econ

Which of the following is an example of market failure? A. Overuse of highways that leads to traffic congestion B. Reduced levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub-prime lending D. All of the above

All of the above A. Overuse of highways that leads to traffic congestion B. Reduced levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub-prime lending

Plagiarism is unethical because A. plagiarism might result in stealing profits from the original writer B. plagiarism can decrease the value of honest students' diplomas C. plagiarism can make it more difficult for instructors to assess the quality of students' writings D. plagiarism is a type of fraud

All of the above are reasons

Plagiarism is unethical because A. plagiarism might result in stealing profits from the original writer B. plagiarism can decrease the value of honest students' diplomas C. plagiarism can make it more difficult for instructors to assess the quality of students' writings D. plagiarism is a type of fraud E. all of the above are reasons

All of the above are reasons

Which of the following are reasons why most owners of companies want their employees to act ethically? A. Because they care about the well-being of their customers B. To enhance productivity C. To maximize public good will toward the company D. To avoid large fines and expensive lawsuits

All of the above are reasons why

Which of the following are reasons why most owners of companies want their employees to act ethically? A. Because they care about the well-being of their customers B. To enhance productivity C. To maximize public good will toward the company D. To avoid large fines and expensive lawsuits E. All the above are reasons why.

All of the above are reasons why

Which of the following is true? A. By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. B. To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. C. If the production possibility curve is concave from below (that is, bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. D. Increases in a society's output do not make scarcity disappear.

All of the above are true.

Which of the following is true? A. By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. B. To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. C. If the production possibility curve is concave from below (that is, bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. D. Increases in a society's output do not make scarcity disappear. E. All of the above are true.

All of the above are true.

Ethics violators like embezzlers, frauds, tax cheats and bank robbers A. usually follow most rules and other ethics most of the time. B. not only injure individuals and companies, but also often hurt entire markets. C. often use rational cost-benefit analysis when deciding whether to cheat. D. may feel so ashamed and guilty of their crimes that they are driven to suicide.

All of the above may be true of ethics violators.

Ethics violators like embezzlers, frauds, tax cheats and bank robbers A. usually follow most rules and other ethics most of the time. B. not only injure individuals and companies, but also often hurt entire markets. C. often use rational cost-benefit analysis when deciding whether to cheat. D. may feel so ashamed and guilty of their crimes that they are driven to suicide. E. All of the above may be true of ethics violators.

All of the above may be true of ethics violators.

Which of the following would reflect self-interested behavior? A. A worker pursuing a higher paying job and better working conditions. B. A consumer seeking a higher level of satisfaction with her current income. C. Donating a cell phone to a woman's shelter. D. Mother Theresa using her Nobel Prize money to care for the poor. E. All of the answers would reflect self-interested behavior.

All of the answers would reflect self-interested behavior.

Which of the following would reflect self-interested behavior?

All of the answers would reflect self-interested behavior. A. A worker pursuing a higher paying job and better working conditions. B. A consumer seeking a higher level of satisfaction with her current income. C. Donating a cell phone to a woman's shelter. D. Mother Theresa using her Nobel Prize money to care for the poor.

Which of the follwing is a resource exchanged in the factor markets? A. land B. Capital C. Labor D. Entrepreneurship E. All the above

All the above

wages

An amount of money paid to an employee at a specified rate per hour worked

How currency exchange rated are determined

An exchange rate is the number of units of one currency it takes to buy one unit of a second currency. How they are determined: The basic answer why one $ = 18 pesos (in January 2016) is: supply and demand

Which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold? -an increase in the price of peanut butter, a complement to jelly -an increase in the price of Marshmallow Fluff, a substitute for jelly -an increase in the price of grapes, an input to jelly -an increase in consumers' incomes, as long as jelly is a normal good

An increase in the price of grapes,, an input to jelly If a change occurs in any of the factors that determine supply - such as an increase in the price of grapes, an input to jelly-the result is a shift of the supply curve. In this case, the change in he price of jelly causes the supply curve of jelly to fall. This leads to an increase in the equilibrium price of jelly, and a decrease in the equilibrium quantity of jelly sold (Question #6 graph)

Change of Supply (shift of S curve)

An increase or decrease in the quantity supplied at each possible price. An increase in supply is a rightward shift in the entire supply surve. A decrease in supply is a leftward shift in the entire supply curve.

Serivce

Any activity that fulfills a human want or need and returns money to those who provide it.

Which of the following is the correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied

Approximately _______ percent of job losses in the first three months of 2004 were caused by outsourcing. A) 1 B) 2 C) 4 D) 6

B) 2

Why might pollution from a paper mill be an example of a market​ failure? A) The paper mill is ignoring property rights by polluting. B) People living downwind of the mill bear part of the cost of production. C) People living near the paper mill are not offered jobs there. D) None of the above.

B) People living downwind of the mill bear part of the cost of production.

Adam Smith listed three reasons for specialization to increase productivity. What are​ they? A) Determination, Motivation, and Innovation. B) Repetition, Continuity, and Innovation. C) Repetition, Continuity, and Motivation. D) Repetition, Determination, and Innovation.

B) Repetition, Continuity, and Innovation.

From an economists' perspective, which of the following observations is not true? a.) Self-interest is purely monetary in nature. b.) Self-interest can include benevolence. c.) Self-interest is a good predictor of human behavior in most situations. d.) Self-interest is not the same as selfishness.

Self-interest is purely monetary in nature.

Shortages and their effects on Market price

Shortage: A market condition existing at any price at where the quantity supplied is less than the quantity demanded Increase in Demand -->rightward shits--> excess demand (quantity demanded, Q3, is greater than quantity supplied, Q1—a shortage) --> Increase in Pe , Increase in Qe-->shortage Decrease in Supply-->leftward shits--> excess demand (quantity demanded (Q1) is greater than quantity supplied (Q3) --> increase in Pe , decrease in Qe-->shortage

Supply schedule

Shows quantity of a offered for sale at different possible prices.

Which of the following people are more likely to break ethical rules:

Someone who is ignorant

Which of the following people are more likely to break ethical rules?

Someone who is ignorant

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Stephanie received a consumer surplus of $300

Which of the following would shift a supply curve to the right?

Subsides

Which of the following statements is most consistent with the rule of rational choice?

"When evaluating new prescription drugs, the Food and Drug administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

Your savings account pays 9 percent per​ year: Each​ $100 in the bank grows to ​$109 over a​ one-year period. If prices increase by 8 percent per​ year, by keeping​ $100 in the bank for a year you actually gain

$1

You earn 5 percent interest on funds in your​ money-market account. If consumer prices increase by 3 percent per​ year, your real earnings on ​$10 comma 000 in the​ money-market account are ​

$200 per year

Percent change

((New value - old value)/old value) X 100

When demand is elastic:

(All of the above are correct) -price elasticity of demand is greater than one -consumers are relatively responsive to changes in price -the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price

Which of the following is not likely to be an inferior good for most Americans?

(All of the above are likely to be inferior goods for most americans) -Thrift store clothing -Wine in a box -Intercity bus travel -Store brand canned vegetables

Plagiarism is unethical because

(All of the above are reasons) -Plagiarism might result in stealing profits from the original writer -can decrease the value of honest students' diplomas -can make it more difficult for instructors to asses the quality of students' writings -plagiarism is a type of fraud

Ethics violators like embezzlers, frauds, tax cheats and bank robbers

(All of the above may be true) -Usually follow most rules and other ethics most of the time -Not only injure individuals and companies, but also often hurt entire markets -Often use rational cost-benefit analysis when deciding whether or not to cheat -May feel ashamed and guilty of their crimes that they are driven to suicide

Which of the following is true?

(All of the above) -By putting unemployed resources to work of by putting already employed resources to better uses, we could expand output in an economy -To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. -If the production possibility curve is concave from below (that is bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. -Increases in a society's output do not make scarcity disappear.

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonablly conclude that:

(All of the above) -California has a comparative advantage in producing almonds -Oregon has a comparative advantage in producing honey -the opportunity cost of growing almonds is lower in California than in Oregon -the opportunity cost of producing honey is lower in Oregon than in California

Which of the following are reasons why most owners of companies want their employees to act ethically?

(All of the above) -Decrease in market demand -Decrease in market supply -Decrease in equilibrium price -Total market collapse

which of the following would reflect self-interested behavior?

(All of the above) -a worker pursuing a higher paying job and better working conditions -a consumer seeking a higher level of satisfaction with her current income -donating a cell phone to a woman's shelter -Mother Teresa using her Nobel Prize money to care for the poor

Which of the following is not a resource exchanged in the factor markets?

(All of the above) -land -capital -labor -entrepreneurship

A student has a chance to see Green Day in concert. The student also has a major economics exam the next morning. If the student goes to the concert:

(All of the above) -she may receive a lower grade on the economics exam -the opportunity cost of the concert is the value of the time spent studying -the decision involves a trade-off

Ethics is defined as:

(Can be defined in any of the ways above) -a branch of philosophy -moral rules or standards governing human conduct, but not necessarily moral rules -the moral principals of an individual person

Which of the following is true?

(None of the above are true) -In the product markets, firms are buyers and households are sellers -In the factor markets, firms are sellsers and households are buyers -Firms receive money payments from households for labor, land, capital, and entrepreneurship

If the government wanted to reduce the quantity of a good traded, it could do so by:

(doing any of the above) -setting a price ceiling for the good below the equilibrium price -setting a price floor for the good above the equilibrium price -tax the good more heavily -tax an input used intensively in the industry more heavily

factors of production(5)

- natural resources(land) -labor -physical capital -human capital -entrepreneurship

Which of the following is true?

-An economy in which labor is relatively scarce would tend to use capital intensive production methods -An increase in the availability of labor relative to capital in the economy would tend to increase how labor intensive the production processes in that economy would be.

Effective free market ethical systems must provide for all of the following:

-Clearly defined rules and regulations -Meaningful punishments for rule breakers -Adequate market oversight and policing -Enough freedom for creativity and competition EXCEPT: a clearly defined moral foundation

More efficient positive market ethics will generally help improve all of the following challenges:

-Positive externalities of a market -Negative externalities of a market -Consumer surplus of a market -Producer surplus of a market

Cost-benefit analysis can determine the optimal amount of all the following:

-Regulations -Market inspectors -Severity of punishments -Inspections EXCEPT: fairness of rules

In order for a market's ethics to be effective, all of the following must occur:

-The ethics must be clearly defined -There must be clear penalties for ethics violators -There must be enough police or inspectors to find most violations -Police or inspectors must be unbiased EXCEPT: everyone must agree to take part in the market

If someone regularly acts unethically in a market:

-They will probably hurt consumers -They will probably hurt suppliers -They will probably hurt the market itself

Non-price determinants of supply (changes in these shift supply curve)

1. #of firms 2. Prices of inputs 3. Tech. Change 4. Taxes/subsidies 5. Wages 6. Price of Energy 7. Price of Raw materials

Supply decreases if( curve shifts left)

1. #of firms in industry decreases (there are fewer options)- direct 2. Tech. doesn't improve/falls (decrease)- direct 3. Taxes/subsidies rise- inverse 4. Wages increase/rise 5. Price of Energy rise 6. Price of Raw materials increase

Supply increase if (curve shifts right)

1. #of firms in industry increases (there are more options) 2. Tech. Improves 3. Taxes/subsidies fall 4. Wages fall 5. Price of Energy falls 6. Price of Raw materials fall

Factors which increase the demand for dollars a) Increased desire by foreigners to buy U.S. produced products (when their countries boom, or when U.S. price levels fall, for example?)

1. In order to purchase newly produced goods or services from the United States For example: If a person living in Oaxaca wants to purchase a Harley-Davidson motorcycle produced in the U.S., the product has to be paid for with dollars so they ahve to change pesos to dollars first.

c) Tastes, Population

Tastes There is a positive relationship between tastes and preferences and demand. If a good becomes more popular, ceteris paribus, demand for the good will increase. Conversely, if a good becomes less popular, the demand for the good will decrease. Population Positive Relationship. If Population INCREASES, Demand INCREASES (shifts to the right) for most goods, if Population DECREASES, Demand DECREASES (shifts to the left) for most goods

An example of a capital resource is: A. stock in a computer software company. B. the funds in a CD account at a bank. C. a bond issued by a company selling electric generators. D. a dump truck. E. an employee of a moving company.

A dump truck

price floor

A legal minimum on the price at which a good can be sold (pizza has to be sold for 5$ no less)

Equilibrium price

A market condition that occurs at any price and quantity at which the quantity demanded equals the quantity supplied.

resource market

A market in which a resource is bought and sold. Ex. Gas companies (labor or job)

Change in Quantity Supplied (move along S curve when Price changes)

A movement between points along a stationary supply curve, ceteris paribus.

renewable resource

A natural resource that can be replaced at the same rate at which the resource is consumed

Which of the following policies would be most effective in promoting monthly water conservation?

A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons

Maps are a good​ non-economic example of using assumptions to make things simpler. Which of the following are assumptions used to make maps​ useful?

The earth is flat. and The roads are flat

Which of the following is a statement of positive economics?

The income tax reduces after-tax incomes of the rich

Which of the following is a statement of positive economics? A. The income tax reduces after-tax incomes of the rich. B. A reduction in tax rates makes the after-tax distribution of income fairer. C. Tax rates ought to be reduced so that people will work more. D. All of the above are statements of positive economics. E. None of the above is statements of positive economics.

The income tax reduces after-tax incomes of the rich

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why doesn't Sergei make his own clothes?

The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career.

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why doesn't Sergei make his own clothes? A. He has already made all the clothes he will need for a few years. B. The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career. C. Sergei just can't find the material he likes in the United States. D. Sergei has a comparative advantage in tailoring clothes. E. The opportunity cost of making clothes instead of playing hockey is relatively low, so he should instead concentrate on his hockey career (for which the opportunity cost is very high).

The opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career.

Consider a bicycle producer that initially employs 200 production workers and 10​ customer-service workers. When the firm outsources its​ customer-service operation to​ India, the 10​ customer-service workers lose their jobs. a. The net effect from outsourcing could be a loss of fewer than 10 jobs in the firm because b. There will be a net gain in jobs in the firm if

a. the savings may allow the firm to hire more production workers. b. additional demand for bicycles creates a large boost in production.

Effective free market ethical systems must provide for all of the following EXCEPT: A. Clearly defined rules and regulations. B. meaningful punishments for rule breakers. C. a clearly defined moral foundation. D. adequate market oversight and policing. E. enough freedom for creativity and competition.

a clearly defined moral foundation

public goods

a commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization. (air, etc.)

and Terry run a landscaping firm that prunes trees and cuts lawns. Sandy is more productive than Terry at both tasks. Sandy should prune trees and Terry should cut lawns if Sandy has advantage in pruning trees

a comparative

A downward sloping straight-line production possibilities curve implies:

a constant opportunity cost

A downward sloping straight-line production possibilities curve implies:

a constant opportunity cost.

A downward sloping straight-line production possibilities curve implies: A. an inefficient use of resources. B. an efficient use of resources. C. an increasing opportunity cost. D. a constant opportunity cost.

a constant opportunity cost.

Sellers who were originally willing to supply 800 units of a good at $4 per unit are now willing to supply 600 units at $4 per unit. That change would be described as:

a decrease in supply

Which of the following will not increase the demand for iced tea?

a decrease in the price of iced tea

A theory can best be defined as:

a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

A theory can best be defined as: A. an untestable assertion or statement of untestable fact. B. a testable statement that can be definitively proven to be true or false using empirical analysis. C. a normative statement that can be tested empirically through analysis of real-world data. D. a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

a deliberate simplification of factual relationships that attempts to explain and predict how those relationships work.

subsidy

a government payment to an individual, business, or other group to encourage or protect a certain type of economic activity

Demand curve

a graphic representation of a demand schedule. Demand curves are downward sloping - the downward slope is a visual representation of the :law of demand": all else equal, as the price of an item rises, the quantity buyers are willing and able to buy decreases. The negative slope of a demand curve shows that there is an inverse relation between price and quantity demanded, all else equal.

demand curve

a graphical representation that shows the inverse relationship between price and quantity demanded. DOWN

Assume the demand schedule for cookies is downward sloping. If the price of cookies falls from $2.50 to $2.25 per dozen:

a larger quantity of cookies will be demanded

The private ownership of property and the use of the market system to direct and coordinate economic activity are the most characteristic of:

a market economy

The completely private ownership of property and the exclusive use of the market system to direct and coordinate economic activity are most characteristic of:

a market economy.

The completely private ownership of property and the exclusive use of the market system to direct and coordinate economic activity are most characteristic of: A. a command economy. B. a mixed economy. C. a market economy. D. a traditional economy.

a market economy.

product market

a market in which a good or service is bought and sold

price ceiling

a maximum price that can be legally charged for a good or service (pizza can be sold for 17$ no more)

exhaustible resource

a natural resource that does not renew itself and so is available in a finite amount, such as oil or coal

increase in demand

a rightward shift of the demand curve (greater quantity is demanded at each price)

excise tax

a sales tax on individual products such as alcohol, tobacco, and gasoline

The imposition of a price ceiling on a market often results in:

a shortage

economic theory

a simplification of economic reality used to make predictions about the real world

Which of the following lies primarily within the realm of microeconomics?

a study of supply and demand conditions in the market for orange juice

Which of the following lies primarily within the realm of microeconomics? A. an empirical analysis of the relationship between the growth of the money supply and the rate of inflation B. an economic model forecasting the impact of a tax increase on consumer spending and national output C. a study of supply and demand conditions in the market for orange juice D. a model forecasting the impact of a change in interest rates on the level of investment in the economy

a study of supply and demand conditions in the market for orange juice

what lies primarily within the realm of microeconomics?

a study of supply and demand conditions in the market for orange juice

Which of the following would be least likely to affect the supply of automobiles?

a successful physical fitness plan encouraging Americans to walk rather than to drive to their destinations

Assume a price floor is imposed in the wheat market at the equilibrium price and that a price ceiling is imposed in the gasoline market at the equilibrium price. An increase in supply in both the wheat and gasoline markets will create:

a surplus in the wheat market and an increase the quantity of gasoline traded.

Hypothesis:

a testable proposition

A hypothesis is:

a testable proposition.

A hypothesis is: A. a normative economic statement. B. a testable proposition. C. a statement that cannot be evaluated using real-world data. D. a model with no connection to the real world.

a testable proposition.

voluntary exchange

a trade that makes both parties better off

Non-price determinants of demand (changes in these shift demand curve)

a) Income (normal goods/inferior goods) b) Prices of related goods (substitutes/complements) c) Tastes, Population

Ethics A. is a branch of philosophy. B. are moral rules or standards governing human conduct. C. are rules or standards governing human conduct, but not necessarily moral rules. D. the moral principles of an individual person. E. can be defined in any of the ways above.

can be defined in any of the ways above

An individual has a comparative advantage in production if that individual:

can produce at the lowest opportunity cost

An individual has a comparative advantage in production if that individual:

can produce at the lowest opportunity cost.

An individual has a comparative advantage in production if that individual: A. can produce at the highest opportunity cost. B. is more self-sufficient than others. C. can produce at the lowest opportunity cost. D. both a. and b. E. both b. and c.

can produce at the lowest opportunity cost.

Interest Rates and ATM Trips. Carlos​, who lives in a country where interest rates are very​ high, goes to an ATM every day to get​ $10 of spending money. Jim​, who lives in a country with relatively low interest​ rates, goes to the ATM once a month to get​ $300 of spending money. Why does Carlos use the ATM more​ frequently?

carlos' opportunity cost of holding cash is higher.

Shift

caused by a change in a variable not on an axis

Movement along a line/curve

caused by a change in a variable on an axis

command economy

central planning

Marginal thinking is best demonstrated by:

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time

To the extent that a government price control succeeds in affecting price, it can be expected to lead to a corresponding:

decrease in the volume of sales whether the price is forced up or down

An increase in the price of inputs used to produce good A will:

decrease supply, increase price and decrease the quantity exchanged.

If the price of the ice cream increases substantially (ceteris paribus), the equilibrium quantity of hot fudge sauce, a complement, is likely to

decrease, and the equilibrium price of hot fudge sauce is likely to decrease

Trade between different prisoner of war​ (POW) compounds _______ the difference in the price of beef across the compounds. increased/decreased

decreased

According to the law of​ demand, an increase in price the quantity demanded

decreases

Suppose that over a​ one-year period, the nominal wage increases by 4 percent and consumer prices increase by 10 percent. The real wage

decreases by 6%

Outsourcing production costs and consumer prices

decreases; decreases

Upper A decrease in demand​ (given a typical upward sloping supply​ curve) for a product the equilibrium​ price, and the equilibrium quantity.

decreases; decreases

normal good

demand increases as income increases

Consumer sovereignty

describes how individual consumers in market economies determine what is to be produced

flat tax/proportional tax

designed so that everybody would be charged the same percentage of their income

progressive taxes

designed so that those with higher incomes pay a greater proportion of their income in taxes

A market economy depends on market mechanisms to:

determine the most efficient way of using resources

A market economy depends on market mechanisms to:

determine the most efficient way of using resources.

A market economy depends on market mechanisms to: A. determine the most efficient way of using resources. B. determine how large the government's budget deficit should be. C. decide how much government regulation there should be. D. provide everyone with a minimum level of income. E. do all of the outcomes listed.

determine the most efficient way of using resources.

market mechanism

determines the most efficient use of resources

A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50%. Which of the following is the most likely explanation of this finding?

diminishing returns

The function of an entrepreneur is to:

do all of the tasks listed

The function of an entrepreneur is to:

do all of the tasks listed.

The function of an entrepreneur is to: A. bear the business risks. B. organize the other factors of production. C. innovate. D. do all of the tasks listed.

do all of the tasks listed.

which of the following would break a positive ethic?

driving two mph over the speed limit

Shifts in the Demand Curve

due to changes in variables other than the price of the good itself and are known as a change in demand, which shift in the demand curve. Increase in demand represents a rightward shift in the demand curve A decrease in Demand represents a leftward shift in the demand curve

An example of a capital resource is:

dump truck

which of the following is not an example of a resource? a. a forest b. a river c. John Deere Tractor d. the chef at city's best cafe e. all answers are resources

e. all answers are resources term-2

rational self-interest

each individual tries to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit (benefits ur )

Adam Smith came up with

economics

Economics is different from a "hard" science like physics because:

economists cannot easily control all the variables that might influence human behavior

Economics is different from a "hard" science like physics because:

economists cannot easily control all the variables that might influence human behavior.

The longer the time period considered, the elasticity of supply tends to

increase

For a given increase in price, the greater is the elasticity of supply, the greater is the resulting

increase in quantity supplied

economic growth

increase in the economy's ability to produce goods and services-outward shift in the PPC

substitutes

increase in the price of one causes an increase in the demand for the other good. coke and pepsi

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a date. This offer will likely:

increase the opportunity cost of going on the date

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a date. This offer will likely: A. not affect the opportunity cost of going on the date. B. reduce the opportunity cost of going on the date because giving up the additional work dollars will make his girlfriend feel even more appreciated. C. increase the opportunity cost of going on the date. D. reduce the opportunity cost of working.

increase the opportunity cost of going on the date

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a date. This offer will likely:

increase the opportunity cost of going on the date.

A government mandated price increase of doodads will:

increase the quantity of doodads supplied but decrease the quantity of doodads demanded

A recent study at a liberal arts college concluded that demand elasticity is 0.91 for college courses. The administration is considering a tuition increase to help balance the budget. An economist might advise the school to:

increase tuition in order to increase revenue

Elasticity of demand will ____ as the availability of substitutes ____.

increase, increase

A shortage exists in the market for corn at the prevailing price. The shortage can eliminated by a price:

increase, increasing the quantity supplied and decreasing the quantity demanded

According to the law of​ supply, an increase in a​ good's price the quantity supplied of that good

increases

An increase in the wage for​ high-school graduates the opportunity cost of college

increases

As a farmer adds more and more fertilizer to the​ soil, the crop yield​, but at a rate.

increases; decreasing

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of

increasing opportunity cost

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of

increasing opportunity cost.

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of A. increasing opportunity cost. B. decreasing opportunity cost. C. comparative advantage. D. consumer sovereignty.

increasing opportunity cost.

benefits received principle

individuals receiving the benefits are those who pay for them: gas tax- the more you drive on the highway, the more gas you use, the more gas tax you pay

Specialization is a way for:

individuals to make the best use of resources by devoting themselves to one primary productive activity

Specialization is a way for: A. individuals to make the best use of resources by devoting themselves to one primary productive activity. B. society to become wealthier while not using their resources. C. people to avoid having to trade. D. increasing one's opportunity cost for an activity.

individuals to make the best use of resources by devoting themselves to one primary productive activity

A steel mill raises the price of steel by 20%, which results in a 7% reduction in the quantity of steel demanded. The demand curve facing this firm is:

inelastic

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price

inelastic

outsourcing offsets

insourcing

substitute goods

interchangeable goods. If A&B are substitutes, an increase in the price of A causes and increase in the demand for B

The law demand illustrates a(n) _____ relationship between price and _____

inverse; quantity demanded

The current supply of Rembrandt paintings:

is perfectly inelastic

macroeconomics

is the study of the aggregate: inflation, unemployment, business cycles, economic growth

A nation has a comparative advantage in the production of cars over another nation if:

it can produce cars at a lower opportunity cost than the other country

A nation has a comparative advantage in the production of cars over another nation if:

it can produce cars at a lower opportunity cost than the other country.

A nation has a comparative advantage in the production of cars over another nation if: A. it can produce cars with fewer resources than the other country. B. it can produce cars at a lower opportunity cost than the other country. C. it can produce cars at a higher opportunity cost than the other country. D. it can produce cars at the same opportunity cost and its consumers have a stronger preference for cars than consumers in the other country. E. it is more self-sufficient in all areas of production, including automobile manufacturing.

it can produce cars at a lower opportunity cost than the other country.

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

it is a proposition that can be tested

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because:

it is a proposition that can be tested.

Your mother tells you, "Watching ten hours of TV per day will make you stupid." This is a positive statement because: A. your mother says it with a positive tone in her voice. B. your mother is positive that you are stupid. C. it is a proposition that can be tested. D. your mother is only thinking of your best interest. E. you're positive that your mother is stupid.

it is a proposition that can be tested.

Four categories of resources

land, labor, capital, entrepreneurship

scare resources

land, labor, capital, entrepreneurship

In the first three months of​ 2004, the number of jobs moving to another state was _______ than the number of jobs moving to another country. larger/smaller

larger

In the first three months of​ 2004, the number of jobs moving to another state was than the number of jobs moving to another country.

larger

Excess demand occurs when the price is the equilibrium​ price; excess supply occurs when the price is the equilibrium price.

less than ; greater than

By promoting​ competition, the government generates _______ product prices. lower/higher

lower

By promoting​ competition, the government generates product prices

lower

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

macroeconomics

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called:

macroeconomics.

The branch of economics that focuses on outcomes in highly aggregated markets, such as the markets for labor or consumer products, is called: A. macroeconomics. B. Marxian economics. C. positive economics. D. normative economics. E. microeconomics.

macroeconomics.

normative economics

makes prescriptions about the way the economy should work based on opinión

The intersection of the supply curve and the demand curve is known as the

market equilibrium

when economists speak of markets, they primarily mean:

mechanisms that coordinate actions of buyers and sellers

When economists speak of markets, they primarily mean:

mechanisms that coordinate actions of buyers and sellers.

When economists speak of markets, they primarily mean: A. places where production of goods and services take place. B. those locations where sales of stocks and bonds of corporations take place. C. mechanisms that coordinate actions of buyers and sellers. D. the trillions of dollars that change hands in the foreign exchange markets.

mechanisms that coordinate actions of buyers and sellers.

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true?

mike can wash a car faster and has comparative advantage in washing cars

price floor

minimum wage

Which of the following is not a factor of​ production?

money

More efficient positive market ethics will generally help improve all of the following challenges EXCEPT:

moral externalities of a market

More efficient positive market ethics will generally help improve all of the following challenges EXCEPT: A. positive externalities of a market B. negative externalities of a market C. moral externalities of a market D. consumer surplus of a market E. producer surplus of a market

moral externalities of a market

more efficient positive market ethics will generally help improve all of the following challenges except:

moral externalities of a market

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars. Other things equal, compared to its competitors, its supply curve of windows for cars would be:

more elastic than the supply curves of competitors

In free market economies,

most market exchanges will result in all parties "winning"

In free market economies,

most market exchanges will result in all parties "winning."

In free market economies, A. most market exchanges will result in a "winner" and a "loser." B. most market exchanges will result in all parties winning. C. any market exchange will follow no rules unless government imposes them. D. regulations and other written ethics will generally limit innovation and profitability. E. there is no way to measure the optimal level or type of market ethics.

most market exchanges will result in all parties "winning."

in free market economies,

most market exchanges will result in all parties "winning."

a change in a variable measured on an axis of a graph causes a the curve, while a change in a relevant variable that is not measured on an axis causes a

movement along, shift in

For the trade of producers, the price

must be greater than the opportunity cost

For the trade of consumer, the price

must be less than the opportunity cost

Mike​, the manager of a car​ wash, is more productive at washing cars than any potential workers he could hire. Should he wash all the cars​ himself

no

competitive market

no single buyer or seller can influence the market price with their similar products

A market economy without any ethics would have:

no value

A market economy without any ethics would have: A. no value. B. immorally high prices and profits. C. too much illegal activity. D. only police and the courts to protect consumers. E. maximum free market freedom to achieve maximum productivity.

no value

a market economy without any ethics would have:

no value

Which of the following is true? A. In the product markets, firms are buyers and households are sellers. B. In the factor markets, firms are sellers and households are buyers. C. Firms receive money payments from households for labor, land, capital, and entrepreneurship. D. All of the above are true. E. None of the above is true.

none of the above are true

Ethical rules based on morals or concepts of fairness are called

normative ethics

Scarcity

not enough resources

Scarcity

not having sufficient resources to produce all the goods and services we want.

scarcity

occurs when the amount people desire exceeds the amount available

If we know someone pays all their taxes and gives money to charity, we know that

only that they pay their taxes and give money to charity

Ceteris Paribus

other things constant

law of supply

other things constant, the quantity supplied will vary directly with the price of the good

rent

pay for natural resources

wages

pay for their labor

rent

payment to resource owners for the use of their natural resources

What is Economics about?

people and the choices they make in a world of scarce resources

An externality occurs when:

people other than those making the demand and supply decisions share the benefits or the costs of an activity.

rational

people try to make the best choices they can, given the available time and information

When a person possesses a comparative advantage in the production of one good or service, it:

permits gain from trade to be realized due to a more efficient use of resources

When a person possesses a comparative advantage in the production of one good or service, it:

permits gain from trade to be realized due to a more efficient use of resources.

When a person possesses a comparative advantage in the production of one good or service, it: A. means that the person's opportunity cost is higher than for that of other goods. B. discourages specialization. C. promotes greater self-sufficiency. D. permits gains from trade to be realized due to a more efficient use of resources.

permits gain from trade to be realized due to a more efficient use of resources.

When a person possess a comparative advantage in the production of one good or service, it:

permits gains from trade to be realized due to a more efficient use of resources

What will happen to my income if I have to pay more​ taxes?

positive

Who is the United States largest trading​ partner

positive

law of demand

price and quantity demanded are inversely related

demand decrease

price decrease, quantity decrease

supply increase

price decrease, quantity increase

supply decrease

price increase, quantity decrease

demand increase

price increase, quantity increase

What is Terms of Trade?

price of one good service or resource in terms of another

entrepreneurship

process of combining the labor, land and capital together to produce goods and services

What is comparative advantage?

produce a good service at a lower opportunity cost than another producer

As a result of an increase in a product's price:

product supply does not change, but quantity supplied increases

primary source of state and local revenue

property taxes

market economy

pure capitalism, no government regulation

the change of price changes

quantity demanded

amount of shortage

quantity demanded - quantity supplied (at mkt price)

The difference between a change in quantity demanded and a change in demand is that a change in:

quantity demanded is caused by a change in good's own current price, while a change in demand is caused by a change in some other variable, such as income, tastes, or expectations

If the demand is perfectly elastic, what would happen to the quantity demanded if there is a tiny increase in price?

quantity demanded will fall to zero

If the demand is perfectly inelastic, what would happen to the quantity demanded if there is a tiny increase in price?

quantity demanded will remain the same

A shortage is the amount by which the exceeds the

quantity demanded, quantity supplied

change in price causes change in

quantity supplied

Along a supply curve:

quantity supplied changes as price changes

The difference between a change in quantity supplied and a change in supply is that a change in:

quantity supplied is caused by a change in a good's own, current price, while a change in supply is caused by a change in some other variable, such as input prices, prices of related goods, expectations, or taxes

surplus

quantity supplied is greater than quantity demanded

When economists refer to economic behavior, they mean that:

rational people try to anticipate the likely consequences of their actions.

When economists refer to economic behavior, they mean that: A. from time to time, everyone behaves irrationally. B. changes in incentives influence behavior in unpredictable ways. C. the pursuit of money is the most significant factor influencing decision making. D. rational people try to anticipate the likely consequences of their actions.

rational people try to anticipate the likely consequences of their actions.

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type of would:

reduce the after-tax cost of raising children and therefore increase the birth rate

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type would:

reduce the after-tax cost of raising children and therefore increase the birth rate.

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type would: A. make it more expensive for parents to provide for their children. B. reduce the value of children to their parents and therefore lead to a reduction in the birth rate. C. reduce the after-tax cost of raising children and therefore increase the birth rate. D. exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity.

reduce the after-tax cost of raising children and therefore increase the birth rate.

Advantages of specialization do not include:

reduced interdependence

Advantages of specialization do not include:

reduced interdependence.

Advantages of specialization do not include: A. reduced interdependence. B. the exploitation of comparative advantage. C. the ability to utilize more complex production processes. D. gains from learning by doing. E. All of the above are advantages of specialization.

reduced interdependence.

A good economic theory:

relies on simplifying assumptions in order to explain economic behavior

A good economic theory:

relies on simplifying assumptions in order to explain economic behavior.

Marginal Airlines. Marginal Airlines runs 10 flights per day at total cost of ​$50 comma 000​, including ​$30 comma 000 in fixed costs for airport fees and the reservation system and ​$20 comma 000 for flight crews and food service. a. If an 11th flight would have 25​ passengers, each paying ​$125​, would it be sensible to run the​ flight? b. If the 11th flight would have only 15​ passengers, each paying ​$125​, would it be sensible to run the​ flight?

a. yes b. no

which of the following is an example of an individual motivated by self interest? A. student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. Man buying a new Camaro E. all answers are correct

all answers are correct

A free market lacking clear ethical rules, adequate oversight and meaningful punishments for rule breakers might suffer: A. decrease in market demand. B. decrease in market supply. C. decrease in equilibrium price. D. total market collapse.

all of the above

A free market lacking clear ethical rules, adequate oversight and meaningful punishments for rule breakers might suffer: A. decrease in market demand. B. decrease in market supply. C. decrease in equilibrium price. D. total market collapse. E. all of the above.

all of the above

Which of the following is one of the three basic questions a society must​ answer?

all of the above

which of the following is true? A. people specialize by concentrating their energies on activities they are best suited B. the primary reason people pursue their comparative advantage is their self interest C. one advantage of specialization is that workers acquire greater skill from repetition D. if a person, region, or country ... E. all of the above

all of the above

A student has a chance to see Green Day in concert. The student also has a major economics exam the next morning. If the student goes to the concert: A. she may receive a lower grade on the economics exam. B. the opportunity cost of the concert is the value of the time spent studying. C. the decision involves a trade-off.

all of the above are correct

A student has a chance to see Green Day in concert. The student also has a major economics exam the next morning. If the student goes to the concert: A. she may receive a lower grade on the economics exam. B. the opportunity cost of the concert is the value of the time spent studying. C. the decision involves a trade-off. D. all of the above are correct.

all of the above are correct

Which of the following is a resource exchanged in the factor markets? A. land B. capital C. labor D. entrepreneurship

all of the above are traded in the factor markets.

Which of the following is a resource exchanged in the factor markets? A. land B. capital C. labor D. entrepreneurship E. all of the above are traded in the factor markets.

all of the above are traded in the factor markets.

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonable conclude that: A. California has a comparative advantage in producing almonds. B. Oregon has a comparative advantage in producing honey. C. the opportunity cost of growing almonds is lower in California than in Oregon. D. the opportunity cost of producing honey is lower in Oregon than in California.

all of the above are true

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonable conclude that: A. California has a comparative advantage in producing almonds. B. Oregon has a comparative advantage in producing honey. C. the opportunity cost of growing almonds is lower in California than in Oregon. D. the opportunity cost of producing honey is lower in Oregon than in California. E. all of the above are true.

all of the above are true

Which of the following is true? a.) voluntary trades give both parties more in value than what they give up b.) w/o the ability to trade, ppl would not tend to specialize in those areas where they had a comparative advantage c.) ppl can gain by specializing in the production of the good in which they have a comparative advantage. d.) voluntary trade directly increases....

all of the above are true

Which of the following is true? a.) voluntary trades give both parties more in value than what they give up b.) w/o the ability to trade, ppl would not tend to specialize in those areas where they had a comparative advantage c.) ppl can gain by specializing in the production of the good in which they have a comparative advantage. d.) voluntary trade directly increases.... e.) all of the above are true

all of the above are true

Which of the following is true? a.) people specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. b.) the primary reason people pursue their comparative advantage is their self-interest c.) one advantage of specialization is that workers acquire greater skill from repetition d.) if a person, a region, or a country....

all of the above are true.

Which of the following is true? a.) people specialize by concentrating their energies on the activity to which they are best suited, because they incur lower opportunity costs as a result. b.) the primary reason people pursue their comparative advantage is their self-interest c.) one advantage of specialization is that workers acquire greater skill from repetition d.) if a person, a region, or a country.... e.) all of the above

all of the above are true.

Which of the following is an example of an individual motivated be self-interest? A. a student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. a man buying a new Camaro

all of the answers

Which of the following is an example of an individual motivated be self-interest? A. a student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. a man buying a new Camaro

all of the answers A. a student volunteering at a soup kitchen B. an attorney providing free legal service to low income families C. a young person volunteering for the Peace Corps D. a man buying a new Camaro

Economics is concerned with: A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires. D. all of the answers are correct.

all of the answers are correct

Economics is concerned with: A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires. D. all of the answers are correct.

all of the answers are correct A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires.

Which of the following is not an example of a resource? a.) a forest b.) a river c.) a John Deere tractor d.) the chef at the city's best café e.) all of the answers are resources

all of the answers are resources

Which of the following is not an example of a resource? a.) a forest b.) a river c.) a John Deere tractor d.) the chef at the city's best café e.) all of the answers are resources

all of the answers are resources a.) a forest b.) a river c.) a John Deere tractor d.) the chef at the city's best café

Ceteris Paribus

all other things held constant

A free market lacking clear ethical rules, adequate oversight and meaningful punishments for rule breakers might suffer: A. decrease In market demand B. decrease in market supply C. decrease in equilibrium price D. total market collapse E. all the above

all the above

Ethics violators like embezzlers, frauds, tax cheats and bank robbers: A. usually allow most rules and other ethics most of the time B. not only injure individuals and companies, but also often hurt entire markets C. often use rational cost benefit analysis when deciding wether to cheat D. may feel so ashamed and guilty of their crimes that they are driven to suicide E. All the above

all the above

which of the following are reasons why most owners of companies want their employees to act ethical? A. becasuser they care about the well being of their customers B. to enhance productivity C. to maximize public good will toward the company D. to avoid large fines and expensive lawsuits E. all the above

all the above

A student has a chance to see Green Day in concert. The student also has a major economics exam in the morning. If the student goes to the concert: A. shimmy recieve a lower grade on Econ exam B. the opportunity cost of the concert is the value of the time spent studying C. the decision involves a trade-off D. all the above are correct

all the above are correct

The term "ceteris paribus" means that:

all variables except those specified are constant

The term "ceteris paribus" means that: A. everything is variable. B. all variables except those specified are constant. C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole.

all variables except those specified are constant.

The term "ceteris paribus" means that: A. everything is variable. B. all variables except those specified are constant. C. no one knows which variables will change and which will remain constant. D. what is true for the individual is not necessarily true for the whole. E. all variables are held constant.

all variables except those specified are constant.

The real core of most economic problem is to:

allocate limited resources among competing uses

The real core of most economic problem is to:

allocate limited resources among competing uses.

The real core of most economic problem is to: A. increase the amount of leisure time available to people. B. guarantee everyone on the planet a minimum level of food, shelter and clean water. C. allocate limited resources among competing uses. D. eliminate scarcity.

allocate limited resources among competing uses.

The importance of the ceteris paribus assumption is that it:

allows one to analyze the relationship between two variables apart from the influence of other variables

The importance of the ceteris paribus assumption is that it:

allows one to analyze the relationship between two variables apart from the influence of other variables.

The importance of the ceteris paribus assumption is that it: A. allows one to separate normative economic issues from positive economic ones. B. allows one to generalize from the whole to the individual. C. allows one to analyze the relationship between two variables apart from the influence of other variables. D. allows one to hold all variables constant so the economy can be carefully observed in a suspended state.

allows one to analyze the relationship between two variables apart from the influence of other variables.

The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6. It is expected, therefore, that a 5% increase in price would lead to:

an 8% decrease in the quantity of gourmet coffee demanded

cartel

an association of manufacturers or suppliers with the purpose of maintaining prices at a high level and restricting competition.

behavioral assumption

an assumption that describes the expected behavior of economic decision makers; what motivates them

Centerally planned economy

an economic system in which the government makes all decisions on the three key economic questions

Buyers who were originally willing to buy 800 units of a good at $4 per unit are now willing to buy 1200 units at $4 per unit, That change would be described as:

an increase in demand

Which of the following is most likely a topic of discussion in a microeconomics course?

an increase in the price of lumber used to construct houses

Which of the following is most likely a topic of discussion in a microeconomics course? A. a decrease in the share of national income paid to the government in taxes B. an increase in the price of lumber used to construct houses C. an increase in the rate of inflation D. an increase in the number of jobless individuals filing unemployment claims E. the size of the national debt

an increase in the price of lumber used to construct houses

which of the following is most likely a topic of discussion is a microeconomics course?

an increase in the price of lumber used to construct houses

complements

an increase in the price of one good causes a decrease in the demand for the other good. peanut butter and jelly

Which of the following is an example of a capital resource?

an oil rig

Which of the following is an example of a capital resource? A. redwood trees B. unskilled labor C. stocks and bonds D. an oil rig

an oil rig

regressive tax

as a person's income rises, the amount his or her tax as a proportion of income falls

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction

Pollution damages the environment we live in. An economist would advise that we reduce air pollution:

as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction.

Pollution damages the environment we live in. An economist would advise that we reduce air pollution: A. as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction. B. until the total benefit from air pollution reduction just equals the total cost of pollution reduction. C. until air pollution levels reach near-zero levels. D. to the levels experienced in the 1950s when air was much cleaner near big cities.

as long as the marginal benefit from air pollution reduction outweighs the marginal cost of achieving the reduction.

Marginal benefit

benefit of one more unit

Pirating​ Textbooks? The government protects intellectual property rights by enforcing copyright rules on textbooks. Suppose Google scans the pages of this and other introductory economics textbooks and makes them available for downloading at no charge. a. Supposing you are a current textbook​ consumer, you would be b. What are the implications for the next generation of economics​ students?

better off; all of the above

If people are self-interested, A. they will always choose work over leisure. B. they will never choose work over leisure C. as their preferences for leisure time increase, they are likely to work less. D. as the wages they are offered increase, they are likely to work more. E. both c. and d. are true.

both c. and d. are true.

If people are self-interested, A. they will always choose work over leisure. B. they will never choose work over leisure C. as their preferences for leisure time increase, they are likely to work less. D. as the wages they are offered increase, they are likely to work more. E. both c. and d. are true.

both c. and d. are true. C. as their preferences for leisure time increase, they are likely to work less. D. as the wages they are offered increase, they are likely to work more.

Opportunity cost includes

both monetary and non-monetary costs

Opportunity cost includes A. monetary costs only. B. non-monetary costs only. C. both monetary and non-monetary costs. D. neither monetary nor non-monetary costs.

both monetary and non-monetary costs

opportunity cost includes:

both monetary and non-monetary costs

the opportunity cost of going to college includes:

both tuition and the value of the student's time

The opportunity cost of going to college includes:

both tuition and the value of the students time

The opportunity cost of going to college includes: A. both tuition and the value of the student's time. B. tuition, but not the value of the student's time, which is a cash cost. C. tuition, but not the value of the student's time, which is a monetary cost. D. neither tuition nor the value of the student's time, since obtaining a college degree makes one's income higher in the future. E. neither tuition nor the value of the student's time, at least at state-supported universities and colleges.

both tuition and the value of the students time

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

in a market economy, the amount of a good that is produced is primarily decide by the interaction of:

buyers and sellers

market

buyers and sellers carry out exchange at mutually agreeable terms

In a market economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

In a market economy, the amount of a good that is produced is primarily decided by the interaction of: A. buyers and sellers. B. all consumers. C. producers and input suppliers. D. producers and government planning committees. E. all producers.

buyers and sellers.

An economic hypothesis is tested:

by comparing the hypothesis predictions to real world data

an economic hypothesis is tested:

by comparing the hypothesis's predictions to real-world data

An economic hypothesis is tested:

by comparing the hypothesis's predictions to real-world data.

An economic hypothesis is tested: A. by assessing the realism of its assumptions. B. by comparing the hypothesis's predictions to real-world data. C. most frequently by using a controlled experiment. D. by assessing the level of descriptive detail. E. by none of the above. Economic hypotheses are theoretical and therefore cannot be tested. Reset Selection

by comparing the hypothesis's predictions to real-world data.

A good economic theory: A. includes every detail that affects the economic behavior of interest. B. relies on simplifying assumptions in order to explain economic behavior. C. does not rely on simplifying assumptions. D. is impossible to achieve because of the difficulty of conducting controlled experiments. E. is normative and therefore not testable.

relies on simplifying assumptions in order to explain economic behavior.

price ceiling

rent control

production possibilities curve

represents the potential total output combinations of any two goods for an economy

increasing oppurtunity cost

resources are not equally well suited to each output

Economists believe that individuals act as if they are motivated by self-interest and:

respond in predictable ways to changing circumstances

Economists believe that individuals act as if they are motivated by self-interest and:

respond in predictable ways to changing circumstances.

Economists believe that individuals act as if they are motivated by self-interest and: A. respond selfishly. B. respond in predictable ways to changing circumstances. C. it leads to inconsistent and unpredictable behavior. D. all of the above.

respond in predictable ways to changing circumstances.

What is a resource?

result of production or the result of human effort

most used source for revenues

sales and income tax

Economic goods are:

scarce products that are created from scarce resources

economic goods are

scarce products that are created from scarce resources

Economic goods are:

scarce products that are created from scarce resources.

Economic goods are: A. only those commodities priced in monetary terms. B. scarce products that are created from scarce resources. C. the opposite of normative economic goods. D. not subject to scarcity. E. only theoretical, not real.

scarce products that are created from scarce resources.

Economic choices or tradeoffs are the result of:

scarcity

Economic choices or tradeoffs are the result of: A. basic human greed B. scarcity. C. poverty. D. private ownership of resources. E. the fallacy of composition.

scarcity

Which of the these conditions are most likely to motivate honest people to become corrupt?

seeing your boss and fellow workers get rich by lying and cheating

which of these conditions are most likely to motivate honest people to become corrupt?

seeing your boss and fellow workers get rich by lying and cheating

Total revenue represents the amount that:

sellers receive for a good or service which is computed as PxQ

If there is a surplus, ____ will be frustrated by their inability to exchange at the current price, and they will ____ the prices as a result.

sellers, lower

change in demand

shift of the entire command curve caused by the determinants PYNTE

ability to pay principle

simply that those with the greatest ability to pay taxes should pay more than those with the least ability to pay taxes

A leftward shift in supply could be caused by:

some firms leaving the industry

mixed economy

some private and some public ownership of resources

which of the following people are more likely to break ethical rules:

someone who is ignorant

diminishing returns

stage of production where output increases at a decreasing rate as more units of variable input are added

microeconomics

studies the behavior in particular markets: firms, households

Economics is most importantly concerned with...

studying how we allocate scarce resources to satisfy unlimited wants

Economics is most importantly concerned with... A. how to profit from trading in the stock market. B. government taxation and spending. C. studying how we allocate scarce resources to satisfy unlimited wants. D. how to reduce inflation. E. how to successfully launch a business.

studying how we allocate scarce resources to satisfy unlimited wants

Economics is most importantly concerned with:

studying how we allocate scarce resources to satisfy unlimited wants

Whenever the price of Good A increases, the demand for Good B increases as well. Good A and B appear to be:

substitutes

The market supply schedule reflects the total quantity

supplied at each price by all of the producers

An upward-sloping supply curve shows that:

suppliers are willing to increase production of their goods if they receive higher prices for them.

In free markets which allows a high level of unethical corruption:

suppliers will be forced to be corrupt or to leave the market

In free markets which allows a high level of unethical corruption: A. Suppliers may be forced to be corrupt or to leave the market. B. Consumers will be forced to be corrupt. C. Firms will always earn large long-term profits. D. the products sold will be worthless. E. there will be more creativity and competition than in highly ethical markets.

suppliers will be forced to be corrupt or to leave the market

In free markets which allows a high level of unethical corruption:

suppliers will be forces to be corrupt or to leave the market

Ceteris paribus, if an 8% increase in price leads to a 6% increase in the quantity supplied, then:

supply is inelastic

Which of the following is not determinant of supply?

tastes

invisible hand

term economists use to describe the self-regulating nature of the marketplace

fact

texas has no income tax

If the elasticity of demand coefficient for a good is one-sixth (in absolute terms), we know:

that for every 1% increase in quantity, there will be a 6% decrease in price.

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

absolute advantage

the ability to produce a product in less time (less resources) than another company

quantity demanded

the actual amount of a good or service consumers are willing to buy at some specific price

quanitity supplied

the amount that firms are willing and able to sell

Graphically, consumer surplus is measured by:

the area below the demand curve, but above the market price.

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour.

Trent decides to spend an hour playing basketball rather than studying. His opportunity cost is: A. nothing because he enjoys playing basketball more than studying. B. the benefit to his grades from studying for an hour. C. the increase in skill he obtains from playing basketball for that hour. D. nothing because he had a free pass into the sports complex to play basketball.

the benefit to his grades from studying for an hour.

capital

the buildings, equipment, and human skills used to produce goods and services

Entrepreneurship

the decision-maker role which in a market economy organizes the other kinds of resources so as to produce and sell a product, thereby earning a profit or taking a loss.

Consumer surplus is:

the difference between what consumers are willing to pay and what they are required to pay for a good.

Market failure occurs when:

the economy fails to allocate resources efficiently on its own.

Market failure occurs when: A. the stock markets tumble due to heavy selling. B. the economy fails to allocate resources efficiently on its own. C. demand shows signs of slowing down. D. a country cannot produce a good or service at a lower opportunity cost than others.

the economy fails to allocate resources efficiently on its own.

marginal/ on the margin

the effect of one more unit

The fallacy of composition is:

the erroneous view that what is true for the individual will also be true for the group

The fallacy of composition is:

the erroneous view that what is true for the individual will also be true for the group.

oppertunity cost

value of next best alternative given up when the choice is made (what you sacrifice to get something)

Because of scarcity

we must sacrifice valuable alternatives to obtain more goods and services we desire

Because of scarcity:

we must sacrifice valuable alternatives to obtain more goods and services we desire

Because of scarcity: A. we must sacrifice valuable alternatives to obtain more goods and services we desire. B. the opportunity cost of consumption is zero. C. we can obtain more of a desirable good without sacrificing other goods and services. D. shortages of goods prevail at current market prices. E. both a. and d. are correct.

we must sacrifice valuable alternatives to obtain more goods and services we desire

Which of the following is not true?

what one trader gains from a trade, the other must lose.

Which of the following is not true? a.) voluntary exchange is expected to be advantageous to both parties to the exchange b.) what one trader gains from a trade, the other must lose c.) if one party to a potential voluntary trade decides it does not advance his interests, he can veto the potential trade. d.) the expectation of gain motivates ppl to engage in trade.

what one trader gains from a trade, the other must lose.

which of the following are not very important to maintaining effective market ethics?

whether people understand the reasons for the rules of regulations

In a market economy how do we determine who will get the goods and services that have been produced?

whoever can afford them

For a given good, the market demand curve is generally ______ than the demand curves for the individual consumers

wider

The government protects intellectual property rights by enforcing patents on new pharmaceutical drugs. Suppose the​ government, by enforcing patent​ laws, prevents a new drug by Merck from being copied by another company and made available at a dramatically reduced price. If you were a current consumer of this new pharmaceutical​ drug, you would initially be as a result of the​ government's action. What are the implications for the next generation of pharmaceutical drug​ users?

worse off ; Pharmaceutical companies will have more revenue to cover research and development costs.

A taxi company currently has nine cabs in its​ fleet, and its total daily cost is ​$4,000. If a taxi company adds a tenth​ cab, the​ company's total daily cost will increase to ​$4,200 and its total revenue will increase by ​$250 per day. Should the company add the tenth​ cab?

yes

Between 1974 and​ 2011, the federal minimum wage increased from​ $2.00 to​ $7.25. Was the typical​ minimum-wage worker worse off in​ 2011?

yes

Extending Trade outside the Camp. Late in World War​ II, a German guard exchanged bread and chocolate at a rate of 2 loaves for 1 chocolate bar. Inside the Allied POW​ camp, the price of chocolate was 15 cigarettes per​ bar, and the price of bread was 30 cigarettes per loaf. Is there an opportunity for beneficial​ exchange?With the​ guard, a POW could exchange 2 chocolate bars for 4 loaves of bread. In the​ camp, the POW could exchange the extra loaves for 120 ​cigarettes, and then exchange the extra cigarettes for 8 chocolate bars. In other​ words, the​ POW's net gain from trade is 6 chocolate bars.

yes

Late in World War​ II, a German guard exchanged tea and chocolate at a rate of 3 tea bags for 1 chocolate bar. Inside the British POW​ camp, the price of chocolate was 5 cigarettes per​ bar, and the price of tea was 10 cigarettes per bag. Is there an opportunity for beneficial​ exchange?

yes

Suppose that in the French compound of a POW​ camp, the price of cheese is 28 cigarettes per cheese ration and the price of tea is 4 cigarettes per tea ration. In the British​ compound, the price of tea is 24 cigarettes per ration. Is there an opportunity for beneficial​ exchange?

yes

Suppose that stricter emissions standards would reduce​ health-care costs by ​$60 million but increase the costs of fuel and emissions equipment by ​$20 million. Is it sensible to tighten the emissions​ standards?

yes

Adam Smith listed three reasons for specialization to increase productivity. What are​ they?

​Repetition, Continuity, and Innovation

natural resources

Gifts of nature used to make goods and services

What does the Latin expression ceteris paribus​ mean?

Other things being held fixed.

Normative economic thinking

value judgment (what should be)

An increase in supply causes

decrease in the equilibrium price and increases the equilibrium quantity

Normative statements answer questions like​ "What will happen​ if...

false

To explain the virtues of​ markets, Adam Smith used the metaphor of the invisible pancreas

false

true or false: what one trader gains from a trade, the other must lose

false

imperfect information

false information

imports

goods and services purchased from other countries

A surplus will result whenever the

government imposes a price floor above the equilibrium price.

What are the components of gross domestic product?

government purchases, net exports, private investment spending

Some markets are dominated by a few large​ firms, leading to

high prices and small quantities.

ceteris paribus

holding everything else constant

A perfectly elastic supply curve is

horizontal

The market demand curve is the sum of the individual demand curves.

horizontal

The market supply curve is the sum of the individual supply curves

horizontal

four types of decision makers in the economy

households, firms, governments, and the rest of the world

A supply schedule shows

how many units producers are willing and able to sell at various prices

The supply curve shows

how the quantity produced varies with price

Labor

human mental and physical capacity to work.

Capital

human-made goods useful in producing other goods or services. Capital in this context includes buildings ("plant"), equipment, and machinery. Any produced product useful for producing other products is a capital good.

Which of the following best illustrates the fallacy of composition?

if a person had more money they could buy more scarce goods, if the nation had more money, everyone could but more scarce goods

If the production of a particular good involves significant external benefits, to force the externality to be internalized the government might:

impose a tax on production of the good in order to decrease production.

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that: A. in the man's judgment, the expected marginal cost of smoking the cigarette outweighs the expected marginal benefit. B. the man is behaving irrationally. C. the smoker is unconcerned about his future health. D. in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost. E. smoking should be banned by the government in order to ensure the safety of smokers.

in the man's judgment, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost.

Despite the warning on a package of cigarettes about the potential health hazards of smoking, a man lights up a cigarette. An economist would conclude that:

in the mans judgement, the expected marginal benefit of smoking the cigarette outweighs the expected marginal cost

You lose $20 from your wallet and decide to miss an hour from work in order to search for it. To an economist, this means that:

in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage

You lose $20 from your wallet and decide to miss an hour from work in order to search for it. To an economist, this means that: A. you estimate the expected cost of searching for one hour to be greater than $20. B. you must earn more than $20 per hour. C. in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage. D. you are irrational, since it is always a waste of time to search for lost money. E. you place no value on your time.

in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage

What is Scarcity?

inability of limited resources to satisfy unlimited wants

inferior good

income increases, demand for the good decreases. If income decreases, demand for the good increases

Macroeconomic topics do not usually include:

the profit maximizing decisions of an individual manufacturer.

Macroeconomic topics do not usually include: A. the rate of inflation. B. the rate of unemployment. C. economic growth. D. the profit maximizing decisions of an individual manufacturer. E. the control of the money supply by the central bank.

the profit maximizing decisions of an individual manufacturer.

A change in price causes movement along a demand curve and a change in

the quantity demanded

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price

when the price of apples goes up

the quantity demanded for apples will decrease

law of demand

the quantity of a good or service demanded varies inversely with its price

Supply

the quantity of a good or service that sellers wish to sell in a time period

A change in price causes movement along a supply curve and a change in

the quantity supplied .

Equilibrium Quantity

the quantity supplied and the quantity demanded at the equilibrium price

Each point on the supply curve shows the

the quantity supplied at that price

demand

the relationship between price and the quantity demanded of a certain good or service (the entire curve)

supply

the relationship between price and the quantity supplied of a certain good or service

Ceteris paribus, if the vacancy rate in an apartment complex increased from 5% to 20% over the past two years, we would expect to see

the rent decrease leading to an increase in quantity demanded.

Entrepreneurship is:

the resource that organizes the other factors of production in order to produce goods and/or services

Entrepreneurship is:

the resource that organizes the other factors of production in order to produce goods and/or services.

Entrepreneurship is: A. human capital. B. another word for the financial capital that can be used to start a business. C. the resource that organizes the other factors of production in order to produce goods and/or services. D. another word for physical capital that is used to produce goods and services.

the resource that organizes the other factors of production in order to produce goods and/or services.

Economic Fluctuations

the rise and fall of economic activity relative to the long-term growth trend of the economy; also called business cycles

Human capital is:

the skill or knowledge of individuals

Human capital is:

the skill or knowledge of individuals.

Human capital is: A. machinery owned by firms, but not by individuals. B. machinery owned by individuals, but not by firms. C. machinery owned by individuals or firms, but not by the government. D. the skill or knowledge of individuals.

the skill or knowledge of individuals.

Which of the following represents a normative statement? A. a decrease in price leads to an increase in quantity demanded B. The temperature outside is 90 degrees C. the study of economics is more important than the study of history D. people will buy less butter at $1.50 per pound then they would at $1.00 per lb E. Normally, as an economy develops, the nations birth rate tends to fall

the study of economics is more important that the study of history

What is macroeconomics?

the study of economy at the large scale level

What is Microeconomics?

the study of economy at the small scale level

economics

the study of the allocation of our limited resources to satisfy our unlimited wants.

Microeconomics

the study of the economic behavior and decision making of small units, such as individuals, families, and businesses (the tree)

division of labor

the type of arrangement in which each worker specializes in a particular task or job

real value

the value of an amount of money in terms of what it can buy

opportunity cost

the value of an item or activity that is not chosen

What is Opportunity Cost?

the value of the opp. that you gave up when you chose one activity instead of another

Suppose there are two members of he U.S. congress who were once economics professors. Why is It important to be able to distinguish their positive from their normative statements about economic policy?

their positive statements help us understand the economies response to a particular policy, while their normative statements reflect their value judgements

Economists believe that in regards to criminal behavior:

those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs

Economists believe that in regards to criminal behavior: A. people engage in criminal activity because they are genetically predisposed to do so. B. those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs. C. individuals are irrational and don't respond to incentives. D. economics can shed very little light on the subject.

those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs

economists believe that in regards to criminal behavior:

those choosing to commit criminal acts weigh the expected marginal benefits versus the expected marginal costs

fundamental resource of labor

time

Tom is a castaway who washes up on a remote island. He can catch eight birds per day or catch ten fish per day. The natives on the island can catch ten birds per day or catch twenty fish per day. According to comparative advantage,

tom should catch more birds and fish less, then trade birds for fish

profit

total revenue minus total cost

A 25% decrease in the price of breakfast cereal leads to 20% increase in the quantity of cereal demanded. As a result:

total revenue will decrease

Adam Smith suggested that self minus interest is more powerful than kindness or altruism.

true

Economists may differ in their conclusions from positive analysis.

true

Feeding the World from a​ Flowerpot? Comment on the following​ statement: "If agriculture did not experience diminishing​ returns, we could feed the world using the soil from a small​ flowerpot."

true

If a firm is subject to diminishing marginal​ returns, an increase in the number of workers increases the quantity produced at a decreasing rate.

true

President​ Lincoln's discomfort with imports resulted from his failure to recognize that money sent to England eventually returns to the United States to buy American exports

true

The legal system is an example of an institution that plays a key role in economic growth

true

true of false: "poverty could be eliminated but scarcity could not"

true

true or false: "The U.S. government defines and enforces business ethics in order to protect the economy"

true

true or false: "a theory may result from a tested and confirmed hypothesis"

true

Along a supply curve, a decrease in price will increase total revenue:

under no circumstances

If there are significant external costs associated with the production of a product, it can be said that the private cost of production to the firm ____ the cost to society associated with this product and output should ____ to move toward the efficient situation.

understates, decreases

Which of the following best defines rational behavior?

undertaking activities whenever the marginal benefit exceeds the marginal cost

Which of the following best defines rational behavior? A. analyzing the total costs of a decision B. analyzing the total benefits of a decision C. undertaking an activity as long as the total benefit of all activities exceeds the total cost of all activities D. undertaking activities whenever the marginal benefit exceeds the marginal cost E. undertaking activities as long as the marginal benefit exceeds zero

undertaking activities whenever the marginal benefit exceeds the marginal cost

what defines rational behavior?

undertaking activities whenever the marginal benefit exceeds the marginal cost

A secondary effect of an action that may occur after the initial effects is known as a(n):

unintended consequence

Demand is said to be ___ when the quantity demanded changes the same proportion as the price

unit elastic

change in quantity demanded

up and down the same demand line because of change in price

Marginal Benefits and Marginal Costs Charts....

!

which of the following is most likely an example of correlation but not an example of causation?

"Usually, if I eat a chili dog and drink a beer before a game, my team wins"

Which of the following statements is most consistent with the rule of rational choice? "

"When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

Which of the following statements is most consistent with the rule of rational choice? A. "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." B. "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." C. "Police forces should be enlarged until virtually all crime is eliminated." D. "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

"When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects."

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complements

exports

Goods and Services sold to other countries

complementary goods

Goods that are consumed together, such as cars and gasoline or peanut butter and jelly.

Meaning of points on and off a PPC

1. Points on the PPC mean we are using all our resources efficiently. 2. Points inside the PPC indicate that it is inefficient. We are not using all our resources fully and efficiently. 3. Points outside the PPC indicate that it is unattainable. Scarcity of our resources prevents us from getting there right now

3 key questions of economics

1. what should we produce? 2. how do we produce the products we produce? 3. who consumes the products?

approximately of job losses in the first three months of 2004 were caused by outsourcing

2%

Factors which increase the demand for dollars b) Increased desire by foreigners to purchase assets (stocks, bonds, real estate, etc.) in the U.S. (happens when interest rates in U.S. rise or when conditions in other countries look unsafe or unprofitable relative to U.S, for example?)

2. In order to invest or purchase assets in the United States For example Mexican citizens may wish to buy U.S. real estate, stocks or bonds, enterprises, government bonds, or other things of value ("assets'). In order to do so they must first buy dollars with their pesos.

Bailey's Barber Shop knows that a 5% increase in the price of their haircuts results in a 15% decrease in the number of haircuts purchased. What is the elasticity of demand facing Bailey's Barber Shop?

3.0

Oprah just inherited a house with a market value of ​$100,000​, and she does not expect the market value to change. Each​ year, she will pay ​$500 for utilities and ​$1,000 in taxes. She can earn 5 percent interest on money in a bank account. Her cost of living in the house for the year is

6500

Suppose you currently live and work in​ Cleveland, earning a salary of ​$70 comma 000 per year and spending ​$25 comma 000 for housing. You just heard that you will be transferred to a city in California where housing is 45 percent more expensive. In negotiating a new​ salary, your objective is to keep your real income constant

81250

outsourcing

A decision by a corporation to turn over much of the responsibility for production to independent suppliers (or other countries)

Demand schedule

A demand schedule presents the same information as a demand curve but in a chart or non-graphical form; it examines how much quantity demanded would be at a variety of prices, not just a single price This about it as a listing of the quantities of an item buyers wish to buy in a time period at various possible prices ceteris paribus.

circular flow model

A diagram that traces the flow of resources, products, income, and revenue among economic decision makers

Which of the following policies would be most effective in promoting monthly water conservation? A. A $100 flat fee for any household that uses over 1500 gallons B. A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons C. A $125 fee for all households in addition to a $0.50 per gallon fee for all consumption D. A $200 fee for all households with zero charge per gallon of consumption E. A $50 fee for all households with zero charge per gallon of consumption

A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons

Which of the following policies would be most effective in promoting monthly water conservation?

A per gallon fee that escales from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons

Entrepreneur

A person who organizes, manages, and takes on the risks of a business.

Price ceiling- purpose and effects

A price ceiling is the maximum legal price that can be charged for a good. To have any effect, a price ceiling is always below the equilibrium price Purpose: to prevent the market price from rising to the height it would otherwise reach. Example: A price ceiling of $600 has been set by the government because it believes that the market price of $900 is too high to provide decent housing for everyone. Therefore, markets will NOT clear. Note, at a price ceiling of $600, there is a shortage Effects: Black markets

Price Floor- purpose and effects

A price floor is the minimum legal price that can be charged/paid. By definition, a price floor is always above the equilibrium price. Purpose: prices are not be allowed to reach their equilibrium level due to government intervention Example: A price floor of $17 has been set by the government because it believes that the market wage of $6.00 is too low to provide a decent standard of living. Therefore, markets will not clear. At a minimum wage of $17, 2 million workers are willing to offer their labor services, but firms only want to hire 1 million workers. This results in a surplus of 1 million workers.

entrepreneur

A profit-seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and then assumes the risk of operation.

shortage

A situation in which quantity demanded is greater than quantity supplied

Recession

A slowdown in a nation's economy

Production possibilities

A society's "production possibilities" are the various combinations of goods and services it is capable of producing at a certain moment. How many hamburgers, tanks, haircuts, etc. it can possibly produce, given its scarce resources.

positive economic statement

A statement that can be proved or disproved by reference to facts

good

A tangible product used to satisfy human wants

Which of the following is correct?

A theory may result from a tested and confirmed hypothesis

Which of the following is correct?

A theory may result from a tested and confirmed hypothesis.

Which of the following is correct? A. "Theory" and "hypothesis" are interchangeable terms meaning the same thing. B. A hypothesis may result from a tested and confirmed theory. C. A theory may result from a tested and confirmed hypothesis. D. A hypothesis is a theory whose formulation relies on mathematics.

A theory may result from a tested and confirmed hypothesis.

Some markets are dominated by a few large​ firms, leading to... A) high prices and small quantities. B) high prices and many choices. C) large quantities and high profits. D) intense competition and low profits.

A) high prices and small quantities.

How Many Hours at the Barber​ Shop? Your opportunity cost of cutting hair at your barbershop is ​$15 per hour. Electricity costs ​$5 per​ hour, and your weekly rent is ​$275. You normally stay open nine hours per day. a. What is the marginal cost of staying open for one more​ hour? b. If you expect to give two haircuts in the 10th hour and you charge ​$15 per​ haircut, is it sensible to stay open for the extra​ hour?

A. $20; B. yes

The fact that some resources and skills cannot be easily adapted from their current uses to alternative uses is the basic reason for the law of A. increasing opportunity cost. B. decreasing opportunity cost. C. comparative advantage. D. consumer sovereignty.

A. increasing opportunity cost

market supply curve

ADD UP supply curves for individual firms

Market Price

Actual price that prevails in a market at any particular moment

Ceteris Paribus

All else constant

Land

All nature-given factors, above or below the ground, of use in producing goods and services. Examples might be water, water-power, timber, minerals, or the agricultural fertility of the soil.

Which of the following is an example of market failure? A. Overuse of highways that leads to traffic congestion B. Reduced levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub-prime lending D. All of the above

All of the above

GDP

Gross domestic product is a monetary measure of the market value of all the final goods and services produced in a period of time, often annually

Which of the following statements is most consistent with the rule of rational choice? A. "The Environmental Protection Agency should strive to eliminate virtually all air and water pollution." B. "When evaluating new prescription drugs, the Food and Drug Administration should weigh each drug's potential health benefits against the potential health risks posed by known side effects." C. "Police forces should be enlarged until virtually all crime is eliminated." D. "Manufacturers of automobiles should seek to make cars safer, no matter the costs involved."

B. "When evaluating new prescription drugs, the food and drug administration should weigh each drugs potential health benefits against the potential health risks posed by known side effects"

Which of the following policies would be most effective in promoting monthly water conservation? A. A $100 flat fee for any household that uses over 1500 gallons B. A per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons C. A $125 fee for all households in addition to a $0.50 per gallon fee for all consumption D. A $200 fee for all households with zero charge per gallon of consumption E. A $50 fee for all households with zero charge per gallon of consumption

B. a per gallon fee that escalates from $1.00 to $2.00 per 25 gallons once household consumption exceeds 1,000 gallons

The marginal benefit to you of drinking bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25. A. If you purchase iced tea you will suffer a net loss of 25 cents per bottle. B. If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. C. You will not purchase iced tea if you are acting rationally. D. If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

B. if you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000. A. If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. B. You will not purchase the new sport utility vehicle at this time if you are acting rationally. C. If you do not purchase the new sport utility vehicle, your net loss will be $2,000. D. If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000.

B. you will not purchase the new sport utility vehicle at this time if you're acting rationally

Bill says: "The imposition of a tax on tequila will increase its price." Bob says, "Taxes should be imposed on tequila because college students drink too much."

Bill's statement is positive, and Bob's statement is normative

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Bill's statement is positive, and Bob's statement is normative.

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much." A. Both statements are normative. B. Both statements are positive. C. Bill's statement is normative, and Bob's statement is positive. D. Bill's statement is positive, and Bob's statement is normative.

Bill's statement is positive, and Bob's statement is normative.

Bill says: "The imposition of a tax on tequila will increase its price." Bob says: "Taxes should be imposed on tequila because college students drink too much."

Bills statement is positive, and Bobs statement is normative

Which of the following is true? A. An advanced market economy would tend to use both labor intensive and capital intensive production methods. B. An economy in which labor is relatively scarce would tend to use capital intensive production methods. C. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be. D. All of the above are true. E.Both b. and c. are true.

Both b and c are true

Which of the following is true? A. An advanced market economy would tend to use both labor intensive and capital intensive production methods. B. An economy in which labor is relatively scarce would tend to use capital intensive production methods. C. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be. D. All of the above are true. E.Both b. and c. are true.

Both b. and c. are true.

Which of the following is true? A. An advanced market economy would tend to use both labor intensive and capital intensive production methods. B. An economy in which labor is relatively scarce would tend to use capital intensive production methods. C. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be. D. All of the above are true. E.Both b. and c. are true.

Both b. and c. are true. B. An economy in which labor is relatively scarce would tend to use capital intensive production methods. C. An increase in the availability of labor relative to capital in an economy would tend to increase how labor intensive the production processes in that economy would be.

markets

Bring buyers and sellers together to exchange goods and services

labor

Human effort directed toward producing goods and services (mental or physical)

which of the following is an example of a capital resource? A. Redwood trees B. unskilled labor C. stocks and bonds D. an Oil Rig

Oil Rig

You lose $20 from your wallet and decide to miss an hour from work in order to search for it. To an economist, this means that: A. you estimate the expected cost of searching for one hour to be greater than $20. B. you must earn more than $20 per hour. C. in your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage. D. you are irrational, since it is always a waste of time to search for lost money. E. you place no value on your time.

C. In your estimation the expected value of searching for the lost $20 for an hour exceeds your hourly wage

Which of the following is true with regard to production possibilities curves? A. Underutilized resources or those not being put to their best uses are illustrated by output combinations along the production possibilities curve. B. Economic growth means a movement along an economy's production possibilities curve in the direction of producing more consumer goods. C. Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future. D. From a point inside the production possibilities curve, in order to get more of one thing, an economy must give up something else.

C. investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now can be able to produce and therefore consume more in the future

The completely private ownership of property and the exclusive use of the market system to direct and coordinate economic activity are most characteristic of: A. a command economy. B. a mixed economy. C. a market economy. D. a traditional economy.

C. market economy

Some political leaders have proposed that parents be granted a substantially larger reduction in their annual personal income taxes for each child that they parent. The economic way of thinking indicates that legislation of this type would: A. make it more expensive for parents to provide for their children. B. reduce the value of children to their parents and therefore lead to a reduction in the birth rate. C. reduce the after-tax cost of raising children and therefore increase the birth rate. D. exert no impact on either the cost of raising children or the birth rate since parenting children is a non-economic activity.

C. reduce the after-tax cost of raising children and therefore increase the birth rate

In a market economy how do we determine who will get the goods and services that have been produced? A. Whoever wants them B. Whoever needs them C. Whoever can afford them D. None of the above.

C. whoever can afford them

Monopoly

Complete control of a product or business (market) by one person or group

Microeconomics

Concerns the behavior of economic decision-makers (firms, consumers, etc.) and markets for individual products. Microeconomics focuses on markets for one good or service at a time.

Suppose the United States imposes higher steel tariffs. How does the change in steel import restrictions affect automobile manufacturers who use steel as an​ input? A) The cost of producing automobiles will decrease. B) Automobile manufacturers will become more profitable as the price of steel falls. C) The tariff change will prompt automobile manufacturers to lowerlower the price of vehicles. D) The automobile industry will experience job loss as manufacturers are more likely to relocate to other countries.

D) The automobile industry will experience job loss as manufacturers are more likely to relocate to other countries.

an example of market failure: A. overuse of highways that leads to traffic congestion B. Reduces levels of vaccinations which increase illness and disease C. Substantial foreclosures caused by sub prime lending D. All the above

D. All the above

Economics is concerned with: A. the choices people must make because resources are scarce. B. human decision makers and the factors that influence their choices. C. the allocation of limited resources to satisfy virtually unlimited desires. D. all of the answers are correct.

D. all of the answers are correct.

A downward sloping straight-line production possibilities curve implies: A. an inefficient use of resources. B. an efficient use of resources. C. an increasing opportunity cost. D. a constant opportunity cost.

D. constant opportunity cost

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk: A. equals $6.00. B. equals $4.00. C. equals $3.00. D. equals $2.00. E. equals zero dollars.

D. equals to $2.00

From an economists' perspective, which of the following observations is not true? A. self-interest is purely monetary in nature B. Self interest can include benevolence C. Self interest is a good predictor of human behavior in most situations D. Self interest is not the same as selfishness

D. self interest is purely monetary in nature

Which of the following best illustrates the fallacy of composition?

If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.

if a student enrolls in an additional course at the university, an economist would conclude that: A. comparing the total benefits of all actions to the total costs incurred as a result of those actions. B. abstract thinking, which is never actually utilized by consumers when making purchasing decisions. C. holding all other variables constant when isolating the relationship between two variables. D. comparing the additional benefit from an action to the additional cost.

D. the expected marginal benefit of an additional course must exceed the expected marginal cost of the course

Direct relationship

Direct relationship (positive): positive slope. ie. as x increases, y increases.

Function of an Entrepreneur: A. bear the business risks B. Organize the other factors of production C. Innovate D. do all tasks

Do all tasks

Which of the following would break a positive ethic?

Driving two miles per hour over the speed limit

Which of the following would break a positive ethic? A. Having lustful daydreams about your best friend's girlfriend (or boyfriend) B. Driving two miles per hour over the speed limit C. Cursing your instructor when you're alone at home at 3 AM answering these stupid questions D. Spending the day sleeping & watching TV instead of studying for your classes E. None of the above

Driving two miles per hour over the speed limit

ethics A. is a branch of philosophy B. are moral rules or standards governing human conduct C. are rules more standards governing human conduct, but not necessarily moral rules D. the moral principles of an individual person E. All the above

E. all the above

plagiarism is unethical because: A. Plagiarism might result in stealing profits from the original writer B. can decrease the value of honest students' diplomas C. can make it more difficult for instructors to asses the quality of students' writings D. plagiarism is a type of fraud E. All the above

E. all the above

Resources and goods are free to move across state lines. If Oregon producers choose to specialize in producing honey and California producers choose to specialize in growing almonds, then we could reasonable conclude that: A. California has a comparative advantage in producing almonds. B. Oregon has a comparative advantage in producing honey. C. the opportunity cost of growing almonds is lower in California than in Oregon. D. the opportunity cost of producing honey is lower in Oregon than in California. E. all of the above are true.

E. all the above are true

Which of the following is true? A. By putting unemployed resources to work or by putting already employed resources to better uses, we could expand output in an economy. B. To generate increased economic growth, a society would produce fewer consumer goods and more capital goods in the present. C. If the production possibility curve is concave from below (that is, bowed outward from the origin), it reflects increasing opportunity costs of producing additional amounts of a good. D. Increases in a society's output do not make scarcity disappear. E. All of the above are true.

E. all the above is true

market economy

Economic decisions are made by individuals or the open market

Positive Statements answer questions like​ " What ought to happen​ to..."

False

Which of the following best illustrates the fallacy of composition? A. If Mr. Smith had more money, he could buy more scarce goods; if the Adams family had more money, it could buy additional goods. B. If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods. C. If other variables are not held constant, economists may not observe the relationship between price and quantity demanded that is expected. D. Aggregate consumption may not behave in the same manner as the consumption of a particular individual.

If Ms. Spann had more money, she could buy more scarce goods; if the nation had more money, everyone could buy more scarce goods.

Change in quantity demanded (move along D curve when prices changes)

If all that changes is the price of the product, we move along an unchanged demand curve from one point to another. In fact, the only thing that will move you along the demand curve is a change in the price of the good in question. This is known as a change in quantity demanded.

Which of the following is true?

If input prices fall, this will lower the costs of production, causing the supply curve to shift to the right

The marginal benefit to you of drinking bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25.

If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents.

The marginal benefit to you of drinking bottled iced tea is $1.50. The price of a bottle of iced tea is $1.25. A. If you purchase iced tea you will suffer a net loss of 25 cents per bottle. B. If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents. C. You will not purchase iced tea if you are acting rationally. D. If you are acting rationally, you will purchase iced tea until the marginal benefit falls to 25 cents.

If you purchase a bottle of iced tea, the net gain to you from doing so is 25 cents.

colluding

In business, where several businesses (or countries) make agreements among themselves which benefit them at the expense of either rival businesses or customers

marginal

Incremental, additional, or extra; used to describe a change in an economic variable (is the marginal benefit higher than the marginal cost?")

Inverse relationship

Inverse relationship (negative): negative slope. ie: as x increases, y decreases.

Which of the following is true with regard to production possibilities curves?

Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future

Which of the following is true with regard to production possibilities curves?

Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future.

Should the government raise​ taxes

Normative

Should the highway speed limit be​ raised?

Normative

Ethical rules based on morals or concepts of fairness are called:

Normative ethics

Which of the following is true with regard to production possibilities curves? A. Underutilized resources or those not being put to their best uses are illustrated by output combinations along the production possibilities curve. B. Economic growth means a movement along an economy's production possibilities curve in the direction of producing more consumer goods. C. Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future. D. From a point inside the production possibilities curve, in order to get more of one thing, an economy must give up something else.

Investing in capital goods will increase the future production capacity of an economy, so an economy that invests more now (consumes less now) will be able to produce, and therefore consume, more in the future.

Slope of a straight line

It is always constant. Measures the rate at which changes are being made.

Economic Resources

Land, Labor, Capital, Entrepreneurship

Macroeconomics

Looks at the whole economy and worries about economy-wide issues like unemployment and inflation. We will look at the U.S. economy as a whole system of interacting parts. We will also look at the swings in the system -- business cycle ups and downs as well as the studies government policy tools for combating cyclical swings.

What is the decision rule?

MB >_ MC , MB<MC

Which of the following serve as the language of the market system?

Market prices

Which of the following serve as the language of the market system? A. Monetary and fiscal policies B. Morals C. Market prices D. Governments

Market prices

which serves as the language of the market system?

Market prices

analogy

Microeconomics looks at the trees; Macroeconomics looks at the forest

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true? Mike can wash a car faster and has comparative advantage in washing cars.

Mike can wash a car faster and has comparative advantage in washing cars.

Mike can wash a car in 5 minutes and wax a car in 15 minutes. Tony can wash a car in 10 minutes and wax a car in 20 minutes. Which of the following is true? Mike can wash a car faster and has comparative advantage in washing cars. a.) Mike can wash a car faster and has comparative advantage in washing cars. b.) Mike can wax a car faster and has comparative advantage in waxing cars. c.) Tony can wash a car faster and has comparative advantage in washing cars. d.) Tony can wax a car faster and has comparative advantage in waxing cars. e.) Both a. and b. are true.

Mike can wash a car faster and has comparative advantage in washing cars.

Which of the following is true? A. In the product markets, firms are buyers and households are sellers. B. In the factor markets, firms are sellers and households are buyers. C. Firms receive money payments from households for labor, land, capital, and entrepreneurship. D. All of the above are true.

None of the above is true.

Which of the following is true? A. In the product markets, firms are buyers and households are sellers. B. In the factor markets, firms are sellers and households are buyers. C. Firms receive money payments from households for labor, land, capital, and entrepreneurship. D. All of the above are true. E. None of the above is true.

None of the above is true.

a) Income (normal goods/inferior goods)

Normal Goods If income increases in the U.S., ceteris paribus, demand for the normal good will increase. Conversely, if income decreases in the U.S., demand for the normal good will also decrease. When average income in U.S. rises from $30,000 to $31,000, the demand curve for automobiles, a normal good, will shift to the right. Inferior Goods If income increases in the US, ceteris paribus, demand for the inferior good will decrease. Conversely, if income decreases, demand for the inferior good will increase. When average U.S. income rises from $25,000 to $26,000, the demand curve for potatoes, an inferior good, will shift to the left We know that a particular product is a "normal" if statistically its demand exhibits a positive relationship with income in the economic data —economics is an empirical science

Is the president doing a good​ job?

Normative

Sources of long-term economic growth: a. More land, labor, capital, or entrepreneurship b. Technological progress; better human skills

PPC's shift out and up in response to long-term economic GROWTH. Long-term growth occurs when a society either gets more economic resources or learns to use its resources more efficiently (technological change occurs). 1.Technological advances allow us to produce more over time - as society learns how to produce more output per unit of resource used. 2.Increases in the availability of resources allow us to produce more over time. 3. Increases in the quality of resources (or of organizational ability to use resources) can also contribute to economic growth. For details look on Lecture 2 notes and Chapter 20-2

interest

Payment to resource owners for the use of their capital

Opportunity Cost

People like goods and services, and some goods and services have to be given up when more of one type good or service is produced. The real cost is thus an opportunity cost: a lost opportunity. More precisely the opportunity cost of a choice is the best alternative given up when that choice is made. Opportunity cost applies to decisions individual people make about their scarce personal resources (their time, money, etc.) as well as to decisions society makes about its scarce economic resources (land, labor, capital, and entrepreneurship).

Why might pollution from a paper mill be an example of a market​ failure?

People living downwind of the mill bear part of the cost of production

Which of the following must be true for markets to operate​ efficiently?

People must bear the full cost and reap the full reward from their decisions.

The market ethics that have been discussed in this section are:

Positive

Which of the following is true?

Poverty could be eliminated but scarcity could not.

Which of the following is true? A. Poverty could be eliminated but scarcity could not. B. Scarcity could be eliminated but poverty could not. C. Both scarcity and poverty could be eliminated. D. Neither scarcity nor poverty could be eliminated.

Poverty could be eliminated but scarcity could not.

If the economy goes into a recession and incomes fall, what happens in the market for inferior goods? - Prices and quantities both rise - Prices and quantities both fall - Prices rise, quantities fall - Prices fall, quantities rise

Prices and quantities both rise If the demand for a good rises when income falls, the good is called an inferior good. An increase in demand results in a rise in both the equilibrium price and quantity of a good (question #5 graph)

PYNTE- demand shifters

Prices of related goods, Yincomes, Number of demanders, Tastes, Expectations of demanders

the economic problem

Scarcity forces us to make choices

Which of these conditions are most likely to motivate honest people to become corrupt? A. Reading that Bernie Madoff was sentenced to life in prison after stealing billions of dollars B. Having your boyfriend (or girlfriend) elope with someone who is rich C. Seeing a film of Bonnie and Clyde being shot by machine guns D. Seeing your boss and fellow workers get rich by lying and cheating E. None of the above; if you're an honest person, you'll stay that way

Seeing your boss and fellow workers get rich by lying and cheating

From an economists' perspective, which of the following observations is not true?

Self-interest is purely monetary in nature.

changes in quantity supplied

up and down the same supply line because of change in price

b) Prices of related goods (substitutes/complements)

Substitutes Substitutes are goods that serve the same purpose. Generally, we substitute the cheaper for the more expensive good. For example, when the price of "good a" increases, the demand for "good b" will also increase Complements Complements are goods that are consumed together. If you consume one good, you must consume the other as well. When the price of "good m" increases, the demand for "good n" will decrease. We already know that we will buy less of "good m"—this is simply the law of demand. And if we buy less of "good m, " we will buy less of "good n" because they are complements. In the case of complements in consumption, there is a negative relationship between the price of "good m" and the demand for "good n"—the complement. Conversely, if the price of "good m"decreases, the demand for "good n" will increase, ceteris paribus.

SPENTRW- supply shifters

Supplier input, Prices of substitutes, Expectations, Number of suppliers, Technology, Regulations, Weather

In free markets which allows a high level of unethical corruption

Suppliers will be forced to be corrupt or to leave the market

How ill a decrease in price tend to affect supply?

Supply will not change

The discovery of a large new reserve of crude oil will shift the ___ curve for gasoline, leading to a ___ equilibrium price. -Supply, higher -Supply, lower -Demand, higher -Demand, lower

Supply, lower The supply curve for gasoline shows the relationship between the price of gasoline and the quantity of gasoline supplied by production, assuming that all the determinants of supply are held constant. The following list displays determinants of supply, which are the factors that affect the quantity of gasoline producers want to sell at a given price: FACTORS THAT DETERMINE SUPPLY -Price of inputs -Production technology -Number of producers -Expectations of producers Therefore, if the price of gasoline changes, the result is a movement along the supply curve from the old place to the new one. However, if a change occurs in any of the factors that determine supply, such as the discovery of a large new reserve of crude oil, the result is shift of the supply curve. In this case, the supply of gasoline increases because of the new oil reserve causing the equilibrium price to decline. (Question #4 for graph)

An increase in ___ will cause a movement along a given demand curve, which is also called a change in ___. - Supply, demand - Supply, quantity demanded - Demand, supply - Demand, quantity supplied

Supply, quantity demanded Demand refers to the position of the demand curve Quantity demanded refers to the amount consumers wish to buy Supply refers to the position of the supply curve Quantity supply refers to the amount of supplies you wish to sell In this case, an increase in supply will cause the equilibrium price to decrease, resulting in a movement along the demand curve. The demand curve itself remains unchanged, but the quantity demanded is affected. (Question 2 to see graph)

Surplus and their effects on Market price

Surplus: A market condition existing at any price at where the quantity supplied is greater than the quantity demanded Decrease in Demand -->leftward shits-->excess supply (quantity supplied, Q1, is greater than quantity demanded, Q3—a surplus)--> decrease in Pe , decrease in Qe-->surplus Increase in Supply-->rightward shits--> excess supply (quantity supplied, Q3, is greater than quantity demanded, Q1—a surplus)--> decrease in Pe , Increase in Qe-->surplus

Which of the following statements is TRUE?

TRUE: The U.S. government defines and enforces business ethics in order to protect the economy

interest

use for the capital

which of the following is not an example of the use of the problem solving perspective provided by economics?

The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember

Which of the following is NOT an example of the use of the problem solving perspective provided by economics?

The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember.

Which of the following is NOT an example of the use of the problem solving perspective provided by economics? A. An investor considers the tax consequences of selling stocks in order to buy bonds (which she believes offer a better return). B. A rancher recognizes that raising more cattle this year will damage his pasture and limit next year's herd size. C. The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember. D. An economics student considers the scarcity of available study time for studying the other subjects that she should be studying before deciding to study economics this evening.

The Fogelberg family takes its vacation at Lake Arrowhead this year simply because they have done so for as long as anyone can remember.

Law of demand

The Law of Demand: All else constant, there is a Negative (or "Inverse") Relationship between P and QD. Ceteris Paribus, if P rises, Qd decreases (a move up and to the left along an unchanged demand curve) Ceteris Paribus, if P falls, Qd increases (a move down and to the right along an unchanged demand curve) There is a negative relationship because consumers prefer lower to higher prices. This is a rational, common sense reaction.

Production possibilities curve (PPC)

The PPC shows a menu of choices, showing all the different combinations of (item A for example clothing) and (item B for example food) that can be produced given our resources and technology. All points on the ppc represent combinations of the two products we are capable of producing - IF we use all our resources efficiently. (ppc's slope is NEGATIVE. The negative slope illustrates scarcity.)

Which of the following statements is TRUE? A. The U.S. government specifies all business ethics adopted by American corporations. B. Ethics decisions are for philosophers, churches and individuals, not government. C. The U.S. government insists that foreign trading partners adopt systems of business ethics identical to ours. D. The U.S. government defines and enforces business ethics in order to protect the economy. E. The U.S. government does not define or enforce any ethical rules.

The U.S. government defines and enforces business ethics in order to protect the economy.

Economic growth (definition)

The ability of an economy to produce greater levels of output, represented by an outward shift of the production possibilites curve. Also, an expansion in the national output measured by the annual percentage increase in a nation's GDP.

Suppose the United States imposes higher steel tariffs. How does the change in steel import restrictions affect automobile manufacturers who use steel as an​ input?

The automobile industry will experience job loss as manufacturers are more likely to relocate to other countries

Movie tickets and DVDs are substitutes. If the price of DVDs increases, what happens in the market for movie tickets? - The supply curve shifts to the left - The supply curve shifts to the right - The demand curve shifts to the left - The demand curve shifts to the right

The demand curve shifts to the right When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. If movie tickets and DVDs are substitutes and the price of DVDs increases, this means he demand for movie tickets will also increase. This results in the demand curve shifting to the right.

The demand for dollars in a 2-country model

The demand for dollars comes from people who have pesos and are seeking to trade them for dollars.

Price controls

use of the power of the state to establish prices different from the equilibrium prices

A change in which of the following will NOT shift the demand curve for hamburgers - The price of hot dogs - The price of hamburgers - The price of hamburger buns - The income of hamburger consumers

The price of hamburgers The demand curve for hamburgers shows the relationship between the price of hamburgers and the quantity of hamburgers demanded by consumers, assuming that all the determinants of demand are held constant. The following list displays determinants of demand, which are the factors that affect the quantity of hamburgers consumers want to buy at a given price: FACTORS THAT DETERMINE DEMAND -Price of a related good (complement or substitute) -Income of consumers -Tastes of consumers -Number of consumers -Expectations of consumers Therefore, if the price of hamburgers changes, the result is a MOVEMENT along the demand curve from the old price to the new one. However, if a change occurs in any of the factors that determine demand - such as the price of hot dogs ( a substitute), the price of hamburger buns (a complement), or the income of hamburger consumers - the result is a shift of the demand curve

Law of Supply

The principle that there is a direct relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus.

A surplus currently exists in the market for apples. Which of the following statements is correct?

The quantity of apples supplied exceeds the quantity demanded and the market price is above the equilibrium price

Which of the following represents a normative statement?

The study of economics is more important than the study of history

Which of the following represents a normative statement?

The study of economics is more important than the study of history.

Which of the following represents a normative statement? A. A decrease in price leads to an increase in quantity demanded. B. The temperature outside is 90 degrees. C. The study of economics is more important than the study of history. D. People will buy less butter at $1.50 per pound then they will at $1.00 per pound. E. Normally, as an economy develops, the nation's birth rate tends to fall.

The study of economics is more important than the study of history.

Macroeconomics

The study of the economy as a whole (the forest)

The supply of dollars in a 2-country model

The supply of dollars comes from people who have dollars and are seeking to trade them for pesos.

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy?

Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments.

Suppose there are two members of the U.S. Congress who were once economics professors. Why is it important to be able to distinguish their positive from their normative statements about economic policy? A. Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments. B. Their positive statements help us understand the good results of a policy change, and their normative statements help us understand the negative results. C. We really do not have to worry about them since trained economists never make normative statements. D. Economists are always making assumptions, and policy should not be based on assumptions. E. Economists are "tricky" by nature, so we need to be able to distinguish truth from political rhetoric.

Their positive statements help us understand the economy's response to a particular policy, while their normative statements reflect their value judgments.

what are resources?

They are inputs to produce goods and services

Which of the following is true of resources? A. Their availability is unlimited. B. They are the inputs used to produce goods and services. C. Increasing the amount of resources available could eliminate scarcity. D. They are inputs used to produce goods and services and increasing the amount of resources available could eliminate scarcity.

They are the inputs used to produce goods and services.

"As a rational person, you would expect individuals to always avoid actions that are illegal." T or F

This is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway.

Which of the following are NOT very important to maintaining effective market ethics? A. A willingness by the vast majority of market participants to obey the ethics and report violators B. The number of inspectors or police C. The severity of punishments for cheating D. Whether people understand the reasons for the rules or regulations E. Whether the likely penalties for cheating are greater than the rewards

Whether people understand the reasons for the rules or regulations

efficiency

using resources to the fullest extent

"As a rational person, you would expect individuals to always avoid actions that are illegal." T or F A. This is a true statement because most people don't want to suffer the penalties associated with criminal behavior. B. This is a true statement because most individuals are good citizens and prefer not to commit crimes. C. This is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway. D. This is a false statement because only people with certain genetic predispositions are likely to commit crimes.

This is a false statement because it is expected that individuals will consider the consequences of their actions and that some will choose to commit illegal acts anyway.

Tom is a castaway who washes up on a remote island. He can catch eight birds per day or catch ten fish per day. The natives on the island can catch ten birds per day or catch twenty fish per day. According to comparative advantage,

Tom should catch more birds and fish less, then trade birds for fish.

Tom is a castaway who washes up on a remote island. He can catch eight birds per day or catch ten fish per day. The natives on the island can catch ten birds per day or catch twenty fish per day. According to comparative advantage, A. Tom should catch more birds and fish less, then trade birds for fish. B. Tom should catch fewer birds and fish more, then trade fish for birds. C. Both should catch more birds and fish less. D. Both should catch fewer birds and fish more.

Tom should catch more birds and fish less, then trade birds for fish.

How a change in dollar value (for example an increase) affects U.S. exports

U.S. goods and services become more expensive for foreigners to purchase, so Exports fall. (Exports are goods and services produced in the U.S. and sold to foreigners.) As imports become cheaper to buy (since a $ buys more of the foreign currency than it did before), Imports increase. (Imports are goods and services produced abroad and sold to U.S. buyers.)

Which of the following is most likely an example of correlation but not an example of causation?

Usually, if I eat a chili dog and drink a beer before a game, my teams wins.

Which of the following is most likely an example of correlation but not an example of causation? A. In the U.S., more pizza is consumed on Super Bowl Sunday than any other day of the year. B. The cost of advertising during the first half of the Super Bowl is greater than the cost of advertising in the second half. C. Usually, if I eat a chili dog and drink a beer before a game, my teams wins. D. Generally speaking winning football teams tend to average more rushing yards than losing football teams.

Usually, if I eat a chili dog and drink a beer before a game, my teams wins.

Which of the following is most likely an example of correlation but not an example of causation?

Usually, if I eat chili dog and drink a beer before a game, my team wins

what according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Values and Information

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances?

Values and information

What according to an economist, forms the basis of rational human behavior under current and anticipated future circumstances? A. Scarcity and rarity B. Opportunities and pay-offs C. Values and information D. Legal consequences

Values and information

Which of the following does not specify positive ethical rules? A. Webster's Dictionary B. Robert's Rules of Order C. Hoyle's Rules of Games D. The San Marcos Land Development Code E. The Amy Vanderbilt Complete Book of Etiquette

Webster's Dictionary

Which of the following does not specify positive ethical rules?

Webster's dictionary

which of the following does not specify positive ethical rules? A. Websters Dictionary B. Roberts rules of Order C. Hoyle's rules of games D. San Marcos land development code E. Army Vanderbilt complete book of etiquette

Webster's dictionary

Demand

When we speak of demand, we are referring to the quantities that people are willing and able to buy at various possible prices. *Note, along with the willingness to buy, the consumer must also have the wherewithal to purchase the good.

Which of the following are NOT very important to maintaining effective market ethics?

Whether people understand the reasons for the rules and regulations

Which of the following are NOT very important to maintaining effective market ethics?

Whether people understand the reasons for the rules or regulations

In a market economy how do we determine who will get the goods and services that have been produced?

Whoever can afford them

In a market economy how do we determine who will get the goods and services that have been produced? A. Whoever wants them B. Whoever needs them C. Whoever can afford them D. None of the above.

Whoever can afford them

Independent relationship

Y is independent of X: horizontal line X is independent of Y: vertical line

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000.

You will not purchase the new sport utility vehicle at this time if you are acting rationally

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000.

You will not purchase the new sport utility vehicle at this time if you are acting rationally.

The expected marginal benefit to you from purchasing a new sport utility vehicle is $20,000. The price of the new sport utility vehicle is $22,000. A. If you are acting rationally, you will borrow $2,000 and purchase a new sport utility vehicle. B. You will not purchase the new sport utility vehicle at this time if you are acting rationally. C. If you do not purchase the new sport utility vehicle, your net loss will be $2,000. D. If you are acting rationally, you will purchase sport utility vehicles until the marginal cost of doing so falls to $20,000.

You will not purchase the new sport utility vehicle at this time if you are acting rationally.

A change in demand causes a shift of the demand curve. A change in quantity demanded causes a movement along the demand curve.

^

A change in supply causes a shift of the supply curve. A change in quantity supplied causes a movement along the supply curve.

^

If both demand and supply decrease ​simultaneously, the equilibrium price will increase if the change in supply is relatively large.

^

If supply decreases while demand increases​, the equilibrium price will increase

^

If supply decreases while demand increases​, the equilibrium quantity will decrease if the change in demand is relatively small

^

Suppose the equilibrium price of housing recently decreased and the equilibrium quantity decreased as well. These changes were caused by​ a(n) decrease in demand .

^

The price of the product is not held fixed in drawing a market demand curve. Consumer income is held fixed in drawing a market demand curve. The price of other related goods is held fixed in drawing a market demand curve. Consumer expectations about future prices are held fixed in drawing a market demand curve. The quantity of the product purchased is not held fixed in drawing a market demand curve

^

The price of the product is not held fixed when drawing a market supply curve. Wages paid to workers are held fixed when drawing a market supply curve. The price of materials used in production is held fixed when drawing a market supply curve. Taxes paid by producers are held fixed when drawing a market supply curve. The quantity of the good produced is not held fixed when drawing a market supply curve.

^

Unemployment Insurance. Each worker employed by Risky Business has a 20 percent chance of losing his or her job in the next year. Each worker employed by Safe Business has a 2 percent chance of losing his or her job. You manage an insurance company that provides a lump sum of ​$10 comma 000 to each unemployed worker. a. The minimum amount you would charge Risky Business for each employee covered by the unemployment policy is ​$ 2000. ​(Enter your response as an​ integer.) b. The minimum amount you would charge Safe Business for each employee covered by the unemployment policy is ​$ 200. ​(Enter your response as an​ integer.) c. Suppose you charge the same premium to both businesses. The companies have the same number of workers and are required to purchase unemployment insurance. The minimum amount you would charge is ​$ 1100. ​(Enter your response as an​ integer.)

^

When demand ​changes, the equilibrium price and equilibrium quantity move in the same direction. When supply ​changes, the equilibrium price and equilibrium quantity move in opposite directions

^

in the supply of a product decreases the equilibrium price and increases the equilibrium quantity

^

positive externality

a benefit received by someone who had nothing to do with the activity that generated the benefit

If the price of ice cream increases and the quantity demanded decreases, economists would describe this as:

a change in quantity demanded

Effective free market ethical systems must provide for all of the following EXCEPT:

a clearly defined moral foundation

For a given increase in price, a greater elasticity of demand will result in a greater

decrease in quantity demanded

Marginal thinking is best demonstrated by: A. choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time. B. deciding to never purchase a coat made with animal skins or furs. C. acquiring the information relevant to a choice before making that choice. D. measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake. E. choosing to purchase beer until there is no additional enjoyment from the consumption of beer.

choosing to spend one more hour studying economics because you think the improvement in your score on the next quiz will be worth the sacrifice of time

Pat and Marty run a landscaping firm that prunes trees and cuts lawn. Pat is more productive than Marty at both tasks. Pat should prune trees and Marty should cut lawns if Pat has a _______ advantage in pruning trees. comparative/absolute

comparative

it is impossible to have ___ in both goods

comparative advantage

specialize according to ____ to maximize your gains from trade

comparative advantage

trade results from

comparative advantage

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

comparative advantage in production

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n):

comparative advantage in production.

Resources are used more efficiently if people, regions, and countries specialize in goods for which they have a(n): A. disincentive to trade with others. B. higher opportunity cost. C. absolute advantage in production. D. comparative advantage in production. E. None of the above. People, regions, and countries should learn to be self-sufficient.

comparative advantage in production.

Marginal analysis involves:

comparing the additional benefit from an action to the additional cost

Marginal analysis involves: A. comparing the total benefits of all actions to the total costs incurred as a result of those actions. B. abstract thinking, which is never actually utilized by consumers when making purchasing decisions. C. holding all other variables constant when isolating the relationship between two variables. D. comparing the additional benefit from an action to the additional cost.

comparing the additional benefit from an action to the additional cost

marginal analysis involves:

comparing the additional benefit from an action to the additional cost

An economy's resources:

consist of land, labor, capital and entrepreneurial skills

An economy's resources:

consist of land, labor, capital, and entrepreneurial skills.

An economy's resources: A. consist of land, labor, capital, and entrepreneurial skills. B. are unlimited in a country like the United States. C. are always efficiently utilized in wealthy nations. D. consist of land, labor, and entrepreneurial skills but not capital.

consist of land, labor, capital, and entrepreneurial skills.

An economy's resources:

consists of land, labor, capital, and entrepreneurial skills

The difference between the value of a good to consumers and its price is known as:

consumer surplus

total surplus

consumer surplus + producer surplus

Ceteris paribus, an increase in the price of a good will cause the:

consumer surplus derived from the good to decrease

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

contains positive statements only

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation:

contains positive statements only.

"Mandating longer sentences for any criminal's third arrest will lead to a reduction in crime. Less crime will reduce the number of police officers cities will hire." This quotation: A. contains positive statements only. B. contains normative statements only. C. contains both normative and positive statements. D. contains neither normative nor positive statements.

contains positive statements only.

Four social inventions that support markets are ​, which specify the terms of​ exchange; , which reduces the risk of​ entrepreneurs; ​, which increase the profitability of​ inventions; and ​rules, which provide potential investors with reliable information about the financial performance of firms.

contracts; insurance; patents; accounting

Marginal cost

cost of one more unit

Negative incentives:

decrease benefits or increase costs

Negative incentives:

decrease benefits or increase costs.

Negative incentives: A. increase benefits or reduce costs. B. increase behaviors. C. decrease benefits or increase costs. D. include both cash subsidies and taxes.

decrease benefits or increase costs.

Economics is different from a "hard" science like physics because: A. economists abstract from reality in creating their theories. B. economics is easier to study than physics. C. economists must explain their theories to policy makers who lack formal mathematical training. D. economists cannot easily control all the variables that might influence human behavior. E. research in economics is primarily conducted in a very "social" way via interviews of consumers and corporate leaders.

economists cannot easily control all the variables that might influence human behavior.

A new hormone will increase the amount of milk each cow produces

effect on the milk market is an increase in supply, lower equilibrium price and a higher equilibrium quantity

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

elastic

If an increase in price causes total expenditure on a product to decrease, then the price elasticity of demand is:

elastic

increase in supply

entire curve shifts rightward, greater quantity supplied at each price

profit

entrepreneurial ability

Every time an individual decides to try out new equipment, or finds better ways to manage exhibiting traits of:

entrepreneurship

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of:

entrepreneurship.

Every time an individual decides to try out new equipment, or finds better ways to manage money, he or she is exhibiting traits of: A. money management. B. entrepreneurship. C. strategic management. D. capital management.

entrepreneurship.

If the supply curve for a product is vertical, then the elasticity of supply is:

equal to zero

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

equals $2.00

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk:

equals $2.00.

Gallons of milk at a local grocery store are priced at one for $4.00, or two for $6.00. The marginal cost of buying a second gallon of milk: A. equals $6.00. B. equals $4.00. C. equals $3.00. D. equals $2.00. E. equals zero dollars.

equals $2.00.

In order for a market's ethics to be effective, all of the following must occur, EXCEPT

everyone must agree to take part in the market

In order for a market's ethics to be effective, all of the following must occur, EXCEPT: A. the ethics must be clearly defined. B. there must be clear penalties for ethics violators. C. everyone must agree to take part in the market. D. there must be enough police or inspectors to find most violations. E. police or inspectors must be unbiased.

everyone must agree to take part in the market

Economics

examines how people use their scarce resources to satisfy their unlimited wants

patent

exclusive rights over an invention, copyright

Problem of scarcity

exists because resources are limited relative to wants

The problem of scarcity:

exists because resources are limited relative to wants.

The problem of scarcity: A. exists because resources are limited relative to wants. B. exists because resources are unlimited relative to wants. C. is solved by economists using abstract models. D. can be eliminated through appropriate government intervention into markets. E. does not exist in communist societies.

exists because resources are limited relative to wants.

The problem of scarcity:

exists because resources are limited to relative to wants

To obtain the greatest gains from trade, a country should specialize in and ____ those goods for which it has a comparative advantage and ____ those goods for which other countries have a comparative advantage.

export, import

To obtain the greatest gains from trade, a country should specialize in and _____ those goods for which it has a comparative advantage and ______ those goods for which other countries have a comparative advantage

export; import

pollution

externality (situation where a 3rd party is effected by market activity they are not directly involved in)

nominal value

face value of a given amount of money

nominal value

face value of a given amount of money (# of dollars)

Economic resources are also known as:

factors of production

Economic resources are also known as: A. profits B. financial capital. C. factors of production. D. costs.

factors of production

Positive economic thinking

facts and figures (what is)

Cost-benefit analysis can determine the optimal amount of all the following EXCEPT:

fairness of rules

Cost-benefit analysis can determine the optimal amount of all the following EXCEPT: A. regulations B. market inspectors C. severity of punishments D. fairness of rules E. inspections

fairness of rules

cost-benefit analysis can determine the optimal amount of all of the following except:

fairness of rules

MB tends to ________ and MC tends to _______

fall, rise

The fallacy of composition is: A. the erroneous view that an economic activity can sometimes exceed the sum of its components. B. the erroneous view that what is true for the individual will also be true for the group. C. the view that the aggregation of economic activity will necessarily lead to an outcome that is different than the outcome generated by each individual in the group. D. the idea that association need not imply causation. E. the failure to hold other variables constant when analyzing the relationship between two particular variables.

the erroneous view that what is true for the individual will also be true for the group.

If a student enrolls in an additional course at the university, an economist would conclude that:

the expected marginal benefit of an additional course must exceed the expected marginal cost of the course

If a student enrolls in an additional course at the university, an economist would conclude that: A. the total benefit that the student expects to receive as a result of completing her college degree exceeds the total cost of her college education. B. the student is not following the rule of rational choice. C. the student must not be involved in extracurricular campus activities. D. the expected marginal benefit of an additional course must exceed the expected marginal cost of the course.

the expected marginal benefit of an additional course must exceed the expected marginal cost of the course

Human capital is:

the expertise of knowledge possessed by workers

Human capital is:

the expertise or knowledge possessed by workers.

Human capital is: A. the same as labor. B. a term describing the tools and equipment owned by households. C. a worker's physical effort when working with machines. D. the expertise or knowledge possessed by workers. E. the money in checking, savings, or CD accounts at banks.

the expertise or knowledge possessed by workers.

negative externality

the harm, cost, or inconvenience suffered by a third party because of actions by others (the market)

the opportunity cost of an item is:

the highest valued alternative you give up to get that item

The opportunity cost of an item is:

the highest valued alternative you give up to get that item.

The opportunity cost of an item is: A. The total value of opportunities you give up to get that item. B. the highest valued alternative you give up to get that item. C. the value of all available alternatives you sacrifice to get that item. D. always equal to the dollar value of the item. E. always less than the dollar value of the item.

the highest valued alternative you give up to get that item.

The opportunity cost of an action is equal to:

the highest valued opportunity that must be sacrificed in order to take the action

the opportunity cost of an action is equal to:

the highest valued opportunity that must be sacrificed in order to take the action

The opportunity cost of an action is equal to:

the highest valued opportunity that must be sacrificed in order to take the action.

The opportunity cost of an action is equal to: A. the monetary payment the action required. B. the total time spent by all parties in carrying out the action. C. the highest valued opportunity that must be sacrificed in order to take the action. D. the value of all of the alternative actions that could have been taken. E. zero, as only goods cost money.

the highest valued opportunity that must be sacrificed in order to take the action.

physical capital

the human-made objects used to create other goods and services (machines,buildings and tools)

what statement is described as positive economics?

the income tax reduces after tax incomes of the rich

Resources

the inputs used to produce goods and services

human capital

the knowledge and skills a worker gains through education and experience

We can tell if a market has too many ethics rules because:

the marginal cost of the ethics rule is higher than the marginal benefit

A quantity of a good bought and sold in a market will be below the equilibrium quantity if:

the market price is either above or below the equilibrium price

Sergei makes millions of dollars a year playing hockey. Sergei is also the best tailor in his hometown in Russia. Why doesn't Sergei make his own clothes?

the opportunity cost to him of making his own clothes is very high because it takes away from his lucrative hockey career

Price elasticity of demand is defined as

the percentage change in quantity demanded divided by the percentage change in price

Equilibrium price

the price at which the quantity demanded equals the quantity supplied