A legally established minimum price for a good or service
Price floors are only temporary
Normally set at a price below the equilibrium price.
