ECON Final-2

question

Which one of the following states a central element of the economic way of thinking?

answer

Incentives matter-human choice is influenced in predictable ways by changes in personal costs and benefits

question

Economic choice and competitive behavior are the result of

answer

scarcity

question

which of the following would most likely increase the demand for peanut butter?

answer

a decrease in the price of jelly, a good that is often used with peanut butter

question

Three basic decisions must be made by all economies. What are they?

answer

what will be produced, how goods will be produced, and for whom the goods will be produced

question

In the _____, a firm's level of plant and heavy equipment (capital) is fixed.

answer

short run

question

when making output decisions in the short run, it is the firm's ______ that are most important.

answer

marginal costs

question

Which type of business is considered a hybrid?

answer

Limited Liability Company

question

Paul's Plumbing is a small business that employs 12 people. Which of the following is the best example of an implicit cost incurred by this firm?

answer

Accounting services provided free of charge to the firm by Paul's wife, who is an accountant

question

When will a price taker maximize profits in the short run?

answer

When MR=MC

question

In the long run, supply will become more

answer

elastic

question

which of the following is a competitive price taker?

answer

A Texas rancher that raises beef cattle

question

In the long run, price searchers will earn _____ economic profits.

answer

zero

question

Price discrimination can only occur when a price searcher is able to:

answer

identify groups of customers with different price elasticities of demand & prevent customers from re-trading the product

question

Price discrimination generally leads to _____ output and ________ gains from trade.

answer

More, Additional

question

Which of the following indicates that a firm operating in the highly competitive retail sector is providing goods and services that consumers value highly relative to their costs?

answer

The firm is highly profitable and its sales have grown rapidly

question

Which of the following best explains why monopoly is harmful from the viewpoint of economic efficiency?

answer

Units of output that are valued more highly than their cost will not be produced by a profit maximizing monopolist

question

Which of the following is not an obstacle to collusion for oligopoly markets?

answer

high barriers to entry

question

Which of the following is a policy option when a monopoly is present?

answer

Design antitrust policy to increase the number of firms in the industry

question

Human resources include

answer

skills, knowledge, and experience of workers

question

The price of hot dogs decreases. How will this affect demand for resources to produce hot dog buns?

answer

Increase resource demand

question

Principal-Agent Problem

answer

the incentive problem that arises when the lack of information makes it difficult for the purchaser (principal) to determine whether the seller (agent) is acting in the principal's best interest

question

Explicit Costs

answer

result when a monetary payment is made

question

Implicit Costs

answer

involve resources owned by the firm that do not involve monetary payment

question

Law of Diminishing Returns

answer

as more units of a variable resource are applied to a fixed resource, output will eventually increase by a smaller and smaller amount

question

Sunk Costs

answer

historical costs associated with past decisions that can't be changed

question

Price Taker

answer

produce identical products (wheat ,corn ,soybeans) and because the firms are small relative to the market each must take the price established in the market

question

Price Searcher

answer

firms produce products that differ and therefore they can alter price

question

Constant-Cost Industry

answer

industry where per-unit costs remain unchanged as market output is expanded

question

Increasing-Cost Industry

answer

industry where per-unit cost rises as market output is expanded

question

Decreasing-Cost Industry

answer

industry where per-unit costs decline as market output expands

question

Contestable Markets

answer

market in which entry and exit costs are low and there are no legal barriers to entry

question

Price Discrimination

answer

when a seller charges different consumers different prices for the same good or service

question

Entrepreneurship

answer

entrepreneurial judgment and the development of improved products and production processes are a central element of economic progress

question

Monopoly

answer

a market with high entry barriers and a single seller of a well-defined product for which there are no good substitutes

question

Oligopoly

answer

a market structure in which there are a small number of rival firms, interdependence among firms, substantial economies of scale, significant barriers to entry, and products that are identical or differentiated

question

Collusion

answer

firms working together secretly

question

Natural Monopoly

answer

exists when long-run average total costs continue to decline as firm size increases over the entire range of market demand

question

Dynamic Competition

answer

profitability and high prices encourage innovation and technological change

question

Non-Human Resources

answer

physical capital, land, natural resources

question

Human Resources

answer

composed of the skills, knowledge, and experience of workers

question

Investment in Human Capital

answer

refers to activities that increase human capital and productivity of individuals

question

Marginal Revenue Product (MRP)

answer

the change in total revenue from the employment of an additional unit of a resource

1 of 42

question

Which one of the following states a central element of the economic way of thinking?

answer

Incentives matter-human choice is influenced in predictable ways by changes in personal costs and benefits

question

Economic choice and competitive behavior are the result of

answer

scarcity

question

which of the following would most likely increase the demand for peanut butter?

answer

a decrease in the price of jelly, a good that is often used with peanut butter

question

Three basic decisions must be made by all economies. What are they?

answer

what will be produced, how goods will be produced, and for whom the goods will be produced

question

In the _____, a firm's level of plant and heavy equipment (capital) is fixed.

answer

short run

question

when making output decisions in the short run, it is the firm's ______ that are most important.

answer

marginal costs

question

Which type of business is considered a hybrid?

answer

Limited Liability Company

question

Paul's Plumbing is a small business that employs 12 people. Which of the following is the best example of an implicit cost incurred by this firm?

answer

Accounting services provided free of charge to the firm by Paul's wife, who is an accountant

question

When will a price taker maximize profits in the short run?

answer

When MR=MC

question

In the long run, supply will become more

answer

elastic

question

which of the following is a competitive price taker?

answer

A Texas rancher that raises beef cattle

question

In the long run, price searchers will earn _____ economic profits.

answer

zero

question

Price discrimination can only occur when a price searcher is able to:

answer

identify groups of customers with different price elasticities of demand & prevent customers from re-trading the product

question

Price discrimination generally leads to _____ output and ________ gains from trade.

answer

More, Additional

question

Which of the following indicates that a firm operating in the highly competitive retail sector is providing goods and services that consumers value highly relative to their costs?

answer

The firm is highly profitable and its sales have grown rapidly

question

Which of the following best explains why monopoly is harmful from the viewpoint of economic efficiency?

answer

Units of output that are valued more highly than their cost will not be produced by a profit maximizing monopolist

question

Which of the following is not an obstacle to collusion for oligopoly markets?

answer

high barriers to entry

question

Which of the following is a policy option when a monopoly is present?

answer

Design antitrust policy to increase the number of firms in the industry

question

Human resources include

answer

skills, knowledge, and experience of workers

question

The price of hot dogs decreases. How will this affect demand for resources to produce hot dog buns?

answer

Increase resource demand

question

Principal-Agent Problem

answer

the incentive problem that arises when the lack of information makes it difficult for the purchaser (principal) to determine whether the seller (agent) is acting in the principal's best interest

question

Explicit Costs

answer

result when a monetary payment is made

question

Implicit Costs

answer

involve resources owned by the firm that do not involve monetary payment

question

Law of Diminishing Returns

answer

as more units of a variable resource are applied to a fixed resource, output will eventually increase by a smaller and smaller amount

question

Sunk Costs

answer

historical costs associated with past decisions that can't be changed

question

Price Taker

answer

produce identical products (wheat ,corn ,soybeans) and because the firms are small relative to the market each must take the price established in the market

question

Price Searcher

answer

firms produce products that differ and therefore they can alter price

question

Constant-Cost Industry

answer

industry where per-unit costs remain unchanged as market output is expanded

question

Increasing-Cost Industry

answer

industry where per-unit cost rises as market output is expanded

question

Decreasing-Cost Industry

answer

industry where per-unit costs decline as market output expands

question

Contestable Markets

answer

market in which entry and exit costs are low and there are no legal barriers to entry

question

Price Discrimination

answer

when a seller charges different consumers different prices for the same good or service

question

Entrepreneurship

answer

entrepreneurial judgment and the development of improved products and production processes are a central element of economic progress

question

Monopoly

answer

a market with high entry barriers and a single seller of a well-defined product for which there are no good substitutes

question

Oligopoly

answer

question

Collusion

answer

firms working together secretly

question

Natural Monopoly

answer

exists when long-run average total costs continue to decline as firm size increases over the entire range of market demand

question

Dynamic Competition

answer

profitability and high prices encourage innovation and technological change

question

Non-Human Resources

answer

physical capital, land, natural resources

question

Human Resources

answer

composed of the skills, knowledge, and experience of workers

question

Investment in Human Capital

answer

refers to activities that increase human capital and productivity of individuals

question

Marginal Revenue Product (MRP)

answer

the change in total revenue from the employment of an additional unit of a resource

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ECON Final-2

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