Microeconomics Spring 2022 JCJC Midterm Review

question

a. Perfectly inelastic

answer

i. The case where the QD is completely unresponsive to price and the price elasticity of demand equals zero.

question

a. Endowment effect

answer

i. The tendency of people to be unwilling to sell a good they already own event though they are offered a price that is greater than the price they would be willing to pay to buy the good if they didn't already own it.

question

a. Behavioral economics

answer

i. The study of situations in which people make choices that do not appear to be economically rational.

question

a. Opportunity cost

answer

i. The highest valued alternative that must be given up to engage in an activity.

question

a. Long-run average total cost curve

answer

i. A curve that shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed.

question

a. Diseconomies of scale

answer

i. The situation in which a firm's long run average cost rises as the firm increases output.

question

a. Economies of scale

answer

i. The situation in which a firm's long run average cost falls as it increases the quantity of output it produces.

question

a. Implicit costs

answer

i. A nonmonetary opportunity cost.

question

a. Marginal product of labor

answer

i. The additional output a firm produces as a result of hiring one more worker.

question

a. Production function

answer

i. The relationship between the inputs employed by a firm and the maximum output the firm can produce with those inputs.

question

a. Sunk costs

answer

i. A cost that has already been paid and cannot be recovered.

question

a. Income elasticity of demand

answer

i. A measure of the responsiveness of the QD to changes in income, measured by the % change in the QD divided by the % change in income.

question

a. Cross-price elasticity of demand

answer

i. The % change in the QD of one good divided by the % change in the price of another good.

question

a. Price elasticity of supply

answer

i. The responsiveness of the QS to a change in price, measured by dividing the % change in the QS of a product by the % change in the product's price.

question

a. Price elasticity of demand

answer

i. The responsiveness of the QD to a change in price, measured by dividing the % change in QD of a product by the % change in the product's price.

question

a. Elasticity

answer

i. A measure of how much one economic variable responds to changes in another economic variable.

question

a. Marginal utility

answer

i. Change in total utility a person receives from consuming one additional unit of a good or service.

question

a. Law of Diminishing Marginal Utility

answer

i. Principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time.

question

Pitfalls in Decision Making

answer

a. They take into account monetary costs but ignore non-monetary costs.
b. They fail to ignore sunk costs
c. They are unrealistic about their future behavior.

question

Social Influences on Decision Making

answer

a. Consumers decide which restaurant to go to not only on the basis of food and décor but also on the basis of the restaurant's popularity. People believe it makes them appear knowledgeable and fashionable. Whenever consumption takes place publicly, some consumers base their purchasing decisions on what other consumers are buying.

question

Technology: An Economic Definition

answer

a. Whenever a firm experiences positive technological change, it is able to produce more output using the same inputs or the same output using fewer inputs.

question

Know the formula for Marginal Cost

answer

a. Marginal Cost = Change in Total Cost / Change in Quantity (output)

question

Long-Run Average Cost Curves for Automobile Factories

answer

Economies of scale do not continue indefinitely as the firm increases its output. The long-run average cost curve in most industries has a flat segment that often stretches over a substantial range of output. As figure 11.6 shows, an automobile factory producing 200,000 cars per year and a factory producing 400,000 cars per year have the same average cost. Over this range of output, firms in the industry experience constant returns to scale. As these firms increase their output, they increase their inputs, sich as the size of the factory or the quantity of workers, proportionally. The level of output at which all economies of scale are exhausted is known as the minimum efficient scale. An automobile factory producing 200,000 cars per year has reached minimum efficient scale. Firms that produce at less than minimum efficient scale may have difficulty surviving because they will be producing output at a higher cost than competitors.

question

Implicit Costs versus Explicit Costs

answer

a. Therefore, explicit costs are sometimes called accounting costs. Economic costs include both accounting costs and implicit costs.

question

1. First paragraph on page 318 and 1st sentences of section 10.3 on page 329

answer

a. Consumers will make choices that make them as satisfied as possible. Given their tastes, incomes, and prices of the goods and services available to them.
b. Sociologists have argued that social factors such as culture, customs, and religion are very important in explaining the choices that people make. Some economists believe that social factors can influence consumer choice.

question

identify perfectly elastic and perfectly inelastic supply curves

answer

a. Perfect Elastic = Horizontal
b. Perfect Inelastic = Vertical a. Elastic = Value of price elasticity is greater than 1
b. Inelastic = Value of price elasticity is less than 1
c. Unit Elastic = Value of price elasticity is equal to 1

question

Figure 6.4

answer

a. Elastic is not constant along a linear curve.

question

Know the relationship between QS and Prices

answer

a. Notice that because supply curves are upward sloping, the price elasticity of supply will be a positive number. We categorize the price elasticity of supply the same way we categorize the price elasticity of demand

question

Polar Cases .....

answer

a. Although extreme, or polar cases of price elasticity do not occur frequently, you need to be aware of them. Vertical line= perfect inelastic; QD is unresponsive to price. Price elasticity of demand = 0. No matter the price, quantity remains the same. EX: Insulin, Cancer fighting drugs.
Horizontal line= perfect elastic; QD is infinitely responsive to price. Price elasticity of demand equals Infinity. Increase in price causes QD to fall to zero

question

The Midpoint Formula

answer

a. We can use the midpt formula to ensure that we have only one value of the price elasticity of demand between the same two points on a demand curve. The Midpt formula uses the avg of the initial and final quantities and the initial and final prices.
b. (Q2 - Q1) / ((Q1+Q2)/2) / (P2-P1) / (P1+P2) /2

question

The Determinants of the Price Elasticity of Demand

answer

a. Availability of close substitutes.
b. Passage of time
c. Luxury VS necessity
d. Definition of the market
e. Share of the good in the consumer's budget.

question

An overview of the economic model of consumer behavior

answer

a. Economists assume that consumers act so as to make themselves as well off as possible. Therefore, you should choose the one combination of clothes that you like the best from among the other combinations that you can afford.
b. Economic model of consumer behavior predicts that consumers will choose to buy the combination of goods and services that makes them as well off as possible from among all the combinations that their budgets allow them to buy.

question

Utility

answer

how much enjoyment or satisfaction someone receives from consuming a product.

question

identify substitutes, complements, and unrelated goods

answer

a. Substitutes - Two brands of smartphones
b. Complements - iPhone and apps
c. Unrelated - iPhones and Butter

question

Rule of Equal Marginal Utility Per Dollar

answer

a. Economists refer to the limited amount of income to spend as a budget constraint.
b. Optimal Decisions are made at the margin.
c. The key to making the best consumption decision is to max utility by following the rule of equal marginal utility per dollar spent.

1 of 35

question

a. Perfectly inelastic

answer

i. The case where the QD is completely unresponsive to price and the price elasticity of demand equals zero.

question

a. Endowment effect

answer

question

a. Behavioral economics

answer

i. The study of situations in which people make choices that do not appear to be economically rational.

question

a. Opportunity cost

answer

i. The highest valued alternative that must be given up to engage in an activity.

question

a. Long-run average total cost curve

answer

i. A curve that shows the lowest cost at which a firm is able to produce a given quantity of output in the long run, when no inputs are fixed.

question

a. Diseconomies of scale

answer

i. The situation in which a firm's long run average cost rises as the firm increases output.

question

a. Economies of scale

answer

i. The situation in which a firm's long run average cost falls as it increases the quantity of output it produces.

question

a. Implicit costs

answer

i. A nonmonetary opportunity cost.

question

a. Marginal product of labor

answer

i. The additional output a firm produces as a result of hiring one more worker.

question

a. Production function

answer

i. The relationship between the inputs employed by a firm and the maximum output the firm can produce with those inputs.

question

a. Sunk costs

answer

i. A cost that has already been paid and cannot be recovered.

question

a. Income elasticity of demand

answer

i. A measure of the responsiveness of the QD to changes in income, measured by the % change in the QD divided by the % change in income.

question

a. Cross-price elasticity of demand

answer

i. The % change in the QD of one good divided by the % change in the price of another good.

question

a. Price elasticity of supply

answer

i. The responsiveness of the QS to a change in price, measured by dividing the % change in the QS of a product by the % change in the product's price.

question

a. Price elasticity of demand

answer

i. The responsiveness of the QD to a change in price, measured by dividing the % change in QD of a product by the % change in the product's price.

question

a. Elasticity

answer

i. A measure of how much one economic variable responds to changes in another economic variable.

question

a. Marginal utility

answer

i. Change in total utility a person receives from consuming one additional unit of a good or service.

question

a. Law of Diminishing Marginal Utility

answer

i. Principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time.

question

Pitfalls in Decision Making

answer

a. They take into account monetary costs but ignore non-monetary costs.
b. They fail to ignore sunk costs
c. They are unrealistic about their future behavior.

question

Social Influences on Decision Making

answer

question

Technology: An Economic Definition

answer

a. Whenever a firm experiences positive technological change, it is able to produce more output using the same inputs or the same output using fewer inputs.

question

Know the formula for Marginal Cost

answer

a. Marginal Cost = Change in Total Cost / Change in Quantity (output)

question

Long-Run Average Cost Curves for Automobile Factories

answer

question

Implicit Costs versus Explicit Costs

answer

a. Therefore, explicit costs are sometimes called accounting costs. Economic costs include both accounting costs and implicit costs.

question

1. First paragraph on page 318 and 1st sentences of section 10.3 on page 329

answer

question

identify perfectly elastic and perfectly inelastic supply curves

answer

question

Figure 6.4

answer

a. Elastic is not constant along a linear curve.

question

Know the relationship between QS and Prices

answer

question

Polar Cases .....

answer

question

The Midpoint Formula

answer

question

The Determinants of the Price Elasticity of Demand

answer

a. Availability of close substitutes.
b. Passage of time
c. Luxury VS necessity
d. Definition of the market
e. Share of the good in the consumer's budget.

question

An overview of the economic model of consumer behavior

answer

question

Utility

answer

how much enjoyment or satisfaction someone receives from consuming a product.

question

identify substitutes, complements, and unrelated goods

answer

a. Substitutes - Two brands of smartphones
b. Complements - iPhone and apps
c. Unrelated - iPhones and Butter

question

Rule of Equal Marginal Utility Per Dollar

answer

Continue to order Get a quote

Microeconomics Spring 2022 JCJC Midterm Review

Recent Posts

Recent Comments

Calculate the price of your order

Our guarantees

Money-back guarantee

Zero-plagiarism guarantee

Free-revision policy

Privacy policy

Fair-cooperation guarantee