Microeconomics Study Guide
Microeconomics Study Guide Econ 22060-002
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This 7 page Study Guide was uploaded by Jacquelyn McGee on Saturday February 13, 2016. The Study Guide belongs to Econ 22060-002 at Kent State University taught by Jeremiah Harris in Spring 2016. Since its upload, it has received 80 views. For similar materials see Microeconomics in Economcs at Kent State University.
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Date Created: 02/13/16
Study Guide 1. What is economic profit? a. The difference between what we get and what we give up b. What we get c. What we give up 2. What is economics? a. The study of ____ _______(2 words) make choices, interact and ______ to incentives 3. Write the definition of economics 4. Write the definition of Scarcity 5. What are incentives? a. Benefits b. Rewards that encourages actions or a penalty that discourages an action c. Monetary cost d. Value of forgone alternative 6. What is explicit cost? a. Value of forgone alternative b. Monetary cost c. Scarcity d. Incentive 7. What is implicit cost? a. Monetary cost b. Scarcity c. Economics d. Value of forgone alternative 8. True or false allocative efficiency is using resources where they have highest value 9. True or false production efficiency is producing at the lowest cost on the curve 10.True or false microeconomics is the study of the bigger picture 11.True or false macroeconomics is the study of choices a single agent makes 12.Opportunity cost is the _____ value of the _______ best alternative 13.Sunk Costs are the costs that are made in the _____ and cannot be _____ or ________ costs 14.Sunk cost Fallacy is the idea that one is more _____ to continue with a(n) ______ if they had already invested a lot, even if _____ is not best. 15.Write the definition of Demand. 16.Write the definition of Law of Demand. 17.What are land/resources, labor, capital, and entrepreneurship examples of a. Economic Resources b. Discrete decision c. Continuous decision d. Scarcity 18.How does demand change when the graph shifts left? a. Increase b. Decrease 19.How does demand change when the graph shifts to the right? a. Increase b. Decrease 20.The demand gives us ____ of the last good purchase 21.Value of the good = _______ 22.When quantity goes up what does the marginal benefit do? a. Goes up b. Goes down 23.True or false absolute advantage is when the production of a good can be achieved in less time or more can be produced in the same time. 24.True or false comparative advantage is when an individual or group can carry out a particular economic activity more efficiently than another activity. 25.What four characteristics can cause shifts in the PPF? a. b. c. d. 26.What does PPF stand for? a. Production Possibilities Frontier b. Production Price Focus c. Production Price Frontier 27.True or False productive efficiency is using resources where they have highest value 28.True or False allocative efficiency is producing at the lowest cost 29.What five factors cause change in demand? a. b. c. d. e. 30.Write the definition of supply. 31.Write the definition for the Law of Supply. 32.Supply price=______ 33.Marginal cost is the cost of _____ one or more _____ of a good 34.Marginal cost of production is the _____ ______ a seller would be willing to take. It’s a _____ that just covers the ______ of production. 35.What change in supply causes a shift right? a. Increase b. Decrease 36.What six factors cause changes in supply? a. b. c. d. e. f. 37.True or False compliments in production is when two goods are produced at exactly the same time; goods that become by-products when produced together 38.True or False equilibrium is the price at which the quantity demanded equals the quantity supplied 39.True or False equilibrium price is a situation in which opposing forces balance each other; equilibrium in market occurs when the rice balances the plans of buyers and sellers 40.True or False equilibrium quantity is the quantity bought and sold at the equilibrium price 41.A shortage is when there is _____ ________ to meet needs. 42.Surplus is when there is ______ ______ then demanded. 43.Write the definition of elasticity 44.True or False the definition of price elasticity of demand is a measure of the responsiveness of quantity demanded to a price change. 45.What is the formula that is most important in price elasticity of demand? 46.When the elasticity demand (εd) >1 its ______ demand a. Elastic b. Inelastic c. Unit elastic 47.When elasticity demand <1 its ______ demand a. Unit elastic b. Elastic c. inelastic 48.When elasticity demand =1 its ______ demand a. Inelastic b. Unit elastic c. elastic 49.What are the 3 factors that influence the elasticity of demand? a. b. c. 50.What type of line is associated with perfectly inelastic demand? a. Vertical line b. Horizontal line 51.What type of line is associated with perfectly elastic demand? a. Horizontal line b. Vertical line 52.True or False total revenue is the same as profit 53.What is cross-price elasticity of demand? (definition) 54.What is income elasticity of demand? (definition) 55.What is elasticity of supply? (definition) 56.When εs>1 it is ___. a. Elastic b. Inelastic c. Unit elastic 57.When εs<1 it is _____. a. Unit elastic b. Inelastic c. Elastic 58.When εs=1 it is______. a. Inelastic b. Unit elastic c. Elastic 59.Fewer substitute inputs means less _______ ______. 60.More substitute inputs means more _______ ______. 61.More time means more ______ _____. 62.Less time means less _______ _____. Answer Key 1. A 2. How agents…….respond 3. Social science that studies the choices made by individuals, businesses, governments, and entire societies; as we cope with scarcity and the incentives that influence our choices and reconcile them. 4. Is when available resources are limited and cannot sufficiently satisfy the wants; meaning we have to make choices 5. B 6. B 7. D 8. True 9. True 10.False 11.False 12.Net…next 13.Past…recovered…irreversible 14.Willing…initiative…..continuing 15.Maximum quantity a consumer is willing and able to purchase at various prices 16.Inverse relationship between price and quantity demanded 17.A 18.B 19.A 20.Marginal benefit 21.Marginal benefit 22.B 23.True 24.True 25.Technological change, capital accumulation, population growth, change in productivity of labor 26.A 27.False 28.False 29.Process of related goods, income, expectations, number of buyers, tastes and preferences 30.The maximum quantity a seller is willing and able to sell a t various prices 31.The positive relationship between price and quantity supplied 32.Marginal cost 33.Producing….units 34.Lowest price…..price…..cost 35.A 36.State of nature, technology, expected future prices, number of suppliers, prices of related goods being produced, prices of factors of production input price 37.True 38.False 39.False 40.True 41.Not enough 42.Supply then 43.Elasticity is the measure of responsiveness 44.True 45.Price elasticity of demand=(εd)=|%ΔQd/%ΔP| 46.A 47.C 48.B 49.Closeness of Substitutes, the proportion of income that’s spent on the good, time elapsed since the price change 50.A 51.A 52.False 53.A measure of the responsiveness of demand for a good to a change in price of a substitute or a compliment, or other things remain the same 54.Measures how the quantity demanded of a good responds to a change in income, other things remaining the same 55.Measures the responsiveness of the quantity supplied to change in the price of a good when all other influences on selling plans remain the same 56.A 57.B 58.B 59.Elastic supply 60.Elastic supply 61.Elastic supply 62.Elastic supply
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