Al Hommy God Macro
Published in 1776, ________ was written by Adam Smith.
"An Inquiry into the Nature and Causes of the Wealth of Nations"
Refer to Figure above. If Vidalia chooses to produce 40 dozen orchids, how many roses can it produce to maximize production.
100 dozen
Hours Open Total Revenue (dollars) 1 $40 2 65 3 80 4 90 5 95 6 98 Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. 6) Refer to Table 1. Using marginal analysis, how many hours should Julius extend his shop's hours of operations?
2 Hours
Refer to Figure below. If the economy is currently producing at point X, what is the opportunity cost of moving to point W?
3 million tons of steel
Hours Open Total Revenue 1 $40 2 $65 3 $80 4 $90 5 $95 6 $98 Using Marginal Analysis, how many hours should Julius extend his shops hours of operations?
4 Hours
Refer to Figure above. If Vidalia chooses to produce 80 dozen roses, how many orchids can it produce to maximize production?
48 dozen orchids
Refer to Figure above. At a price of $25, how many units will be sold?
500
Voluntary exchange increases economic efficiency
Because neither the buyer nor the seller would agree to a trade unless they both benefit.
Wilma Betty Statues 12 14 Benches 4 7 Refer to the table above. Which of the following statements is true?
Betty has a comparative advantage in making benches and wilma in making statues.
Which of the following is part of an economic model?
Data
__________ occurs when economic benefits are distributed fairly
Equity
Refer to Figure above, In the circular flow diagram, market K represents.
Factor markets
As population declines, scarcity eventually disappears.
False
Consumers make all economic decisions in a mixed economy.
False
For most goods and services, the burden of a tax is on the sellers.
False
If Blake can pick more cherries in one hour than Cody, then Blake has a comparative advantage in cherry picking
False
If the demand curve for a product shifts to the right and the supply curve for the product shifts to the left, equilibrium price and equilibrium quantity will both increase.
False
In economics, the term "free market" refers to a market where no sales tax is imposed on products sold.
False
In market economies, income distribution is always going to be completely equitable.
False
In the circular flow model, households supply resources such as labor services in the product market.
False
Physical capital refers to stocks and bonds.
False
Policies based on normative economic ideas tend to increase economic efficiency and improve equity.
False
The difference between consumer surplus and producer surplus ina market is equal the deadweight loss
False
The term "market" refers only to trading arrangements that have been approved by the government
False
Refer to Figure below. Which country has a comparative advantage in the production of coconuts?
Guatemala
HW 1
HW 1
HW 2
HW 2
HW 3
HW 3
Refer to Figure above. In the circular flow diagram, economic agents M represent
Households
The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.
Income
A(n) _________ is represented by a rightward shift of the demand curve while a(n) _____________
Increase in demand; Increase in quantity demanded
The law of demand implies, holding everything else constant, that as the price of yogurt
Increases, the quantity of yogurt demanded will decrease.
Minnie Mickey Hats 40 50 Umbrellas 10 5 Refer to Table above. Which of the following statements is true?
Mickey has a comparative advantage in making hats and Minnie in making umbrellas.
The income effect of a price change results in a
Movement along the demand curve due to a change in purchasing power brought about by the price change
If the production possibilities frontier is linear, then
Opportunity costs are constant as more of one good is produced.
One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?
People respond to economic incentives.
Refer to Figure below. ____________is (are) unattainable with current resources.
Point C
In a market economy, those who are willing and able to buy what is produced
Receive the most of what is produced.
In a market economy, those who are willing and able to buy what is produced.
Receive the most of what is produced.
Refer to figure above. A technological advancement would be represented by a movement from
S1 to S2
The study of economics arises due to
Scarcity
which of the following is a result of government price controls?
Some people win and some people lose
The process used to produce goods and services describes
Technology
Comparative advantage means
The ability to produce a good or service at a lower opportunity cost than any other producer.
If the price of gasoline increases, what will be the impact in the market for public transportation?
The demand curve for public transportation shifts to the right.
Refer to Figure above. The graph in this figure illustrates an initial competitive equilibrium in the market for motorcycles at the intersection of D1 and S1 (point A). If the price of motorcycle engines increases, and the wages of motorcycle workers increase, how will the equilibrium point change?
The equilibrium point will move from A to B
Opportunity cost is defined as
The highest-valued alternative that must be given up to engage in an activity.
A consumer is willing to purchase a product up to the point where
The marginal benefit is equal to the price of the product.
The production possibilities frontier shows
The maximum attainable combination of two products that may be produced in a particular time period with available resources.
Which of the following is a normative economic statement
The price of milk is too high
One would speak of a movement along a supply curve for a good, rather than a change in supply, if
The price of the good changes
_______ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
The production possibilities frontier model.
The circular flow model demonstrates
The roles played by households and firms in the market system.
Refer to Figure above. If the price is $25
There is a surplus of 300 units.
Without technological advancement, how can a nation achieve economic growth?
Through an increase in supplies of factors of production
Which of the following is a normative economic statement?
Tobacco products should be banned in all public spaces
An increase in the unemployment rate may be represented as a movement form a point on the production possibilities frontier to a point inside the frontier.
True
Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient.
True
If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.
True
If the population increases and input prices increase, the equilibrium price of a product will definitely increase.
True
In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country.
True
The division of the burden of a tax between buyers and sellers in a market is called tax incidence.
True
Exam 1
Version 1 Questions and Answers. Look at actual sheets for all of the graphs in all questions
Which of the following is a macroeconomic question?
What determines the minimum wage?
Which of the following is a macroeconomic question?
What determines the unemployment rate?
An example of a factor of production is
a worker hired by an auto manufacturer.
If you can produce more of something than others with the same resources, you have ___________
an absolute advantage
If a decrease in income leads to an increase in the demand for macaroni, then macaroni is
an inferior good
The Basic economic Problem of Scarcity
has always existed and will continue to exist.
A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.
increase in demand; increase in quantity demanded
Because minimum wage is a price floor
it will create a deadweight loss.
Economic surplus is maximized in a competitive market when
marginal benefit equals marginal cost.
The ability to exercise control over one's own resources within the confines of the law refers to
one's property rights.
Every society faces economic trade-offs. This means
producing more of one good means less of another good can be produced.
The supply curve for umbrellas
shows the relationship between the price of umbrellas and the quantity of umbrellas supplied
The process used to produce goods and services describes
technology
If the price of smartphones was to increase, then
the demand for smartphone apps would decrease.
Opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity.
A demand curve shows the relationship between
the price of a product and the quantity of the product demanded
The circular flow model demonstrates
the roles played by households and firms in the market system.
If in the market for apples the supply has decreased, then
the supply curve for apples has shifted to the left.
Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?
$10
Brett buys a new cell phone for $100. He receives consumer surplus of $80 from the purchases. How much does Brett value his cell phone?
$180
Refer to figure above. How much of the tax is paid by buyers?
$3
Refer to figure above. What is the value of the deadweight loss after the imposition of the price floor?
$600
Refer to Figure below. If the economy is currently producing at point E, what is the opportunity cost of moving to point B?
0 Spoons
Refer to Figure below. What is the opportunity cost of one dozen roses?
0.4 dozen orchids
The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk?
1 2/3 dozen eggs
Marginal cost is the _________ associated with a particular increases in an activity.
Additional cost
If society decides it wants more of one good and _______, then it has to give up some of another good and incur some opportunity costs.
All resources are fully utilized.
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ____________ occurs.
Allocative efficiency
An outward shift of a nations production possibilities frontier can occur due to
An increase in the labor force
If an increase in income leads to a decrease in the demand for salami, then salami is
An inferior good
Refer to figure above. What area represents producer surplus at P2?
B+D
All of the following are examples of spending on goods and services in the circular flow model except
Chaitanya buys a new spa pedicure chair for her expanding nail salon business.
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?
Consume a combination of goods that lies outside its own production possibilities frontier
Economics promotes which of the following as the way to make the best decision.
Continue an enjoyable activity activity up to the point where its marginal benefit equals its marginal cost.
Economics promotes which of the following as the way to make the best decision?
Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost
In venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. These price ceilings were set ________ the market prices, which resulted in _______ of food
below; shortages