EC111 Final Exam || with Errorless Solutions 100%.
Types of Resources correct answers - Labor
- Capital (Equipment)
- Natural Resources
- Entrepreneurial Ability
Positive Economics correct answers - Assertion of fact
- Law
- What is
Normative Economics correct answers - Opinion
- Belief
- What should be
Law of Comparative Advantage correct answers If economies specialize and produce where they
have the lowest opportunity cost, both economies can be better off.
The Three Big Questions correct answers 1.) What to produce? (How much?)
2.) How to produce?
3.) How to distribute?
Types of Economic Systems correct answers 1.) Capitalism (market-based, laissez-faire)
2.) Command economy (communism)
3.) Mixed economy
Law of Demand correct answers An inverse relationship between price and quantity demanded
What causes changes in demand? correct answers - consumer incomes
- changes in prices of other goods
- preference/taste
- expectations
- #/composition of consumers
Law of Supply correct answers A direct relationship between price and quantity supplied
What causes changes in supply? correct answers - cost of production/price of resources
- change in technology
- change in price of other products
- # of producers
- producer expectations
- government interventions
Elasticity correct answers Measure of responsiveness
Determinants of Elasticity of Quantity Demanded correct answers - addiction
, - necessity vs. luxury
- availability of substitutes
- adjustment period
- share of budget
- rare/limited
Total Revenue Test correct answers - If price increases and inelastic demand: total revenue
increases
- If price increases and elastic demand: total revenue decreases
Short Run correct answers At least one resource is fixed
Long Run correct answers All resources are variable
Characteristics of Perfect Competition correct answers - many sellers, many buyers
- no product differentiation
- perfect information
- ease of entry & exit
Golden Rule of Profit Maximization correct answers Produce up to but not beyond where
marginal cost = marginal revenue
Characteristics of Monopoly correct answers - 1 seller, many buyers
- May or may not be a standardized product
- Significant lack of perfect information
- Virtually impossible to enter this market
Characteristics of Monopolistic Competition correct answers - many sellers
- product differentiation
- not perfect information
- easy of entry
Characteristics of Oligopoly correct answers - few firms
- product differentiation
- not perfect information
- very difficult to enter
If ATC<AR correct answers Maximizing profit
If AVC<AR<ATC correct answers Minimizing loss
If AR<AVC correct answers Shut down
How firm size is determined correct answers - transaction costs
- economies of scale
- economies of scope
Types of Resources correct answers - Labor
- Capital (Equipment)
- Natural Resources
- Entrepreneurial Ability
Positive Economics correct answers - Assertion of fact
- Law
- What is
Normative Economics correct answers - Opinion
- Belief
- What should be
Law of Comparative Advantage correct answers If economies specialize and produce where they
have the lowest opportunity cost, both economies can be better off.
The Three Big Questions correct answers 1.) What to produce? (How much?)
2.) How to produce?
3.) How to distribute?
Types of Economic Systems correct answers 1.) Capitalism (market-based, laissez-faire)
2.) Command economy (communism)
3.) Mixed economy
Law of Demand correct answers An inverse relationship between price and quantity demanded
What causes changes in demand? correct answers - consumer incomes
- changes in prices of other goods
- preference/taste
- expectations
- #/composition of consumers
Law of Supply correct answers A direct relationship between price and quantity supplied
What causes changes in supply? correct answers - cost of production/price of resources
- change in technology
- change in price of other products
- # of producers
- producer expectations
- government interventions
Elasticity correct answers Measure of responsiveness
Determinants of Elasticity of Quantity Demanded correct answers - addiction
, - necessity vs. luxury
- availability of substitutes
- adjustment period
- share of budget
- rare/limited
Total Revenue Test correct answers - If price increases and inelastic demand: total revenue
increases
- If price increases and elastic demand: total revenue decreases
Short Run correct answers At least one resource is fixed
Long Run correct answers All resources are variable
Characteristics of Perfect Competition correct answers - many sellers, many buyers
- no product differentiation
- perfect information
- ease of entry & exit
Golden Rule of Profit Maximization correct answers Produce up to but not beyond where
marginal cost = marginal revenue
Characteristics of Monopoly correct answers - 1 seller, many buyers
- May or may not be a standardized product
- Significant lack of perfect information
- Virtually impossible to enter this market
Characteristics of Monopolistic Competition correct answers - many sellers
- product differentiation
- not perfect information
- easy of entry
Characteristics of Oligopoly correct answers - few firms
- product differentiation
- not perfect information
- very difficult to enter
If ATC<AR correct answers Maximizing profit
If AVC<AR<ATC correct answers Minimizing loss
If AR<AVC correct answers Shut down
How firm size is determined correct answers - transaction costs
- economies of scale
- economies of scope
