Microeconomics Spring Final Exam 2023;University of
Arkansas: Professor Bregu's class
economists assume that people respond to
incentives
incentives
rewards and penalties that motivate behavior
____ are the following types of incentives that economists believe people respond to
moral,monetary, and personal incentives
The Wealth of Nations, Adam Smith claimed that individuals
are motivated by self-interest
what 2 points do economists consider important with trade-offs?
drug lag, drug loss
what is the invisible hand?
the idea that people pursuing their own self-interest actually benefits the public at large
economics is the study of
trade offs when making decisions
why is it less costly to attend college during a recession
the opportunity cost is lower during a recession because there are fewer labor market
opportunities
what is opportunity cost
the value of what you give up when you make a choice
when the opportunity cost increases
individuals are less likely to choose that same option
what does thinking at the margin mean?
making choices by comparing the additional benefits and additional costs from doing a
little bit more of some activity
without trade, we would all be able to produce
very little
what is price inflation
...
macroeconomists is?
the incentives to produce New Ideas
what is inflation?
an increase in the general level of prices
what is inflation caused by?
sustained increase in the money supply
the law of demand states that
the lower the price, the greater the quantity demanded
what is a demand curve
a demand curve is a function that shows the relationship between prices and their
associated quantities demanded
quantity demanded is
the amount of a good or service that a buyer is able and willing to purchase at a given
price
, define an inferior good
when the demand goes down the income goes up
the quantity supplied is the
amount of a good that firms are willing adn able to sell at a particular price during a
given period of time
the supply curve illustrates
the relationship between the quantity supplied and the price of a good
total consumer surplus is measured by
the area below the demand curve and above the market price
substitute goods
are those than can be used as alternatives for the other
complements is
goods that are used together
producer surplus
the producers gain from exchange.
in a market, the equilibrium condition is given by the following
quantity demanded = quantity supplied
define surplus
situaiton in which quantity supplied is greater tahn quantity demanded
define shortage
quanitty demanded is greater than quantity supplied
when the price of a good incrases the demand for the good will
...
OPEC is able to raise oil prices by
...
define speculation
the attempt to proft from futuer price changes
futures are
contracts to buy or sell specified quantities of a commodity or financial instrument at a
specified price with delivery set at a specified time in the future
how are oil prices and sugar prices related?
as oil prices increase, producers divert sugar cane from sugar production to ethanol
production
one of the biggest problems with centrally planned economies is that
central planners have limited information on the true value of the various ways to utilize
scarce resources
the great economic problem is
satisfying infinite wants with limited resources
in a competitive free market, consumers decide not only whether their use of a good is
worth more than the market price, but also wether their use of a good is worth more
than...
its next highest-valued use of the good
if a central planner had the power to solve the great economic problem
his incentive would be to use that power to enrich himself, not to solve the problem
increasing prices act as a signal to
suppliers to increase he quantity supplied in those markets
Arkansas: Professor Bregu's class
economists assume that people respond to
incentives
incentives
rewards and penalties that motivate behavior
____ are the following types of incentives that economists believe people respond to
moral,monetary, and personal incentives
The Wealth of Nations, Adam Smith claimed that individuals
are motivated by self-interest
what 2 points do economists consider important with trade-offs?
drug lag, drug loss
what is the invisible hand?
the idea that people pursuing their own self-interest actually benefits the public at large
economics is the study of
trade offs when making decisions
why is it less costly to attend college during a recession
the opportunity cost is lower during a recession because there are fewer labor market
opportunities
what is opportunity cost
the value of what you give up when you make a choice
when the opportunity cost increases
individuals are less likely to choose that same option
what does thinking at the margin mean?
making choices by comparing the additional benefits and additional costs from doing a
little bit more of some activity
without trade, we would all be able to produce
very little
what is price inflation
...
macroeconomists is?
the incentives to produce New Ideas
what is inflation?
an increase in the general level of prices
what is inflation caused by?
sustained increase in the money supply
the law of demand states that
the lower the price, the greater the quantity demanded
what is a demand curve
a demand curve is a function that shows the relationship between prices and their
associated quantities demanded
quantity demanded is
the amount of a good or service that a buyer is able and willing to purchase at a given
price
, define an inferior good
when the demand goes down the income goes up
the quantity supplied is the
amount of a good that firms are willing adn able to sell at a particular price during a
given period of time
the supply curve illustrates
the relationship between the quantity supplied and the price of a good
total consumer surplus is measured by
the area below the demand curve and above the market price
substitute goods
are those than can be used as alternatives for the other
complements is
goods that are used together
producer surplus
the producers gain from exchange.
in a market, the equilibrium condition is given by the following
quantity demanded = quantity supplied
define surplus
situaiton in which quantity supplied is greater tahn quantity demanded
define shortage
quanitty demanded is greater than quantity supplied
when the price of a good incrases the demand for the good will
...
OPEC is able to raise oil prices by
...
define speculation
the attempt to proft from futuer price changes
futures are
contracts to buy or sell specified quantities of a commodity or financial instrument at a
specified price with delivery set at a specified time in the future
how are oil prices and sugar prices related?
as oil prices increase, producers divert sugar cane from sugar production to ethanol
production
one of the biggest problems with centrally planned economies is that
central planners have limited information on the true value of the various ways to utilize
scarce resources
the great economic problem is
satisfying infinite wants with limited resources
in a competitive free market, consumers decide not only whether their use of a good is
worth more than the market price, but also wether their use of a good is worth more
than...
its next highest-valued use of the good
if a central planner had the power to solve the great economic problem
his incentive would be to use that power to enrich himself, not to solve the problem
increasing prices act as a signal to
suppliers to increase he quantity supplied in those markets
