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Contemporary Economics Unit Three: The Market Economy Flashcards | StudBud
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Contemporary Economics Unit Three: The Market Economy
Contemporary Economics Unit Three: The Market Economy
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An #economics #Quiz! covering the concepts of #supply #demand and #Equilibrium
Flashcards
25 cards
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Questions
25
Answers
1
Which situation shows the law of diminishing marginal utility at work?
willingness to pay more for every succeeding slice
Each slice of pizza you buy gets smaller.
purchasing succeeding slices of pizza if they cost less.
willingness to pay same price for each succeeding slice
2
Real income refers to
your income minus taxes and benefits.
how much money you actually earn
your income minus taxes.
how much your income can buy.
3
Allocative efficiency occurs when
management is well-organized.
no raw materials are wasted.
labor works faster.
firms produce the output that is most valued by customers.
4
Which of these is an example of a fixed cost in the short run?
the electricity used to operate machinery
the cost paid to deliver finished products to a warehouse
the wages paid to the firm’s production workers
the salary paid to the firm’s security guard
5
One of the reasons consumers choose substitutes is that
they are the same price and there are more of them.
no one can tell the difference.
they are relatively cheaper.
they are made in Japan.
6
Market competition promotes
allocative efficiency but not productive efficiency.
neither productive efficiency nor allocative efficiency
productive efficiency but not allocative efficiency.
both productive and allocative efficiency
7
A firm has productive efficiency if it
employs more workers than the competitors.
produces at the lowest possible cost per unit.
produces more products than the competitors
sells at the lowest price in the market.
8
Which of the following is NOT a determinant of supply?
technology used to make the good
producer expectations
consumer expectations
the number of sellers in the market
9
law of supply states that the quantity of a good supplied is usually directly related to its
total cost
price
elasticity
opportunity cost
10
making economic decisions, people have limits to the amount of information they can act on.
limited willpower.
bounded rationality.
rational self-interest.
unlimited willpower.
11
A firm’s profit-maximizing level of output occurs where
marginal revenue equals marginal cost.
total revenue equals marginal cost.
marginal revenue equals total cost.
average revenue equals average cost.
12
The term
quantity supplied
refers to
the number of individual producers.
the amount offered for sale at a specific price.
the entire supply schedule.
the total amount supplied by all producers in the market.
13
The demand for products or services for which there are no substitutes tends to be
quite inelastic.
perfectly elastic.
somewhat elastic.
unit elastic.
14
Any price that is below a product’s equilibrium price will result in a
surplus that will force the price to rise.
shortage that will force the price to fall.
shortage that will force the price to rise.
surplus that will force the price to fall.
15
Elasticity, in economic terms, is another word for
reconciliation.
responsiveness.
adjustment.
adaptability.
16
When price decreases, a producer becomes __?__ to supply the good.
more willing but less able
less willing but more able
less willing and less able
more willing and more able
17
Which of the following elasticities represents inelastic supply?
2.1
0.5
1.2
1.0
18
When personal incomes fall, there will be
movement up the wage earners’ demand curves for products
shift left for their demand curves for normal products
movement down their demand curves for normal products.
shift right for their demand curves for normal products.
19
In order to have an effect, a price floor must be set
as soon as the product goes on the market.
above the equilibrium price
below the equilibrium price.
after the product reaches its equilibrium price.
20
Elasticity of supply indicates
how responsive producers are to a change in price
how quickly producers can provide a product.
how many products are in stock.
how much the product costs.
21
Which item would provide you with the least marginal utility?
a second pair of sneakers
a second drink of water when you’re thirsty
a second copy of the daily newspaper
a second car
22
Typically, car dealers locate near each other in order to
reduce their transaction costs.
set prices as high as they can.
drive the other dealers out of business.
create equilibrium in the car market.
23
Market demand reflects the demand of
all suppliers in the market.
an individual consumer
all consumers in the market.
a single supplier
24
In a competitive market, if price exceeds marginal cost, the firm will likely
decrease units supplied
go out of business.
maintain current supply
supply additional units.
25
What is an important indicator about the relative scarcity of a product or service?
how well known it is
its cost of production
the “invisible hand”
its market price
