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Economic Principles
Supply and Demand
Production and Costs
Market Structure
Final Jeopardy
100

What is the economic problem?

Limited Resources and Unlimited Wants

100

If the price of one good increases and decreases the demand for another, what type of goods are they?

Substitute goods

100

In microeconomics, what is the period in which some inputs in a firm's production process cannot be changed?

The short run
100

What characterizes a perfectly competitive firm in the long-run equilibrium?

No/Zero (0) economic profit

200

What is the concept where consumers will eventually reach a point where consuming an additional unit of a good provides less additional utility than the previous unit?

The Principle (Law) of Diminishing Marginal Utility

200

The cross price elasticity of demand of two goods is negative. What kind of goods are these?

Complements
200

What does an increase in all inputs by 50% leading to a 100% increase in output indicate?

Increasing returns of scale

200

What happens to a firm in a perfectly competitive market if it raises its price above the market equilibrium price?

It will not be able to sell any output.

300

What is the fundamental difference between a market economy and a command economy?

Property rights and the protection of private property

300

What happens to the demand curve for a normal good when consumer income increases?

It shifts to the right.

300

If the marginal cost is greater than the average total cost, what happens to the average total cost?

It increases.

300

What is a price floor and its intended effect?

The government sets a minimum price to assist producers.

400

How can economic growth due to an increase in the availability of resources be depicted using a production possibilities curve?

An outward (rightward) shift of the curve

400
How does a decrease in production costs affect the supply curve?

It shifts to the right.

400

What is the formula for average total cost?

Total Cost / Quantity of Output
400

In a market experiencing deadweight loss due to a price floor, what is the primary cause of the loss?

Excess supply leading to unsold goods

500

Describe comparative advantage.

Specialization in the production of goods for the economy that has the lowest opportunity cost.

500
Equilibrium price is $50, equilibrium quantity is 40, and customers are willing to pay $80. What is the producer surplus?

$60

500

In a perfectly competitive market, at what point is profit maximization?

When Marginal Revenue = Marginal Cost

500
How does a merger of two firms potentially increase economic efficiency?

Decreasing average total cost through increased economies of scale

500
Explain why a country can consume beyond its present production possibilities curve when it engages in trade.
Trade allows countries to specialize in producing goods where they have a comparative advantage, leading to increased overall production and consumption possibilities.