Chapter 1 Econ

An economy has achieved _____ if it has not pass up any opportunities to make some people better off without making others worse off.

efficiency

The invisible hand of self-interest is the means by which markets acheive

efficiency

Which of the following statements describes efficiency

1. A situation in which producers make the highest profits possible 2. A situation in which we cannot produce more of one good without producing less of another good 3. A situation in which we produce the goods and services that people value most highly

Specialization in production was the starting point for Adam Smith in

The Wealth of Nations

Which of the following is true of specialization

The gains from trade are due to specialization.

If an economy is efficient

all opportunities to make people better off without making other people worse off have been taken

A trade-off involves weighing

costs and benefits

According to the principle that one person's spending is another person's income, a decrease in manufacturing employment can:

decrease spending on goods and services, and thereby lower incomes

Product prices change incentives to purchase goods and services. If Byron is choosing between apples and oranges in a local grocery store, an increase in the price of oranges _____ the incentive to buy apples and _____ the incentive to buy oranges.

increases, decreases

Which of the following is a microeconomic topic

reasons why a consumer buys more cheese

One of the potential causes of a recession is an

shortfall of spending

Consider a situation where two gas stations located across the street from each other are charging different prices. The Exxon gas station is charging 50 cents more per gallon of each type of gasoline than the Shell gas station. The equilibrium can be restored if:

the Exxon gas station reduces its prices

You can spend $300 on either a pair of new Air Jordan sneakers or a new skateboard. If you choose to buy the Air Jordans, the opportunity cost is

your enjoyment of the new skateboard

Which of the following is not a tool of macroeconomic policy

Anti-trust regulation

According to the principle that one person's spending is another person's income, an increase in manufacturing employment can:

Increase spending on goods and services, and thereby increase incomes

Suppose everyone in a small town decided to save more and spend less. How will this affect an economy? (in macroeconomics, this is called the paradox of thrift)

It will have no impact, since a small town makes up a small portion of an economy

When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities" Which economic principle does this statement BEST represent?

The true cost of something is its opportunity cost

When the economy experiences shortfalls or excesses of spending, government policies can be used to address the imbalances. Which statement does NOT address such imbalances, realized during the coronavirus pandemic?

There is fear of recession and uncertainty about the future in a post COVID - 19 reality

making a trade-off involves

incurring an opportunity cost

Excess availability of empty parking spots near the stadium during a popular college football game indicates that the parking market _____ in an equilibrium and _____ to restore the equilibrium.

is not; the parking fees need to be lowered

In a market economy, each individual _____ able to make his or her own choices, and coordination takes place _____ a coordinator.

is; without

A decrease in efficiency means that an economy has

made more people worse off without making others better off

Scarcity of resources

means that there are not enough resources available to satisfy all the ways that society wants to use them

If a market is in equilibrium

no individual will be better off doing something different

If elijah is given a free ticket to see a movie

elijah still incurs an opportunity cost

As incomes fall, spending ____, and as incomes rise, spending _____

falls, rises

Sabrina has gone out to lunch three times this week. She has some extra money, so she decides to go out to lunch a fourth time. Which economic principle does this statement BEST represent

"How much" is a decision at the margin

You decide whether to eat one more slice of cheesecake based on how hungry you feel. This statement best represents this economic concept:

"How much" is a decision at the margin

Quinn is trying to decide what to serve his guests when they watch the big game. He prefers to have pizza, which will cost $50, but he could also serve his next best choice of hotdogs, which would only cost $30. If Quinn chooses to have pizza, his opportunity cost is

$50 and the hot dogs

Which of the following topics would be studied in macroeconomics

Recessions

If Isabella drives to a Kansas City, 120 miles from Manhattan, Kansas (home of Kansas State UniversityO to do her back-to-school shopping, this will:

hurt Isabella's community because Isabella's spending will be income for people in the large city

According to the principle that one person's spending is another person's income, an increase in consumer confidence can _____ spending on goods and services, and therefore _____ incomes.

increase, increase

A sushi chef prepares a California roll for a customer. Which of the following factors is physical capital?

the knife use to cut the sushi

When the price of a good changes in a market

the market will move toward a new equilibrium

During economic downturns the number of Americans without jobs increases. According to the principle that one person's spending is another person's income

the reduction in spending by the unemployed workers will further lower incomes

Animah has a calculus exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Aminah decides to attend the lecture instead of studying for her exam. Aminah's opportunity cost of attending the lecture is:

the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight

Suppose one parent picks up their child from day care, while the other parents stays home to make dinner. This is an example of the principle that

there are gains from trade