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Chapters 1-5 study guide

What are inferior goods?
A good that consumers demand less when their incomes increase
What determines the price and quantity produced of most goods?
Interaction of supply and demand
How would you describe an economy that uses its resources to make the greatest possible number of goods and services?
Efficient economy
Human capital includes
knowledge and skills developed
What is a shortage?
good/service is unavailable
Entrepreneur has sweaters w/fixed costs of $100. Makes 10 a month spends $15 on wool. Makes 11 one month spends $17 on wool what is the marginal cost of the eleventh sweater?
$2
Gun’s and butter decision
model shows increase in one, relies on decrease of the other one. national defense vs. domestic needs
The price of movie tickets in a town has risen from $7 to $9 what is the most likely effect of the change?
less of a demand
Will a sprinter sees local store raised price of sports drink from $1 to $1.50 what will be his response?
bought 10 at $1 later he will only but 8 at $1.50
Basic principle of the law of demand
when a price is lower, people will buy more of it
Difference between general partnership and limited liability partnership LLP
In an LLP all partners are limited from personal liability in certain situations
Movie rentals were $2.95 Sara rents ten a month. The price increased by 50 cents and Sara rented two fewer. Price increased by $1 and she cute the number of movies in half. What is her quantity demanded by month at current price?
Four
Community produces large number of tires and small amount of kiwis. Kiwis became popular, and they decided to expand kiwi cultivation and decrease tire manufacturing. According to the law of increasing costs what will happen
Cost of kiwis will decrease while cost of tires will increase
Alex receives raise and continues to work same number of hours. His demand for $3 shirts which he considers an inferior good will do what?
Will decrease
Law of supply
Increase number of sandwiches when price increases; tendency of suppliers to offer more of a good at a higher price
What is scarcity?
limited equality of resources to meet unlimited wants
How is the current demand for a good related to its future price?
if price is expected to drop, current demand will fall
Bens family purchased a dishwasher so that they save time. This kind of production factor is
Physical capital
Why do you think franchising has become popular in recent years?
Bc owners are free to set own rules and operating standards, but they benefit from national ad. programs
When a consumer is able and willing to buy a good/service he or she creates what?
Demand
What is a factory building an example of?
physical capital
Entrepreneur
person owns/runs business
When the selling price of a good goes up, what is the relationship to the quantity supplied?
It becomes practical to produce more goods
An efficient economy is one that does what?
Uses all resources to make greatest number of goods
What is the opportunity cost of a decision?
Alternative decisions that could have been made
How is future price related to current demand?
If price is expected to rise current demand will rise too
Any resources that are made by humans and used to create other goods and services are called
Capital goods
Difference between scarcity and shortage
Scarcity – limited amounts of goods/services available to meet unlimited amounts.
Shortage – consumers want more of good, producers willing to make at particular price
What is a company’s total revenue
The amount a company relieves for selling its goods
Give an example of lower production costs brought about by the use of technology
The use of email to replace slower surface mail
Two giant automakers merged to form a single corporation the type of merger is
Horizontal
What do sellers do if they expect the price of goods they have for sale to increase dramatically in the near future?
Store the goods until price increases
When prices rise, what happens to income?
It buys less
A company that makes baseball caps in underutilizing its resources. What does this mean?
Company is paying workers less than should
In which kind of business organization should you participate if you can afford to lose only the amount of your initial investment?
Limited partnership
What is a fixed cost for a store?
Rent
What kind of changes would be expected in the demand of a country that has a growing population?
A rise in demand for shelter

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