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the accumulated skill and knowledge of human beings
quantity of parking spaces demanded is greater than the quantity of parking spacessupplied.
an increase in the supply of pineapples and a rightward shift in the supply curve ofpineapples.
Millions of people from Mexico have migrated to the United States. This has reduced the supplyof labor in Mexico and increased the supply of labor in the United States. Assume that thedemand for labor in Mexico and the United States is unchanged. Then wages in the United States________ and wages in Mexico ________.
The above figure illustrates the market for corn. If point "a" represents the original equilibrium and point "b" thenew equilibrium, which of the following could have caused the change?
A construction boom occurs and many of the new buildings need plywood for their framing.
Which of the figures above best illustrates this change?
Ramen noodles are a staple food item for many college students. Ramen noodles are veryinexpensive, easy to prepare, and can be combined easily with other foods. After studentsgraduate, find employment, and earn a higher income, they decrease their Ramen noodlepurchases significantly. In this case, Ramen noodles are
"Other things remaining the same, if the price of a good rises, the quantity supplied of that goodincreases." This sentence describes a
Suppose the currentequilibrium wage rate for landscapers is $6.65 in Little Rock; $7.50 in St.Louis and $9.05 in Raleigh. An increase in the minimum wage to $7.50 per hourresults in unemployment of landscapers in
Landlords have no incentive to finance maintenance and remodeling of apartment buildings.
The figure above illustrates the bagel market. Which of thefollowing statements is correct?
The above figure shows a labor market. Before the minimum wageof $8 an hour is imposed, employment equals ________ workers; after the minimumwage of $8 an hour is imposed, employment equals ________ workers.
A black market
is a potential outcome of a price ceiling.
Which of thefollowing describes a difference between a price support and a price ceiling?
A price support attempts to raise the price above the equilibrium price while a price ceiling does not.
3,000; 6,000; 3,000
Following a majornatural disaster that destroys housing, a rent ceiling ________ be an effectivepolicy to increase the quantity of more affordable housing for displacedresidents because it would ________.
would not; discourage rebuilding and result in a shortage
A minimum wage law
increases the time spent searching by workers who cannot find a job.
Suppose the city ofChicago imposes a rent control program that fixes rents at $400 below theequilibrium rent. With this plan
the quantity of apartments demanded will increase.
A stated goal of aminimum wage is to
boost the incomes of low-wage earners.
Rent ceilings are difficultto abolish because
current renters offer political support for ceilings.
To have aneffective price support program, the government must
i. isolate the domestic market from the world market.
ii. pay the farmers a subsidy.
iii. introduce a price floor.
i, ii, and iii
A price ceiling inthe market for fuel oil that is below the equilibrium price will
lead to the quantity demanded of fuel oil exceeding the quantity supplied.
A housing shortageresults when
a rent ceiling below the equilibrium rent is imposed.
Which of thefollowing is an example of the unfairness of rent control?
Newcomers have a more difficult time finding apartments.
The figure above shows the labor market in a region. If aminimum wage of $8 an hour is imposed, then the quantity of labor supplied is________ and the quantity of labor demanded is ________.
The above figure shows a labor market with minimum wage equal to $16. In thisfigure, what area equals the firms' surplus?
A price floor makesprices
below the price floor illegal.
If a rent ceilingis below the equilibrium rent, some allocation scheme must be used. Theallocation methods include all of the following EXCEPT
charging the equilibrium rent.
The above figure shows the domestic market for tomatoes. Suppose this market isisolated from global competition and there is a support price set at $16. Inthis figure, what area equals the producer surplus?
area B + area C + area D + area F
Suppose theequilibrium rent in Denver is $1,050. A rent ceiling of $755 per month leads to
a shortage of apartments in Denver.
In the market forcotton, suppose the equilibrium price is $10 per ton and the equilibriumquantity is 100 tons. If the government then imposes a price support of $20 perton,
the market price increases.
The graph shows the market for holiday condos in West PalmBeach. If a rent ceiling is set at $1,700 a week, the quantity of holidaycondos rented ________ per week.
The above figure shows the market for 2 bedroom town homes inSan Diego. If a rent ceiling is set at $1,000 per month, what is the maximumrent someone is willing to pay per month in the black market?
The figure above shows supply and demand in the market forlabor. The government introduces a minimum wage of $7 per hour.
How many unemployed workers will there be?
The above figure shows a labor market with a minimum wage of$8 an hour. How many people are employed when the minimum wage is in place?
The above figure shows the market for biologists. Thegovernment decides to set a minimum wage for biologists of $18 per hour. Afterthis minimum wage is in effect, the firms' surplus equals ________.
The figure above shows some of a firm's cost curves.
Based on the figure above, curve A is the firm's
the return to entepreneurship
is part of a firms opportunity cost because it is the cost of not running another firm
In the long run, the firm ________ change the number of workers it employs and ________change the size of its plant.
Bill is an economics professor who earns $37,000 teaching but decides to leave and fulfill hisdream of catering barbecues. During his year of barbecuing he earned total revenue of $60,000.He spent $30,000 on food and supplies. He also paid his wife $10,000 to help serve food. The
A cost incurred in the production of a good or service and for which the firm does not need tomake a direct monetary payment, is referred to as ________ cost.
A firm pays $50,000 for a machine that is used in production for one year, after which it is soldfor $40,000 to another firm. The $10,000 difference is
Which of the following is an implicit cost in Jim's business venture?
i. the salary Jim could have earned at another job
ii. the interest Jim must pay on the loan he incurred to help open his businessiii. the interest Jim lost when he used his savings to help open his business
If the average product of labor curve is rising,
i) the average variable cost curve is falling.
ii) the marginal cost curve is definitely falling.
iii) the marginal product curve has reached its maximum.
Jennifer owns a pig farm near Salina, Kansas. Last year she earned $39,000 in total revenuewhile incurring $38,000 in explicit costs. She could have earned $27,000 as a teacher in Salina.
These are all her revenue and costs. Therefore Jennifer earned an
Which of the following curves are U-shaped?i) average variable cost curve
ii) average fixed cost curve
iii) average total cost curve
An insurance agent rents a building and has a three-year lease. An increase in the rent for thebuilding increases the agent's
The table above shows a total product schedule. Suppose that labor costs $20 per worker and
fixed costs are $60. The total cost of producing 80 units equals
April quit her job as an accountant at Ernst and Young, where she was paid $45,000 per year.She started her own landscaping business. She rents machines and tools for $50,000 and pays$10,000 as wages to her help. These are her only costs. April earned total revenue of $100,000
Cost curves shift if
i. technology changes.
ii. the prices of factors of production change.iii. productivity changes.
The Table gives some production and cost information for Flaming Fernando's, a restaurantthat sells Fiery Frijoles. Between what two levels of output does the marginal cost of producingFiery Frijoles first begin to rise?
The table above shows the total product schedule for Rick's Lawn Service, a yard care company.
In a graph of a t
when the marginal product of an additional worker is less than the marginal product of the previous worker
more and more workers use the same equipment and work space
The table above gives costs at Jan's Bike Shop. Unfortunately, Jan's record keeping has been spotty. Each workervariable costs of production. What is the total variable cost of producing 60 bikes?
Lauren runs a chili restaurant in San Francisco. Her total revenue last year was
$110,000. The rent on her restaurant was $48,000, her labor costs were $42,000, andher materials, food and other variable costs were $20,000. Lauren could have workedas a biologist and earned $50,000 per year. An economist calculates her implicit costsas
a good that can be consumed in place of another good
the D for a good and the P of its substitutes move in the same direction
the D for a good increases if the P of one of its substitues rises and decreases if the price of its substitute falls
a good that is consumed with another good
the demand for a good and the price of one of its compliments move in opposite directions
the demand for a good decreases if one of its complements rises and increases if the price of one of its complements
a good for which demand increases when income increases and demand decreases when income decreases
relationship with income
a good for which demand decreases when income increases and demand increases when income decreases
a change in the quantity of a good that people plan to buy that results from a change in the price of a good with all other incluences on buying plans remaining the same
did the price of the good change or did some other influence change?
other things remaining the same, if the price of a good increases; and if the price of a good falls, the quanity of that good decreases
as more of a good is produced the opportunity cost of producing it increases
the relationship between the quantity supplied and the price of a godo when all other infleunces on selling plans remain the same
a list of quantities at different prices illustrated by a supply schedule and supply curve
if the price of the good is changes, then the quantity supplied changed
if some other influences changed and the price of the good remained constant, then supply changed
percentage change in price=
(new price-initial price/(new price+initial price) ÷ 2)) × 100
percent change in quantity=
(new quantity-initial quantity/(new quantity+initial quantity) ÷ 2)) × 100
when the percentage change in QD exceeds the percentage change in price
a substitute for it is easy to find
when the percentage change in quantity demanded is less than the percentage change in price
substitue for it is hard to find
necessity has poor subsititues--inelastic
luxury has many substitutes--demand for a luxury is elastic
the demand for a narrowly defined good is elastic
demand for a broadly defined good is inelastic
price elasticity= %Δ in QD (QS) / %Δ in Price
if the price elasticity of demand/supply is greater than 1--elastic
...equal to 1--unit elastic
...less than 1--inelastic
demand is unit elastic at the midpoint of the curve
demand is elastic at all points above the midpoint
demand is inelastic at all points below the midpoint
the slope is constant but the elasticity decreases as the price falls, and the QD increases
the amount spend on a good and recieved by its seller and equals the price of a good multiplied by the quantity sold
price × quantity
relationship between the price elasticity of demand and total revenue is:
allocates resources by the order of someone in authority
works bad when applied to an entire economy
a tradeoff between efficiency and fairness that recognizes the cost of making income transfers
the time frame in which the quantities of some resources are fixed. A firm can usually change the quantity of labor it uses, but not its technology and quantity of capital
decisions are easily reversed: increase or decrease # of labor hours it hires
the time frame in which the quantities of all resources can be varied
the total qunatity of a good produced in a given period
output rates as the quantity of labor employed increases
the number of units produced per unit of time
the change in total product that results from a one-unit increase in the quantity of labor employed
Δ in TP/Δ in Q of Labor
when the marginal product of an additional worker exceeds the marginal product of the previous worker
increased specialization and greater divison of labor in the production process
a firm's total revenue minus total cost
TC = TFC + TVC
increases as output increases
the cost of the firm's factors of production--the cost of land, capital, and entreprenuership
constant horizontal line
the cost of the firm's variable factor of prodcution--the cost of labor
increases as output increases
total variable cost per unit output
total variable cost/quantity
total cust per unit output, which equals average fixed cost plus average variable cost
TC/Q= TFC/Q + TVC/Q or ATC= AFC + AVC
the U-shape of the average total cost arises from the influence of 2 opposing forces
a condition in whcih, when a firm increases it plant size and labor employed by the same %--its output increases by a larger % and its ATC decreases
specialization of labor and capital
long run ATC decreases as output increases
a condition in which a firm increases its plant size and labor employed by the same %. its output increases less & its ATC increases
arises from difficutly of controlling a large enterprise
long run ATC increases as output increases
a condtion in which, when a firm increases its plant size and labor employed by the same %, its output increases by the same % and its ATC remains constant
long run ATC stays the same as output increases
market demand and market supply determine price
the reason is that firms can sell any quantity it chooses at the going market price
a firm that cant influence the price of the good or service that it produces
the producers of most agricultural products are price takers
economic loss equals total fixed cost and total variable cost minus total revenue
any constraint that protects a firm from competitors
selling a good or service at a number of different prices
convert CS into economic profit
price discimination that extracts the entire consumer surplus by charging the highest price that consumers are willing to pay for each unit
economic profits: TC include opportunity costs
accounting profits: TC exclude opportunity costs
the profit-maximizing of the individual firm.
profits are 0 so no firms are leaving or entering the market
MR is half of the demand line
an organized group of workers that aims to increase wages and influence other job conditions of its memebers
the wage rate rises
if thats all the union is able to do, the wage rate rises, but the number of jobs decreases
the tax on employers delivers the same outcome as the tax on workers
workers recieve the same wage and firms pay the same total wage
the theory that governments pursue policies that make the median vote as well off as possible
a price floor in an agricultural market maintained by a government guarantee to buy a surplus at that price
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