ECON 201 Chapter Notes - Chapter 1: Productive Efficiency, Optimal Decision, Marginal Utility

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emeraldherring443

11 Apr 2018

School

Northwestern University

Department

Economics

Course

ECON 201

Professor

David Berger

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Document Summary

Economics: study of choices consumers, business managers, and government officials make to attain their goals, gien scarce resources. Scarcity: our wants are unlimited, but resources available to us are limited. Optimal decision: continue any activity up to the point where the marginal benefit outweighs the marginal cost. Trade-offs: producing more of one good or service means producing less of another good or service. Opportunity cost: highest valued alternative that must be given up to engage in an activity- what you give up to get something. Centrally planned economy: most decisions made by the government. Market economy: most economic decisions made by consumers and firms. Mixed economies: most economic decisions made by consumers and firms but government plays a significant role. Productive efficiency: good produced at lowest possible cost. Voluntary exchange: buyer and seller made better off by a transaction. Economic variable: something measurable that can have different values (ex: wages)

Related Questions

Can you solve them and tell me if youre sure 100% 100% 100%

Question 1 (1 point)

If two variables move together but are otherwise unrelated, we have

Question 1 options:

a fallacy of composition.

an econometric model.

a spurious correlation.

an efficiency problem.

evidence of a weak correlation but strong causation.

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Question 2 (1 point)

The Latin expression "ceteris paribus": is essential in ______.

Question 2 options:

collecting data.

identifying sunk costs.

evaluating theories.

recognizing scarcity.

developing spurious relationships.

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Question 3 (1 point)

Opportunity cost is best defined as

Question 3 options:

marginal cost minus marginal benefit.

the time spent on an economic activity.

the value of the best forgone alternative.

the monetary cost of an economic decision.

marginal cost plus marginal benefit.

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Question 4 (1 point)

A cost that cannot be recovered at the time a decision is being made is termed a(n)

Question 4 options:

marginal cost.

scarcity cost.

sunk cost.

average cost.

opportunity cost.

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Question 5 (1 point)

If the marginal costs of 1, 2, and 3 hours of talking on the phone are $50, $75, and $105, then the total costs are

Question 5 options:

$50, $150, and $315.

$50, $41.67, and $115.

$50, 125, and $230.

$50, $175, and $405.

impossible to calculate with information given.

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Question 6 (1 point)

In general, individuals should specialize in producing those goods for which they

Question 6 options:

can produce more quickly than others.

can produce less quickly than others.

have the lowest opportunity cost compared to others.

have the highest opportunity cost compared to others.

have an average opportunity cost.

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Question 7 (1 point)

The extra benefit that comes from an extra unit of activity is called the _________ of the activity.

Question 7 options:

benefit

marginal benefit

marginal cost

average benefit

reservation benefit

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Question 8 (1 point)

The marginal benefit of an activity is the

Question 8 options:

same as the total benefits of the activity.

total benefit divided by the level of the activity.

change in the activity divided by the change in benefits.

extra benefit associated with an extra unit of the activity.

total benefit divided by the change in the level of the activity.

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Question 9 (1 point)

The fundamental problem that is studied in economics is that

Question 9 options:

consumers have limited wants in the face of unlimited resources.

markets should function without government interference.

Canada is too wealthy.

consumers have unlimited wants in the face of limited resources.

there are unlimited resources.

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Question 10 (1 point)

The range of topics, or issues, that fit within the definition of economics is

Question 10 options:

limited to market activities, e.g., buying soap.

limited to individuals and firms.

extremely wide, requiring only the ideas of choice and scarcity.

limited to governments and nations.

very limited.

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Question 11 (1 point)

When economists make predictions using the framework of a given economic model, it is usually based on

Question 11 options:

personal experiences.

important relationships between particular variables.

mathematical abstractions.

political implications.

the profit-maximizing objective.

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Question 12 (1 point)

The cost of spending an evening partying instead of studying economics is

Question 12 options:

the resulting decrease in the test score in Economics.

the time spent at the party.

the score of the test.

the cost of the textbook.

university tuition.

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Question 13 (1 point)

As one progresses from a one-person economy to a large, multi-person economy, the shape of production possibilities curve changes from

Question 13 options:

downward sloping to upwards sloping.

linear to convex (bowed into the origin).

concave (bowed out from the origin) to linear.

convex (bowed into the origin) to concave (bowed out from the origin).

linear to concave (bowed out from the origin).

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Question 14 (1 point)

Which is NOT a sunk cost?

Question 14 options:

Monthly rent of $1,000 contractually specified in a one-year lease.

An insurance premium of $50 per year, paid last month.

An attorney's retainer of $50,000 per year.

A worker's wage of $15 per hour.

A non-refundable deposit for a tender.

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Question 15 (1 point)

"We should support government intervention because the market produces undesirable outcomes" is an example of

Question 15 options:

positive economics.

normative economics.

comparative economics.

negative economics.

formative economics.

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amberchimpanzee966

According to neuroeconomics,

Select one:

a. logical decisions take place in the limbic system or amygdale, and emotional decisions take place in the prefrontal cortex.

b. both logical decisions and emotional decisions take place in the limbic system or amygdala.

c. both logical decisions and emotional decisions take place in the prefrontal cortex.

d. logical decisions take place in the prefrontal cortex, and emotional decisions take place in the limbic system or amygdala.

e. None of the above.

In comparing perfect competition and monopoly, which of the following is true?

Select one:

a. Monopolies automatically earn profits; perfectly competitive firms do not.

b. In perfect competition, profits will disappear in the long run as new firms enter the market; in a monopoly, profits may exist in the long run.

c. In the short run, both monopoly and perfect competition attempt to minimize total costs.

d. In the long run, both monopoly and perfect competition produce at the minimum of the average-total-cost curve.

e. Neither monopoly nor perfect competition can sustain positive economic profits in the long run

The quantity supplied is

Select one:

a. the amount sellers are willing and able to offer at a given price, during a particular time period, everything else held constant.

b. the amount sellers are willing and able to offer for sale at all possible prices.

c. a set of price and quantity-supplied combinations, everything else held constant.

d. a list of prices and the corresponding quantities supplied.

e. a downward-sloping line that relates expenditures to different levels of output.

Efficiency implies that goods and services are allocated

Select one:

a. to those with the ability to pay.

b. to those with the greatest need for the good or service.

c. equally throughout society.

d. in the most cost-effective manner.

e. by government in such a way that the marginal social benefit equals the marginal social cost for each good and service.

Assume a reserve requirement of 25 percent. If a bank has zero excess reserves and $100,000 in total cash reserves, then its deposits must equal

Select one:

a. $100,000.

b. $250,000.

c. $400,000.

d. $25,000.

e. $750,000.

When economists describe the process of consumer choice, they

Select one:

a. portray people as simple, methodical, and robot-like consumers who always behave in perfectly predictable ways.

b. are asserting the simple fact that consumers do have to decide which goods and services to purchase with their limited incomes and people do select the options that give them the greatest utility.

c. point out that consumers rarely consider utility in their purchase decisions.

d. are asserting that price is the only variable consumers consider in making their purchasing decisions.

e. admit that there is no credible economic theory to explain the phenomenon.

Unemployment will decrease if

Select one:

a. actual GDP increases faster than potential GDP.

b. actual GDP increases at the same rate as potential GDP.

c. the GDP gap widens.

d. actual GDP increases less than potential GDP.

e. actual GDP decreases and potential GDP remains the same.

1. if the government attempts to break up a natural monopoly to enforce competition in an industry

A. the average cost of producing the good will increase

B. the smallest firm will have a significant cost advantage over the larger, less efficient firms

C. the average cost of producing the good will decrease

D. the price paid by consumers will be expected to remain the same.

2. which statement is true?

A. the monopolistic competitor always makes a profit in the short run

B. the monopolistic competitor operates at peak efficiency

C. product differentiation takes place in the minds of the buyers

D. none of these statements is true

3. Price discrimination

A. occurs when a good or service is resold

B. is prohibited by law

C. occurs when a seller charges two or more prices for the same good or service

D. occurs when the seller charges different prices for different quality products

4. Monopolistic competition may lead to each of the following except

A. inefficiency

B. overdifferentiation

C. overcapacity

D. monopoly profits

5. In the long run in monopolistic competition

A. most firms are making a profit

B. the absence of entry barriers ensures that there are no profits

C. economies of scale ensure that there are no profits

D. most firms are losing money

6. Price discrimination means

A. charging different prices for identical goods that have identical production costs

B. paying wages according to race or sex rather than productivity

C. exploiting the working masses by charging the highest single price possible.

D. eliminating all costs so that only pure profits are realized

7. The definition of monopolistic competition includes

A. few firms and ease of entry and exit

B. few firms and barrieres to entry and exit

C. many firms and barriers to entry and exit

D. many firms and ease of entry and exit

8. Which statement is true?

A. there are many firms in a monopolistically competitive industry.

B. monopolistic competitors produce an identical product

C. in order for product differentiation to take place, there must be clear physical differences amont the products sold

D. none is true

9. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

A. price equals minimum possible average total cost

B. price equals marginal cost

C. marginal revenue equals average total cost

D. price equals average total cost

10. Which statement is false?

A. Oligopolies are illegal in most states

B. most oligopolies engage in outright collusion

C. Ford motor company is an oligopoly

D. none of these statements is false

ECON 201 Chapter Notes - Chapter 1: Productive Efficiency, Optimal Decision, Marginal Utility

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