econ quiz 1
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a choice involves a cost
always
a surplus in a maket occurs when
the market price exceeds the equilibrium price
law of deminishing returns
As additional increments of resources are added to producing a good or service, the marginal benefit from those additional increments will decline.
Opportunity Cost is
the value of the next best alternative
About 540 million passengers took plane trips in the United States in 2012. Since the 9/11 hijackings, security screening has become more intensive, and consequently, the procedure takes one hour longer than in the past. If the average price of time for air travelers is $25 per hour, the ____________ of delay in airports is 540 million hours × 25 dollars/hour, or $13.5 billion per year.
Opportunity cost
A sunk cost is a cost that is
unavoidable
Marginal thinking is best demonstrated by
choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time.
A demand curve shows the relationship between price and _________________ on a graph.
quantity demanded
When income increases, the demand for an inferior good
decreases
The production possibility frontier illustrates the concept of
cost
What is meant by law of demand?
The common relationship that a higher price leads to a lower quantity demanded of a certain good or service.
The equilibrium price in this market is
when quantity demand and quantity supply equal
The equilibrium quantity is
the number of when quantity demand and quantity supply equal
if there is a surplus quantity demand that means
there is a shortage of quantity supply
In a free market equilibrium,
Quantity Demand= Quantity supply
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ___.
quantity supplied
If new manufacturers enter the computer industry, then (all other things equal):
the supply curve shifts out
What is meant by producer surplus?
The benefit producers receive from selling a good or service, measured by the price the producer actually received minus the price the producer would have been willing to accept.
In a competitive market where the price of the product is $25, we know that marginal cost of the last unit sold is
equal to $25.
This month, Joe Blow sold 40 fewer snowblowers at a lower price than he did last month. This change is likely due to
a decrease in market demand.
Consumer surplus is
the amount of money a consumer is willing to pay above what the consumer has to pay.
The rational rule is
-act to maximize the economic surplus -act so that MB = MC -act to maximize the total benefits minus the total costs ALL OF THE ABOVE
A market is
an institution that brings together buyers and sellers of goods or services.
An influence that reduces the supply of a good is
an increase in costs.