DrV Test 1 Micro

To answer the question of how the goods and services are to be produced, society must decide:

how to combine its scarce resources to produce the desired

The result of government intervention in the market, is that:

Society may be worse off.

If you are willing to sell an old bicycle for $30, but someone offers you $40 for it, the result of the transaction would yield:

$10 worth of producer surplus and unknown consumer surplus

A change in quantity supplied is the result of:

A change in the price of the good. A change in technology. An increase in the number of sellers.

If bagels and donuts are substitutes, then a decrease in the price of donuts will result in:

A decrease in the demand for bagels.

Which of the following will cause the production-possibilities curve to shift inward?

A decrease in the size of the labor force.

Which of the following performs the role of both capital and land?

A manufacturing plant and the property on which it is located.

If the government prevented prices from falling to their equilibrium levels, there would be:

A surplus.

To Calculate Market Supply we:

Add the quanties supplied for each individual supply schedule horizontally

Suppose there are a series of forest fires which affect the lumber industry while, at the same time, consumers demand more wooden furniture. The wooden furniture market would experience:

An increase in price and an indeterminate change in quantity.

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is the consumer surplus?

B) $11

In a market, the equilibrium price is determined by:

Both demand and supply.

Economics is a social science that involves the study of how individuals, firms, and societies:

Choose among alternatives to satisfy their unlimited wants

The term opportunity costs refers to the:

Value of all the options given up when a good or service is produced.

The purpose of an economic model is to:

Demonstrate which values and beliefs are best for the economy

Suppose in the market for iPhones, the following two changes take place: (1) the cost of making iPhones rises and (2) customers begin to prefer Android-platform smart phones over iPhones. What happens to equilibrium price and equilibrium quantity?

Equilibrium price rises but equilibrium quantity is indeterminate.

Consumer surplus is defined as the:

Gap between the demand curve and the market price.

When an economy is producing efficiently it is:

Getting the most goods and services from the available resources.

When government directives do not produce a better economic outcomes, which of the following has occurred?

Government failure.

According to the law of increasing opportunity costs:

Higher opportunity costs induce higher output per unit of input.

Which of the following events would cause the production-possibilities frontier to shift outward?

Increased efficiency in using resources.

According to the law of demand, the quantity of a good demanded in a given time period:

Increases as its price falls, ceteris paribus.

A corporation is a firm owned by:

Many people who own shares (stock) in a firm, but who are not liable for the firm's debt.

An institution that enables buyers and sellers to interact and transact with one another is known as a(n)

Market

Markets differ in:

Markets differ in all of these

A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a:

Model

Which of the following definitely means productivity has increased?

More output from fewer workers.

A single proprietorship is a firm owned by:

One individual who is liable for the firm's obligations and debt.

A decrease in available resources would cause:

Opportunity costs to increase.

The Latin phrase ceteris paribus means:

Other things remain equal.

According to economists, investment includes:

Output which is used to produce output.

A leftward shift of the market supply curve, ceteris paribus, causes equilibrium:

Price to increase and quantity to decrease.

_______ occur(s) when goods are produced at the lowest possible cost, and ______ occur(s) when individuals who desire a product the most receive those goods and service

Production efficiency; allocative efficiency

In a market economy, which of the following is an incentive for producers to produce efficiently?

Profits.

A Shift in demand is defined as a change in the:

Quantity demanded at any given price.

When effective price ceilings are set for a market:

Quantity demanded will be greater than the equilibrium quantity, and price will be less than the equilibrium price.

An effective price ceiling results in black-market pressures to:

Raise prices because of surpluses.

A change in the price of a good:

Results in a change in quantity supplied.

The market mechanism

Results in the misallocation of resources because producers seek to maximize profits.

The market mechanism:

Results in the misallocation of resources because producers seek to maximize profits.

Productivity:

Rises when the value of output rises relative to the cost of inputs.

A point on a nation's production-possibilities frontier indicates:

That resources are fully employed in producing a particular combination of goods and services.

In economics, what does scarcity mean?

That society's desires exceed the want-satisfying capability of the resources available to satisfy those desires.

Which of the following is not a factor of production?

The $100,000 used to start a new business.

When economists talk about "optimal outcomes" in the marketplace, they mean that:

The allocation of resources by the market is likely to be the best possible, given scarce resources and income constraints.

Opportunity cost is:

The alternative that must be given up in order to get something else.

When the market mechanism is allowed to operate freely prices will determine:

The mix of output to be produced. The resources to be used in the production process. To whom the output will be

Ceteris paribus, which of the following can change without shifting demand?

The price of the good itself.

A market is said to be in equilibrium when:

The quantity demanded equals the quantity supplied.

Given a downward-sloping market demand curve for product X, if the price of X is reduced from $10 to $8, then, ceteris paribus:

The quantity demanded of X will decrease.

Which of the following is the best example of land?

The river water used to float a riverboat casino.

The fundamental problem of economics is:

The scarcity of resources relative to human wants.

The term market mechanism refers to:

The use of market prices and sales to determine resource allocation.

Economists make a distinction between changes in quantity supplied and changes in supply:

To distinguish a movement along a supply curve from a shift in the supply curve.

The goals of market participants include the maximization of:

Utility, profits, and the general welfare of society.

Land:

earns rent

Suppose that the price of pork rises. We would expect that the supply of beef will:

fall because farmers will shift resources from beef production to pork production.

An item whose demand rises as people's incomes fall is known as a(n) ________ good.

inferior

Joe fixes cars for a living in his driveway. He works late at night and makes so much noise that Moe, his neighbor across the street, cannot sleep. Joe:

is imposing an external cost on Moe.

If a price ceiling is set above the equilibrium price:

no impact is felt in the market.

Which of the following illustrates the law of demand?

offers to buy more sticks of chewing gum at $1 than at $2.

If you accept a job in Seattle as a financial analyst, you must give up the chance to accept a similar job in Australia. Giving up the job in Australia is your:

opportunity cost.

A study by the Organization for Economic Co-operation and Development (OECD) on factors driving economic growth finds per capita GDP is:

positively affected by lower inflation rates.

Scott decided to sleep in rather than attend his 8:30 A.M. economics class. Economists would find this choice:

rational, if Scott values sleep more highly than the benefit he would expect to receive from attending the class.

Other things remaining the same, an increase in the price of Chevrolets will cause the demand for Ford to:

shift to the right

An increase in technology:

shifts the PPF curve outward

The purpose of invoking ceteris paribus is to:

simplify the analysis being done

A shift in the demand curve is caused by a change in:

the price of the item.

Reasons to study economics include all of the following, EXCEPT that you:

will learn exactly how to invest your cash short-term for the highest return on investment