Economics A100 Lecture Notes - Lecture 14: Dry Cleaning, Gambling

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ceruleanwildebeest294

28 Dec 2020

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Measures two things at once: the total income of everyone in the economy and the total expenditure on the economy"s output of goods and services. *for the economy as a whole, income must equal expenditure. Because every transaction has two parties: a buyer and a seller (illustrated by the circular flow diagram). Every dollar of spending by some buyer is a dollar of income for some seller. The circular flow diagram omits the government (who collects taxes), the financial system (who matches savers" supply of funds with borrowers" demand for loans), and the foreign sector(who trades goods and services, financial assets, and currencies) We can compute the flow of money from these transactions in two ways: by adding up the total expenditure by households or by adding up the total income (wages, rent, and profit) paid by firms. ***gdp= the market value of all final goods and services produced within a country in a given time period***

Related Questions

What is the market for factors of production?

What is the market for factors of production?
1. The market for factors of production is where households and firms interact to trade factors of production for factor payments. For example this is where people provide firms with labor and firms pay them with wages.
What is the money market?
1. The money market is where households, firms, and the government may save and/or invest their money to earn interests. Money market includes banks, stock market, bonds market, and other financial institutions where economic actors can buy and sell financial assets to earn interests and/or dividends.
Who are the three economic actors in the circular flow model?
1. In a circular flow model, the three main economic actors are the households, firms, and the government. Households include the typical individual consumers. Firms include businesses and similar producers in the economy. Finally, the government refers to the whole government system from federal to local level.
How is the national income of an economy determined?
1. The national income of an economy is determined by measuring the total value of the output produced in an economy or the total income earned by the actors in the economy. In a circular flow model, we can see that the value of total output produced should equal the total value of income generated and earned in the economy. This is because every dollar spent by someone in the economy is received by another person in the economy as income.
What is GDP?
1. The gross domestic product or GDP represents the sum total of the value of the final goods and services produced within the economy for a given year. It is the most commonly used measure of its economy’s productivity and income.

Q1. Import quotas are
a. methods for reducing imports by limiting the quantity of goods that can enter the country each year
b. voluntary agreements by exporting countries to limit sales in a foreign country
c. subsidies to foreign producers to encourage them to trade
d. none of these

Q2. Devices that set up multiple exchange rates between the currencies of two nations are known as
a. tariff quotas
b. export subsidies
c. exchange controls
d. variable currencies

Q3. The international organization that replaced the General Agreement on Tariffs and Trade (GATT) is the
a. World Bank
b. Export-Import Bank
c. World Trade Organization
d. International Monetary Fund

Q4. Dumping refers to the practice of
a. flooding a foreign market with large quantities of a good
b. selling a product abroad at a price below cost or below the domestic price
c. exporting inexpensive products to foreign countries
d. selling surplus goods abroad with counterfeit brand names

Q5. Countries engage in trade because
a. the exchange is mutually beneficial
b. governments force industries to exchange
c. international law dictates that exchange must take place
d. all of these

Q6. According to the U. S. Department of Commerce, all persons, unrelated or related, who occupy a housing unit comprise
a. a family unit
b. a household
c. an extended family unit
d. group living

Q7. A country with an equal distribution of income will have a higher standard of living than a country with a more unequal distribution of income.
a. true
b. false

Q8. Welfare caseloads tend to fluctuate with
a. business cycles
b. weather
c. stock markets
d. minimum wage rates

Q9. The official poverty threshold line is adjusted annually for
a. income taxes
b. inflation
c. average household size
d. average family size

Q10. For many welfare recipients, taking a job reduces income.
a. true
b. false

Q11. It is true that a stable economy occurs when
a. total injections into the circular flow are large enough to make up for government tax leakages
b. total leakages from the circular flow are great enough to offset the effects of government spending
c. total planned leakages from the circular flow are exactly equal to total planned injections into the circular flow
d. actual saving is equal to planned investment

Q12. The measure of income received by persons from all sources is known as
a. personal income
b. national income
c. gross domestic product
d. net national product

Q13. Discharges of chemicals from a paper plant that pollute a nearby river represent an example of
a. internal costs
b. the underground economy
c. social costs
d. transfer costs

coralrabbit244

1. A reason why there is more competition in the restaurant industry than in the music streaming industry is that restaurants

A.unlike music streaming? companies, have to abide by government sanitation rules.

B.have to cater to a variety of consumer tastes while music streaming companies do not.

C.have more elastic demand for their product compared to music streaming companies.

D.unlike music streaming? companies, do not have significant economies of scale.

2. Why would a government use a patent to block entry to some markets if this hinders competition especially when governments generally promote? competition?

A.Patents are justified because they are an important means for creating network externalities.

B.Patents encourage firms to spend money on research necessary to create new products.

C.Politicians sometimes succumb to pressure from lobbyists to grant favors to businesses for political reasons.

D.Patents are an important source of government revenue.

3.Suppose we can divide all the goods produced by an economy into two? types: consumption goods and capital goods. Capital? goods, such as? machinery, equipment, and? computers, are goods used to produce other goods.

Suppose a technological advance occurs that affects the production of consumption goods but not capital goods.

If a technological advance occurs that affects the production of consumption goods but not capital?goods, then the production possibilities frontier will

A.remain unchanged.

B.shift outward along the consumption goods axis.

C. shift outward along the capital goods axis.

D. shift outward along both axes.

The new production possibilities frontier will indicate that with the technological? advance, more (CAPITAL GOODS /// CONSUMPTION GOODS /// OF BOTH GOODS) can be produced.

4. Market failure is best described as

A.All of the above.

B.when consumption occurs at low social benefit.

C.when the market fails to produce the efficient level of output.

D.when the market fails to produce deadweight loss.

E.when production occurs at high social cost.

The market will fail when which of the following? happen????(Check all that? apply.)

A.When property rights are incomplete.

B.When there is a market surplus.

C.When there is scarcity.

D.When it is difficult to enforce property rights.

E.When there is a market shortage

5.In which of the following market structures is price discrimination? possible?

??????a. perfect competition

??????b. monopoly

??????c. oligopoly

??????d. monopolistic competition

A.?b, c, and d only

B.?a, b,? c, and d

C.c and d only

D.b and c only

6. How do market economies ultimately determine what goods and services are? produced, how the goods and services will be? produced, and who will receive the goods and? services?

A.The government determines what goods and services are? produced, how to produce? them, and who will receive them.

B.Firms determine what goods and services are produced and how to produce? them, and markets determine who will receive them.

C.Consumers determine what goods and services are? produced, firms determine how to produce? them, and equity determines who will receive them.

D.Consumers determine what goods and services are? produced, firms determine how to produce? them, and markets determine who will receive them.

E.Firms determine what goods and services are? produced,technology determines how to produce? them, and consumers determine who will receive them.

7. For monopolistically competitive firms is it always likely in the? long-run to have? zero-economic profit?

Monopolistically competitive firms in the? long-run

A.may continue to earn profit by convincing consumers their products are differentconvincing consumers their products are different.

B.will not continue to earn profit because the cost of production will rise as new firms enter the market.

C.will not continue to earn profit because monopolistically competitive firms produce identical products.

D.will continue to earn profit due to barriers to new firms entering the market.

E.may continue to earn profit by instead beginning to produce a product identical to competitors.

8. In monopolistically competitive? markets, what is a factor under a? firm's control that determines whether it will be? successful?

A. Upper A firm's ability to differentiate its productA firm's ability to differentiate its product.

B.Consumer preferences.

C.Factors that affect all firms in a market.

D.Chance events.

E.Both a and b.

9. From the list? below, select the necessary condition in order to achieve successsful price discrimination.

A. The seller must possess market power.

B. Buyers must have identical inelastic demands.

C. Transactions costs must be zero.

D.The buyer must possess market power.??

10.Suppose Dell is currently selling 3,000,000 computers per year. However, managers at Dell are considering whether to increase production by 300,000 computers. One manager explains that after increasing production by this? amount, total profit would be? $100 million. Given this? information, should Dell increase production by 300,000 computers??

A.?Yes, because Dell would earn a profit.

B.Information about the additional cost incurred from producing 300,000additional computers is required to answer this question.

C.?No, because increasing production by 300,000 computers would decrease the price of computers.

D.Information about the additional revenue earned and the additional cost incurred from producing 300,000 additional computers is required to answer this question.

E. Information about the total revenue earned and the total cost incurred from producing 3,300,000 computers is required to answer this question.

11. The Majestic box office sells tickets for the same play at different? prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the? front, around the stage. Which of the following statements is? true?

A. This is an example of product differentiation not price discrimination.

B. The theatre practices first degree price discrimination by setting prices based on willingness to pay.

C. Charging two different prices is an effective way to avoid an excess demand for play? tickets; the higher price lowers quantity demanded to some extent.

D. Since the cost of producing the play does not change with the seating? configuration, this is evidence of price discrimination based on market segmentation.

Economics A100 Lecture Notes - Lecture 14: Dry Cleaning, Gambling

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