Term
|
Definition
a market outcome in which the marginal benefit to consumers of the last unit produced is equal to
its marginal cost of production and in which the sum of consumer surplus and producer surplus is
at a maximum |
|
|
Term
| When the government imposes price floors or price ceilings, |
|
Definition
| some people win, some people lose, and there is a loss of economic efficiency. |
|
|
Term
A price floor is a legally determined ________ (maximum, minimum) price that sellers may receive. A
price ceiling is a legally determined ________(minimum, maximum) price that sellers may charge. |
|
Definition
|
|
Term
The area ________ the market supply curve and ________ the market price is equal to the total amount of
producer surplus in a market. |
|
Definition
|
|
Term
A market does not cease to exist when there is Market failure
A. True
B. False |
|
Definition
|
|
Term
| A negative externality causes: |
|
Definition
| the social cost from consuming the good to be greater than the private cost. |
|
|
Term
At what level must a Pigovian tax be set to achieve efficiency? A Pigovian tax must be set equal
to |
|
Definition
| the cost of the externality. |
|
|
Term
|
Definition
| a tax to bring about an efficient level of output in the presence of externalities. |
|
|
Term
Why would supporters of market-based reforms to health care propose to make the tax treatment of
employer-provided health insurance the same as the tax treatment of individually purchased health
insurance?
A. This change would result in an increase in employees' out-of-pocket spending on health care.
B. This change would result in a reduction in employers' spending on health insurance policies
for employees.
C. This change would result in a reduction in health insurance premiums.
D. All of the above. |
|
Definition
|
|
Term
Which of the following is one of the major reasons for the improvement in U.S. health in the last two
centuries?
A. improvements in the distribution of food
B. better sanitation
C. advances in medical equipment and prescription drugs
D. All of the above are true. |
|
Definition
| D. All of the above are true. |
|
|
Term
Assume a large corporation is experiencing the principal-agent problem.
What could the corporation do to minimize this problem? The company could
A. appoint inside directors as members of the board of directors.
B. provide shareholders with limited personal liability.
C. tie the salaries of top managers to the profits of the firm.
D. institute separation of ownership from control.
E. let a chief executive officer run the day-to-day operations of the corporation |
|
Definition
| C. tie the salaries of top managers to the profits of the firm. |
|
|
Term
he US government passed the Sarbanes-Oxley Act in 2002, further defining its role in corporate
governance. What issue did the Sarbanes-Oxley Act address?
The Sarbanes-Oxley Act was passed because some companies had
A. benefited from limited liability.
B. separated ownership from control.
C. falsified their financial statements.
D. not used accountants who were certified.
E. raised funds through indirect finance. |
|
Definition
| C. falsified their financial statements. |
|
|
Term
Which of the following terms refers to a flow of funds from savers to firms through financial markets?
A. financial engineering
B. business finance
C. indirect finance
D. direct finance |
|
Definition
|
|
Term
When quantity demanded is completely unresponsive to price, what is the value of price elasticity of
demand?
A. A negative number
B. 1
C. A number between 0 and 1
D. 0 |
|
Definition
|
|
Term
As you move down a linear demand curve, the price elasticity of demand in absolute value
A. increases.
B. stays the same.
C. decreases.
D. None of the above. |
|
Definition
|
|
Term
Which of the following statements is true?
A. The three most important indexes are the Dow Jones Industrial Average, the S&P 500, and the
Nasdaq Composite Index.
B. The performance of the U.S. stock market is often measured by market indexes, which are
averages of stock prices.
C. The S&P 500 is composed of the stocks of the 500 largest companies, so it does the best job
of reflecting general movements in stock prices.
D. All of the above. |
|
Definition
|
|
Term
In general, the demand for a good will be _________ elastic the ___________ the share of the good in
the average consumer's budget.
A. less; larger
B. unit; larger
C. less; smaller
D. more; smaller |
|
Definition
|
|
Term
When quantity demanded is completely unresponsive to price, what is the value of price elasticity of
demand?
A. A number between 0 and 1
B. 1
C. A negative number
D. 0 |
|
Definition
|
|
Term
If a 30 percent increase in the price of Red Bull energy drinks results in a decrease in the quantity
demanded of 25 percent, demand for Red Bull is _______ in this range. |
|
Definition
|
|
Term
Compare the demand for water with the demand for wine.
The demand for water is likely
A. relatively more elastic because water is a luxury.
B. relatively more elastic because water is a necessity.
C. relatively more inelastic because water is a luxury.
D. equally elastic as the demand for wine.
E. relatively more inelastic because water is a necessity. |
|
Definition
| E. relatively more inelastic because water is a necessity. |
|
|
