35 Cards in this Set
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If the price of a complement goes up, what happens to the demand curve?
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It shifts to the left
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Demand and price are
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inversely related, as price goes up, demand goes down, and as price goes down, demand goes up
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Supply and price are
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directly related, if price of a good goes up, so does supply, if the price of a good falls, so does supply
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A supply curve is what kind of curve?
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a minimum-supply-price curve
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A rise in the price of a good ______ the quantity supplied and ____ the supply
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increases; does not change
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Suppose the price of a good increased so more people started producing this good. What happens to the graph? What is this an example of?
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Demand curve shifts right and the quantity supplied increases. This is an example of Law of Supply.
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Suppose the price of corn increased 35%. A cotton farmer would plant corn because:
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Corn is a substitute in the production of cotton, and when the price of corn rises, cotton farmers plant more corn.
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A rise in wages, does what to supply?
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decreases
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When dairies make low-fat milk, it produces cream. So if the price of cream increased, the supply of low-fat milk______
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Increases
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A rise in the price of low-fat milk _____ the price of low-fat milk
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does not change
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A new technology lowers the price of producing a good, the supply of the good:
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increases
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Suppose a firm produced good A and while producing good A, it produces good B. If a firm decides to producing good B, what happens to the supply and supply curve of good A.
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Supply decreases so the supply curve shifts to the left.
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If the demand increases the demand curve
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shifts right
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If demand decreases the demand curve
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shifts left
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If supply increases the supply curve
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shifts right
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If the supply curve decreases, the supply curve
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shifts left
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If a chart had price, quantity supplied, and quantity demanded, market equilibrium would be
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When quantity supplied and quantity demanded were equal
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When shortage arises, the price __ to its equilibrium, which
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rises; decreases the quantity demanded and increases quantity of supplied
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when a surplus arises, the price _____ to its equilibrium, which ______.
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falls; increases the quantity demanded and decreases the quantity supplied
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If the price of a good is less than the equilibrium price, there is a ___ in that good and the price will__.
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shortage, rise
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Oligopoly is a market structure which
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natural or legal barriers prevent the entry of new firms and a small number of firms compete
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Are firms in oligopolies independent or interdependent, why?
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They are interdependent because each firm's influence the profits of the others
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Demand of a good is $30 for 60 units. One firm can produce 30 for $30, how many firms are needed?
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2
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If there is a natural duopoly and the demand is 800 units for $50. What should each firm produce?
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400 units for $50
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Energizer is gaining market share over its competitor Duracell and is making a profit despite the rise in cost of zinc (in batteries). The market for batteries has ___. The market for batteries is___.
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a small number of interdependent firms; oligopoly
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The common features of all games are
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rules, strategies, playoffs, and an outcome
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In a collusive agreement, the firms best option ___ if the other firms complies and ___ if the other firm cheats.
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cheat
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A collusive agreement creates a game like the prisoners' dilemma because
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the outcome is worse if both firms held to the agreement
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Tit-for-Tat Strategy
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A negotiating tactic in which the individual responds to competitiveness with competitiveness and to cooperation with cooperation
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trigger strategy
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Players cooperate and both gain benefits until one of them break the cooperation, then the strategy will go back to Nash
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A market that is contestable has a __ price and __ quantity than monopoly
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lower; greater
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Public good generally are (rival/non-rival) and (excludable/non-excludable)?
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non-rival and non-excludable
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If private firms began producing and sell public goods to consumer,
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no one would feel the incentive to pay for the goods
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public good
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non-rival non-excludable
everyone can enjoy it without having to pay for it, however, the gov't provides public goods & can tax the people for its use
ex: clean air, national defense
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The value of marginal product of labor
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is the value of hiring one more unit of a factor of production
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EC 210: TEST 1