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Class:EconS 352
Subject:Economic Sciences
University:Washington State University
Term:Spring 2010
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The economic theory of a firm assumes that the primary objective of a firm//owners is to.... maximize the value of the firm
what is the relationship between economic and accounting profit Economic profit is less than accounting profit
economic profits may result from innovation, risk taking, and explotinging market inefficientcys
Managers may make decisions that are not consistent with the goals of stockholders. this is reffered to as the principal agent problem
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ConAgra has introduced a lean mixture of cereal and ground beef that is indistingushable from ground beef but has about the same amount of fat as chicken. As a result the... demand for chicken decreases
Which good represents substitue goods contacts and eyeglasses
information on the quatities that would be purchased at different prices, holding all other factors constent in a given time period from buyers is shown in a Market demand curve
The demand curves's usual slope implys that customers... buy less of a good whose price increases
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A market demand curve is likely to shift to the right when population increases
As we move down the linear demand curve, demand becomes less elastic
Is the demand -2.625 elastic yes
what type of good is beer relative to textbooks in a "college setting" Substitues
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the price elasticity of market demand primarily depends on the.... Availability of substitutions
The price elasticity of demand can be interpreted as the... percentage change in the quantity demanded divided by the percentage change in the good's price
`the income elasticity of demand is defined as the... Percentaged change in the quantity dermanded divided by the percentage change in per capita income
points along an indifference curve represents bundles of goods that deliver equal utility
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Consumer surplus is defined as The difference between what a consumer is willing to pay and what they actually pay for a good or service.
international trade is introduced for a good, the producers in the importing country are worse off due to an increase of supply of the good
a production function is a table, a graph, or an equation showing the... maximum output that can be achieved from specified levels of input
the average producut of labor is defined as the output/labor input usage
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the marginal product of labor is divided by the... change in output/change in input usage
in what state of production is marginal product greater than zero but less than the actual product Stage 2
Concerning production in stage 3 It is the stage of economic inefficency
The cobb-douglas function is represented by... Q=aL^bK^cr5e5
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An isoquant identifies shows all possible (efficient) input bundles capable of producing a given output level
The marginal rate of technical substiution between two inputs: Shows the rate which one input can be traded for another, holding output constant
The production function of the for Q=aL^0.2K^0.2 implies decreasing returns to sales
Which statement about the relationship between the marginal cost and the average variable is correct When marginal cost is falling, AVC is falling AND when MC exceedes AVC, AVC must be rising
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The supply curve of a competative firm in the short run is it's Marginal cost curve above the minimum of average variable cost
In the model of perfect competition there are... low barriers to entry and limited nonprice competition
in the model of perfect competition, firms maximize profits by producing where... price=MC
Economies of scope exist when it is cheaper to produce... given quatities of two different products together than to produce the same quantities seperately
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Who was the first president to enforce the sherman antitrust act was... Prez. Roosevelt
the learner index measures... the ability of a monopoly to set price above marginal cost
output elasticity can be defined as the percentage change in output/the equal percentage change in all inputs
Price discrimination is defined as when the same product is sold at more than one price
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A firm with production located in a poor idaho town sells toys locally for $10 each and ships the same toys to sell in a wealthy idaho town for $15. Theyre not price discriminating if... total transportation cost is $5/unit
when pan united airlines give a $400 free discount to persons with student ids, they are practicing... 3rd degree price discrimination
when an electrical utility company charges higher rates during the day rather than night, it is practicing Peak-load pricing
in the model of oligopoly there... are few firms producing differentiated or undifferentiated products
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in the united states most cartels were declared illegal by the.. sherman antitrust act
the objective of a cartel is to control supply to decrecrease production
the opec oil cartel lost it's market power and the world oil prices fell in the 1980s members began to cheat on agreement
cereal manufactureres use of coupons can be partially explained by third degree price discrimination
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in an english auction buyers bid against eachother with a sucession of increasingly higher bids until only one remains AND the dominate strategy is to bid up until your reservation price
in a sealed bid auction each bidder submits a price that is known only to that bidder. bids are opened and the highest (lowest) bid is accepted
the winner's curse occurs because The winning bid exceeds true value of the object
Tristate states sale price is lowered and lowered until the good is sold. this is an example of... dutch auction
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How do you calculate optimal bid? Reservation price- (reservation price- lowest/#)
Business risk is... the variation in firm net income due to price or production risk
a definition of subjective probability is a persons degree of certainty of an event occouring
a decision fork is represented by a... square
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a chance fork with payoffs given for each branch is assigned a value based on the... the expected value of all payoff branches
a decision for with payoff givedfor each brach is assigned a value based on t the highest payoff branch
considering a business, budgets are best concerned as a management function
what type of budget would you use to analyze a marginal change in your operation that effects multiple enterprises partial budget
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Definition
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 The economic theory of a firm assumes that the primary objective of a firm//owners is to....maximize the value of the firm
 what is the relationship between economic and accounting profitEconomic profit is less than accounting profit
 economic profits may result frominnovation, risk taking, and explotinging market inefficientcys
 Managers may make decisions that are not consistent with the goals of stockholders. this is reffered to asthe principal agent problem
 ConAgra has introduced a lean mixture of cereal and ground beef that is indistingushable from ground beef but has about the same amount of fat as chicken. As a result the...demand for chicken decreases
 Which good represents substitue goodscontacts and eyeglasses
 information on the quatities that would be purchased at different prices, holding all other factors constent in a given time period from buyers is shown in aMarket demand curve
 The demand curves's usual slope implys that customers...buy less of a good whose price increases
 A market demand curve is likely to shift to the right whenpopulation increases
 As we move down the linear demand curve, demand becomesless elastic
 Is the demand -2.625 elasticyes
 what type of good is beer relative to textbooks in a "college setting"Substitues
 the price elasticity of market demand primarily depends on the....Availability of substitutions
 The price elasticity of demand can be interpreted as the...percentage change in the quantity demanded divided by the percentage change in the good's price
 `the income elasticity of demand is defined as the...Percentaged change in the quantity dermanded divided by the percentage change in per capita income
 points along an indifference curve represents bundles of goods thatdeliver equal utility
 Consumer surplus is defined asThe difference between what a consumer is willing to pay and what they actually pay for a good or service.
 international trade is introduced for a good, the producers in the importing country areworse off due to an increase of supply of the good
 a production function is a table, a graph, or an equation showing the...maximum output that can be achieved from specified levels of input
 the average producut of labor is defined as theoutput/labor input usage
 the marginal product of labor is divided by the...change in output/change in input usage
 in what state of production is marginal product greater than zero but less than the actual productStage 2
 Concerning production in stage 3It is the stage of economic inefficency
 The cobb-douglas function is represented by...Q=aL^bK^cr5e5
 An isoquant identifies shows all possible (efficient) input bundles capable of producing a given output level
 The marginal rate of technical substiution between two inputs:Shows the rate which one input can be traded for another, holding output constant
 The production function of the for Q=aL^0.2K^0.2implies decreasing returns to sales
 Which statement about the relationship between the marginal cost and the average variable is correctWhen marginal cost is falling, AVC is falling AND when MC exceedes AVC, AVC must be rising
 The supply curve of a competative firm in the short run is it'sMarginal cost curve above the minimum of average variable cost
 In the model of perfect competition there are...low barriers to entry and limited nonprice competition
 in the model of perfect competition, firms maximize profits by producing where...price=MC
 Economies of scope exist when it is cheaper to produce...given quatities of two different products together than to produce the same quantities seperately
 Who was the first president to enforce the sherman antitrust act was...Prez. Roosevelt
 the learner index measures...the ability of a monopoly to set price above marginal cost
 output elasticity can be defined as thepercentage change in output/the equal percentage change in all inputs
 Price discrimination is defined aswhen the same product is sold at more than one price
 A firm with production located in a poor idaho town sells toys locally for $10 each and ships the same toys to sell in a wealthy idaho town for $15. Theyre not price discriminating if...total transportation cost is $5/unit
 when pan united airlines give a $400 free discount to persons with student ids, they are practicing...3rd degree price discrimination
 when an electrical utility company charges higher rates during the day rather than night, it is practicing Peak-load pricing
 in the model of oligopoly there...are few firms producing differentiated or undifferentiated products
 in the united states most cartels were declared illegal by the..sherman antitrust act
 the objective of a cartel is tocontrol supply to decrecrease production
 the opec oil cartel lost it's market power and the world oil prices fell in the 1980smembers began to cheat on agreement
 cereal manufactureres use of coupons can be partially explained bythird degree price discrimination
 in an english auctionbuyers bid against eachother with a sucession of increasingly higher bids until only one remains AND the dominate strategy is to bid up until your reservation price
 in a sealed bid auctioneach bidder submits a price that is known only to that bidder. bids are opened and the highest (lowest) bid is accepted
 the winner's curse occurs becauseThe winning bid exceeds true value of the object
 Tristate states sale price is lowered and lowered until the good is sold. this is an example of... dutch auction
  How do you calculate optimal bid?Reservation price- (reservation price- lowest/#)
 Business risk is...the variation in firm net income due to price or production risk
 a definition of subjective probability isa persons degree of certainty of an event occouring
 a decision fork is represented by a...square
 a chance fork with payoffs given for each branch is assigned a value based on the...the expected value of all payoff branches
 a decision for with payoff givedfor each brach is assigned a value based on tthe highest payoff branch
 considering a business, budgets are best concerned as a management function
 what type of budget would you use to analyze a marginal change in your operation that effects multiple enterprisespartial budget
  Definition
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