ECON-B 251 Test 1 Latest Updated
absolute advantage - ANSWER-the ability to produce more units of a good with fixed
amount of resources or producing the same amount with less resources
allocative efficiency - ANSWER-when we cannot produce more of any one good without
giving up some other good that we value more highly
assumptions - ANSWER-a set of conditions within a model
auction sniping - ANSWER-may occur to avoid bidding wars in a time auction to prevent
other bidders from increasing their bid
bounded rationality - ANSWER-assumes people's rationality is constrained by the less
than full information they have; constrained by one's mental capacity or time
capital goods - ANSWER-includes include tangible assets, such as buildings,
machinery, equipment, vehicles, and tools that an organization uses to produce goods
or services
Case 1 - ANSWER-when demand increases, the demand curve shifts to the left, the
equilibrium price and equilibrium quantity both decrease
Case 2 - ANSWER-when demand increases, the demand curve shifts to the right, the
equilibrium price and equilibrium quantity both increase
Case 3 - ANSWER-when supply increases, the supply curve shifts to the right, the
equilibrium price decreases and equilibrium quantity increases
case 4 - ANSWER-when supply decreases, the supply curve shifts to the left,
equilibrium price increases and equilibrium quantity decreases
Case 5 - ANSWER-when demand and supply increase, the demand and supply curve
shift to the right, equilibrium price may increase, decrease, or remain unchanged
(indeterminate) and equilibrium quantity increases
case 6 - ANSWER-when demand and supply decrease, the demand and supply curves
shift to the left, the equilibrium price may increase, decrease or remain unchanged and
equilibrium quantity decreases
case 7 - ANSWER-when demand increases and supply decreases, the demand curve
shifts to the right and the supply curve shifts to the left, the equilibrium price increases
and the equilibrium quantity may increase, decrease or remain unchanged
, case 8 - ANSWER-when demand decreases and supply increases, the demand curve
shifts to the left and the supply curve shifts to the right, the equilibrium price decreases
and equilibrium quantity may increase, decrease, or remain unchanged
Ceteris Paribus - ANSWER-Latin for "all of things being equal"; nothing changes except
the factor of factors being studied
change in demand vs. changes in quantity demanded - ANSWER-a change in one or
more of the non-price determinants will lead to a change in demand
changes in supply versus changes in quantity supplied - ANSWER-a change in one or
more of non-price determinants will lead to a change in supply
comparative advantage - ANSWER-the ability to produce a good or service at a lower
opportunity cost; relative concept
complementary goods in production - ANSWER-two goods produced from the same
resource
complements - ANSWER-cross-price elasticity of demand would be negative
consumption - ANSWER-the use of goods and services for personal satisfaction
cross-price elasticity of demand - ANSWER-percentage change in the demand for one
good (holding its price constant) divided by the percentage change in the price of a
related good (complement or substitute)
decreasing marginal benefit - ANSWER-the maximum amount of money a consumer is
willing to pay for an additional good or service is decreasing.
demand - ANSWER-quantities of specific good or services that individuals or groups will
purchase at various possible prices, other things being constant
demand curve - ANSWER-a graphical illustration of the inverse relationship between
price and quantity demanded
demand schedule - ANSWER-a table of the different quantity demanded of a good or
service at different prices
demanders - ANSWER-a party who wants or desires a good or service
determinants of demand - ANSWER-income, tastes and preferences, price of related
goods, expectations, market size
determinants of price elasticity of supply - ANSWER-resource substitution possibilities,
time frame for supply decision
absolute advantage - ANSWER-the ability to produce more units of a good with fixed
amount of resources or producing the same amount with less resources
allocative efficiency - ANSWER-when we cannot produce more of any one good without
giving up some other good that we value more highly
assumptions - ANSWER-a set of conditions within a model
auction sniping - ANSWER-may occur to avoid bidding wars in a time auction to prevent
other bidders from increasing their bid
bounded rationality - ANSWER-assumes people's rationality is constrained by the less
than full information they have; constrained by one's mental capacity or time
capital goods - ANSWER-includes include tangible assets, such as buildings,
machinery, equipment, vehicles, and tools that an organization uses to produce goods
or services
Case 1 - ANSWER-when demand increases, the demand curve shifts to the left, the
equilibrium price and equilibrium quantity both decrease
Case 2 - ANSWER-when demand increases, the demand curve shifts to the right, the
equilibrium price and equilibrium quantity both increase
Case 3 - ANSWER-when supply increases, the supply curve shifts to the right, the
equilibrium price decreases and equilibrium quantity increases
case 4 - ANSWER-when supply decreases, the supply curve shifts to the left,
equilibrium price increases and equilibrium quantity decreases
Case 5 - ANSWER-when demand and supply increase, the demand and supply curve
shift to the right, equilibrium price may increase, decrease, or remain unchanged
(indeterminate) and equilibrium quantity increases
case 6 - ANSWER-when demand and supply decrease, the demand and supply curves
shift to the left, the equilibrium price may increase, decrease or remain unchanged and
equilibrium quantity decreases
case 7 - ANSWER-when demand increases and supply decreases, the demand curve
shifts to the right and the supply curve shifts to the left, the equilibrium price increases
and the equilibrium quantity may increase, decrease or remain unchanged
, case 8 - ANSWER-when demand decreases and supply increases, the demand curve
shifts to the left and the supply curve shifts to the right, the equilibrium price decreases
and equilibrium quantity may increase, decrease, or remain unchanged
Ceteris Paribus - ANSWER-Latin for "all of things being equal"; nothing changes except
the factor of factors being studied
change in demand vs. changes in quantity demanded - ANSWER-a change in one or
more of the non-price determinants will lead to a change in demand
changes in supply versus changes in quantity supplied - ANSWER-a change in one or
more of non-price determinants will lead to a change in supply
comparative advantage - ANSWER-the ability to produce a good or service at a lower
opportunity cost; relative concept
complementary goods in production - ANSWER-two goods produced from the same
resource
complements - ANSWER-cross-price elasticity of demand would be negative
consumption - ANSWER-the use of goods and services for personal satisfaction
cross-price elasticity of demand - ANSWER-percentage change in the demand for one
good (holding its price constant) divided by the percentage change in the price of a
related good (complement or substitute)
decreasing marginal benefit - ANSWER-the maximum amount of money a consumer is
willing to pay for an additional good or service is decreasing.
demand - ANSWER-quantities of specific good or services that individuals or groups will
purchase at various possible prices, other things being constant
demand curve - ANSWER-a graphical illustration of the inverse relationship between
price and quantity demanded
demand schedule - ANSWER-a table of the different quantity demanded of a good or
service at different prices
demanders - ANSWER-a party who wants or desires a good or service
determinants of demand - ANSWER-income, tastes and preferences, price of related
goods, expectations, market size
determinants of price elasticity of supply - ANSWER-resource substitution possibilities,
time frame for supply decision
