1. Total surplus is greatest at market equilibrium.
2. Perfectly elastic demand curves are horizontal in shape.
3. If a firm's long run average total cost is decreasing, a firm is said to have relatively
4. Economic profit i
1. Use the table below to find marginal benefit and marginal cost. Graph the marginal benefit and marginal cost curves.
the optimal level of pollution control as point 'A' on the graph. Find the optimal level of pollution contro
1. Based on the graph below, draw the line corresponding to the world price on the country graph. Complete the table.
Basic Principles of Economics
What is Economics?
Economics, like all social sciences, is a study of
Unlike other social sciences, economics
focuses on one aspect of behavior: how
people use resources.
This is a question that is far broa
1. Graph the points on the following graph.
2. Find the slope between points A and B.
3. Find the slope between points C and D.
1. Graph the points on the following graph.
The x value
1. 35% of 120
2. 10% of 58
3. 16% of 50
4. 71% of 5180
5. Increase 48 by 20%
6. Increase 550 by 42%
7. Decrease 200 by 15%
8. Decrease 36 by 5%
9. Percent increase from 410 to 492
10. Percent increase from 200 to 255
11. Percent decrease from 50 to 40
Specialization and Trade
Standard of Living
Ones standard of living refers to the goods
and services one can consume (use, in other
We assume that higher standards of living are
associated with greater levels of utility, all else
being equal (ce
Efficiency of Markets
Markets often result in efficient outcomes, by balancing the
interests of producers (supply) and consumers (demand).
The supply side is based on producer costs, and creates
incentives for producers to work efficiently. (Productive
Under usual conditions, the market equilibrium is
If a market is functioning without market failure:
Buyers and sellers possess good informations
Then markets will be allocatively effici
Perfect competition is the ideal set of conditions
under which markets operate.
When we relax the characteristics of perfect
competition, we get a form of imperfect competition.
There are different types of imperfect competition:
6. Limitations of GDP
Although GDP is a reasonably good measure of a nation's output, it does not necessarily include all
transactions and production for that nation.
Which of the following scenarios are either not accounted for or measured inaccurately b
5. Real versus nominal GDP
Consider a simple economy that produces two goods: cupcakes and oranges. The following table
shows the prices and quantities of the goods over a three-year period.
1.Other things equal, the demand for a good tends to be more inelastic, the
a. fewer the available substitutes.
longer the time period considered.
more the good is considered a luxury good.
more narrowly defined is the mark
Chapter 9 Flashcard
If a nation that does not allow international trade in steel has a domestic
price of steel lower than the world price, then
a.the nation has a comparative advantage in producing steel and would become a steel
exporter if it op
Multiple choice question
If the price of a hot dog is $2 and the price of a hamburger is $4, then 30 hot dogs contribute as much
to GDP as _ hamburgers.
Angus the sheep farmer sells $20 worth of wool to Barnaby the knitter.
Aplia chapter 10
9. Problems and Applications Q3
As the chapter states, GDP does not include the value of used goods that are resold.
True or False: Including the value of used goods that are resold would make GDP a less informative
measure of ec
11. Problems and Applications Q5
Consider an economy that produces only chocolate bars. In year 1, the quantity produced is 3 bars and
the price is $4. In year 2, the quantity produced is 4 bars and the price is $5. In year 3, the quantity
produced is 5 b
14. Problems and Applications Q10
The participation of women in the U.S. labor force has risen dramatically since 1970.
This rise likely
increased GDP in the U.S.
Now imagine a measure of well-being that includes time spent working in the home and taking
12. Problems and Applications Q6
Consider the following data on U.S. GDP:
(Billions of dollars)
(Base year 2005)
The growth rate of nominal GDP between 2002 and 2012 was
GDP deflator between
3. Categories of expenditures
Tim and Alyssa Espinosa live in Swarthmore, PA. Their son, Brian, is an artist living in New York City.
For each of the following transactions that occur in their lives, identify whether it is included in the
calculation of U
2. Activities included (and not included) in the calculation ofGDP
The gross domestic product (GDP) of the United States is defined as the
final goods and services produced
market value of all
within the United States in a given period of
1. The economy's income and expenditure
The following diagram presents a circular-flow model of a simple economy. The outer set of arrows
(shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the
corresponding flow o
Economic theory best describes perfect competition.
Perfect competition is very rare.
It is defined by these characteristics:
There are many buyers and sellers.
There is free entry to and exit from the industry.
All goods for sale a