Microeconomics 1
Oligopolies engage in ___ in order to decide how to price their products.
Game theory
Marginal Social Cost
Economics is the study of _
Scarcity
Unemployment benefits are a type of (expansionary/contractionary) fiscal policy and (discretionary fiscal policy/automatic stabilizer)
Contractionary, automatic stabilizer
When the aggregate demand far outweighs the supply, ___ occurs, and prices ___.
Demand-Pull inflation, increase.
A profit-maximizing firm will shut down in the short run any time the firm’s total revenue is less than its __.
Average variable costs
Accounting profit is always (higher/lower) than economic profit.
Higher
The three factors of production are...
Land, labor, and capital
If you are laid off during a recession, you are __.
Cyclically unemployed.
Understated
The elimination of an effective rent ceiling will result in ___ for rents, and _ in the quantity of housing supplied.
Increase, Increase
Relative to a command economy, resources in a market economy are more commonly allocated by
The price system(supply and demand)
When a country can produce more of a product than another country, it has an ___ in that product.
Absolute advantage
GDP consists of __.
Consumption(C), Investment(I), Government Spending(G), Net Exports(X)
Stagflation is a ___ in the Phillips curve.
Leftward shift
For a product with a net marginal social benefit, the government should ____ the item.
Subsidize
If the price of the raw materials for a product decreases, the supply for that product will __, __ the equilibrium price, and __ the equilibrium quantity.
Rightward, decreasing, increasing
The production possibilities curve is linear when two products are...
The crowding out effect occurs because ___.
Expansionary fiscal policy will lead to higher interest rates, decrease investment and consumption, and thus dampen the effect of the expansionary fiscal policy.
How does technological progress increase long-term economic growth?
It increases labor productivity
In order to reduce the deadweight loss of a natural monopoly without subsidizing it, the government should set a price equal to ___.
Average total cost
The Coase Statement says...
Externalities can be negotiated between parties without governmental intervention
Two countries will mutually benefit from trade if it occurs between ____.
Their opportunity costs
When a central bank conducts open-market bond sales, the money supply will __, the interest rate will __, and the aggregate demand will __.
Decrease, Increase, Decrease
Protection for the infant industry, military self-sufficiency