ECO 2023 TEST #1

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

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?

$11

in the above graph, what is the formula for producer surplus?

0.5 x (i-j) x (k-j)

the table above shows the demand of three individuals in a market. assuming these are the only buyers, what is total market demand is price is $20?

5 units

the above table shows coffee and tea units produced for the US and japan. if japan decides to increase production of tea from 20 units to 35 units, the opportunity cost is

8 units of coffee

in this graph above total surplus is shown by area

ACE

a decrease in the proportion of the population that is unemployed is best represented in figure 1.4 above by a movement from point

B to point C

which of the following graphs concerning hamburgers indicates an increase in the quantity demanded of hamburgers

C

which of the following graphs shows an increase in quantity supplied

C

a change in quantity supplied is the result of:

a change in the price of the good

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 labor

a manufacturing plant and the property on which it is located

an institution that enables buyers and sellers to interact and transact with one another is known as:

a market

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

a surplus

to calculate market supply we:

add the quantities supplied for each individual supply schedule horizontally

when the market mechanism is allowed to operate freely prices will determine

all of the above

the market mechanism

allows buyers to communicate with producers indirectly

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

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

in the graph above a shift to the right of the demand curve would be caused by anything, EXCEPT a:

decrease in the population

the purpose of an economic model is to

demonstrate which values and beliefs are best for the economy

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

all of the choices on the production possibilities frontier are equally desirable

false

an increase in the price of one good can cause the demand for another good to decrease if the goods are complements

false

both the supply and demand curves depend on expectation but the supply curve depends on the expectations of the buyer and the demand curve depends on the expectations of the seller

false

in the graph above if the governments sets a price of $5 this is an example of an effective price floor

false

it is impossible to have a conflict between allocative efficiency and productive efficiency

false

land labor capital and entrepreneurship are bought and sold in the product market

false

market price is the same thing as equilibrium price

false

mathematically the law of demands refers to the positive relationship between price and quantity demanded

false

normative and positive questions are basically involving the understanding of basic facts

false

output combos that lie inside the production possibilities frontier are characterized by efficient use of resources

false

technological advance shifts the production possibilities frontier inward

false

the choice to attend a free college lecture involved absolutely no opportunity cost

false

when a seller sells a good the supply curve shifts to the right

false

consumer surplus is defined as the:

gap between the demand curve and the market price

when a 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:

greater production of one good requires increasingly larger sacrifices of other goods

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 products

in the graph above, which of the following would change demand from D0 to D1?

increase in the price of a substitute

which of the following events would cause the production possibilities frontier to shift outwards

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

an item whose demand rises as peoples incomes fall is known as a _____ 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

which of the following illustrates the law of demand

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

a corporation is a firm owned by

many people who own shares (stocks) in a firm, but who are not liable for the firm's debt

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

if the price ceiling is set above the equilibrium price

no impact is felt in the market

a single proprietorship is a firm owned by:

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

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

one of the determinate of demand

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

the latin phrase ceteris paribus means

other things remain equal

according to economists, investment includes:

output which is used to produce output

a study by the organization for economic co-operation and development on factors driving economic growth finders per capita GDP is:

positively affected by lower inflation rates

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

price to increase and quantity to decrease

_____ occurs when goods are produced at the lowest possible cost, and _________ occurs 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 less 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 shortages

scott decided to sleep in rather than attend his 8:30 am econ 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

a change in the price of a good

results in a change in quantity supplied

productivity:

rises when the ratio of output to input increases

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

the result of government intervention in the market, is that

society is always better off

a point on a nations production possibilities fronter 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 scare resources and income constraints

opportunity cost is:

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

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

the price of the good itself

a decrease in available resources would cause

the production possibilities frontier to shift inward

a market is said to be in equilibrium when:

the quantity demanded equals the quantity supplied

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

the quantity demanded of X will increase

in figure 3.5 above, at a price of $100

the quantity supplied is greater than the quantity demanded

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

a decrease in the level of resources utilization would bring about an inward shift of a PPF

true

according to the law of supply if the price of calculators decreased the supply of calculators would decrease, ceteris paribus

true

all output combinations that lie outside a production possibilities frontier are unattainable with available resources and technology

true

another term for market economy is capitalistic economy

true

education and training are an example of investment in human capital

true

goods are scarce because society desire for them exceeds society ability to produce them

true

if a price ceiling is set above the market price it is ineffective

true

if the market price of beanie babies increases, then the supply curve of beanie babies will shift to the right

true

in a market economy, prices are determined by the consumer; in a planned or command economy prices are determined by the seller

true

in the graph above, if the government sets a price of $25 there is a shortage of 600

true

one reason that buyers purchase less of a product when its price rises is that they switch to substitute items

true

price signals direct answers to the WHAT HOW and FOR WHOM questions in a laissez-faire economy

true

price signals direct the answers to the WHAT HOW and FOR WHOM questions in a laissez-faire economy

true

the demand schedule and demand curve remain unchanged only so long as the underlying determinants of demand remain constant

true

the market price equals the equilibrium price if quantity demanded equals quantity supplied, at the market price

true

there are never shortages or surpluses when the price in a market is equal to the equilibrium price for the market

true

thinking at the margin is defined as maximizing a firms or individuals well being

true

when a factory pollutes the air we breathe in a market economy, this situation is known in economics as market failure

true

when a scarce good or resource is consumed by a person who does not value it most economists refer to the situation as a misallocation of resources

true

when imports are larger than exports the value of net exports is negative

true

when individual supply curve shift, ceteris paribus, the market supply curve shifts

true

when the number of buyers in a market changes the market demand curve for goods and services also changes even if individual demand curves do not shift

true

the goals of market participants include the maximization of:

utility, profits, and the general welfare of society

the term opportunity cost refers to the:

value of the best option given up when a good or service is produced

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