ECON 1A CH 1-4

Refer to Figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is: Point B Point C Point D All points on the production possibilities frontier are equally efficient.

All points on the production possibilities frontier are equally efficient.

The nature of demand indicates that as the price of a good increases: suppliers wish to sell less of it. more of it is produced. more of it is desired. buyers desire to purchase less of it.

buyers desire to purchase less of it.

(Demand curve d1 to the left of demand curve d2) Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n): increase in quantity demanded. decrease in quantity demanded. increase in demand. decrease in demand.

increase in demand.

Macroeconomics: is concerned with the expansion of a small business into a large corporation. is narrower in scope than microeconomics. analyzes mergers and acquisitions between firms. is concerned with the expansion and contraction of the overall economy.

is concerned with the expansion and contraction of the overall economy

In many cases, it is reasonable to refer to the ________________ as the price. budget constraint sunk cost opportunity cost budget constraint

opportunity cost

The opportunity cost of attending university is likely to include all except which of the following? the cost of haircuts received during the school term the income you forgo in order to attend classes tuition fees the cost of required textbooks

the cost of haircuts received during the school term

In a discussion of economics, which of the following would exert the most influence on an individual firm's decision to hire workers? wage levels the macroeconomy the firm's income household income

the macroeconomy

According to the law of supply: there is a direct relationship between price and the quantity supplied. there is an inverse relationship between price and the quantity supplied. there is a direct relationship between price and quantity demanded. there is an inverse relationship between price and quantity demanded.

there is a direct relationship between price and the quantity supplied.

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern. utility marginal benefit opportunity cost sunk costs

utility

The imposition of a price ceiling on a market often results in: an increase in investment in the industry. a surplus a shortage a decrease in discrimination on the part of sellers.

a shortage

1 / 1 pts (PPP curve moves out) Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above: the economy begins using its resources efficiently to produce both food and clothing. the economy operates at its productive capacity once it reaches Point B. the economy increases production of both clothing and food. All of the above occur.

All of the above occur.

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. normative statement budget constraint trade-off opportunity cost

normative statement

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. opportunity set consumption choice time value of money risk premium

opportunity set

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. marginal utility sunk costs marginal analysis budget constraints

sunk costs

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. high-skill labor lower wage technology market

technology

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. business government household capital market

government

(Pt A below and on same supply curve as Pt B) Refer to Figure 3-3. A change from Point A to Point B represents a(n): increase in supply. decrease in supply. increase in quantity supplied. decrease in quantity supplied.

increase in quantity supplied.

(Pt A on a supply curve to the left of supply curve with Pt D) Refer to Figure 3-3. A change from Point A to Point D represents a(n): decrease in quantity supplied. increase in quantity supplied. decrease in supply. increase in supply.

increase in supply.

Improvements in the productivity of labor will tend to: decrease wages. decrease the supply of labor. increase wages. increase the supply of labor.

increase wages.

In the ____________, households work and receive payment from firms. financial investment market financial capital market labor market savings market

labor market

Attending college is a case where the ________________ exceeds the monetary cost. budget constraint marginal analysis opportunity cost marginal utility

opportunity cost

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases. quantity demanded, price quantity supplied, quantity demanded price, quantity demanded price, quantity supplied

price, quantity demanded

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis. demand quantity quantity supplied quantity demanded

quantity

_________________ refers to the total number of units that are purchased at that price. quantity quantity demanded supply market quantity

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. demand schedule market price quantity supplied demand curve

quantity supplied

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right. technology low-skill labor market lower wage

technology

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. the production possibilities frontier allocative efficiency scarcity utility

the production possibilities frontier

Macroeconomic topics do not usually include: the profit maximizing decisions of an individual manufacturer. the rate of inflation. the rate of unemployment. economic growth.

the profit maximizing decisions of an individual manufacturer.

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. the quantity demanded of financial capital at any given interest rate will remain unchanged. the quantity demanded of financial capital at any given interest rate will shift to the left. the quantity demanded of financial capital at any given interest rate will shift to the right. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

the quantity demanded of financial capital at any given interest rate will shift to the right.

If new manufacturers enter the computer industry, then (ceteris paribus): the supply curve shifts to the left. the supply curve shifts to the right. the demand curve shifts to the left. some established manufacturers must exit the industry.

the supply curve shifts to the right.

When quantity demanded decreases in response to a change in price: the demand curve shifts to the right. the demand curve shifts to the left. there is a movement down along the demand curve. there is a movement up along the demand curve.

there is a movement up along the demand curve.

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. price ceiling laws usury laws price floor laws minimum interest rate

usury laws

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: $0 $4 $40 $44

$44

Price D 1 D 2 S 1 S 2 $12 5 9 19 14 $10 8 12 17 12 $8 11 15 15 10 $6 13 18 13 8 $4 16 21 11 6 $2 18 24 9 4 Table 4-1 Refer to Table 4-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. $4; 11 $4; 16 $6; 13 $8; 15

$6; 13

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time. $900 billion $90 billion $900 million $90 million

$900 billion

In the United States, a typical credit card interest rate ranges from ______________ per year. .2% to .8% 2% to 8% 12% to 18% 22% to 28%

12% to 18%

In the circular flow diagram model: a) households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. b) businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households. c) households receive revenue for selling goods and services to businesses, and use that revenue to buy inputs from businesses. d) Both (a) and (b) are correct.

Both (a) and (b) are correct.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy? China Cuba Canada Chile

Cuba

In countries like _____________ the command economy predominates. China and Vietnam Cuba and North Korea South Africa and Kenya Germany and France

Cuba and North Korea

Which of the following statements most likely lies within the realm of macroeconomics? An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. Due to process innovations in computer chip manufacturing, the market supply of computers increased. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market." The statement is correct. The statement would be correct if "quantity of wheat demanded" were substituted for "quantity of wheat supplied." The statement is incorrect because it confuses a change in quantity supplied with a change in supply. The statement would be correct if it read that a "decrease in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

The statement is correct.

Which of the following is most likely a topic of discussion in macroeconomics? an increase in the price of a hamburger a decrease in the production of DVD players by a consumer electronics company an increase in the wage rate paid to automobile workers a decrease in the unemployment rate

a decrease in the unemployment rate

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________. everything is variable. all else is held equal no one knows which variables will change and which will remain constant. what is true for the individual is not necessarily true for the whole.

all else is held equal

Which of the following results in a rightward shift of the market demand curve for labor? a decrease in labor productivity a decrease in the firm's product price an increase in the wage rate an increase in demand for the firm's product

an increase in demand for the firm's product

Macroeconomics primarily examines: the behaviour of individual households and firms. how prices are determined within individual markets. broad issues such as national output, employment and inflation. the output levels that maximize the profits of business firms

broad issues such as national output, employment and inflation.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible. consumption set budget constraint original budget income cap

budget constraint

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. deciding to never purchase a coat made with animal skins or furs acquiring the information relevant to a choice before making that choice measuring all of the costs of a meal against all of the benefits when deciding whether to order a second milkshake

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.

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right. prices rise equilibrium is achieved costs of production fall there is a population increase

costs of production fall

(demand curve; pt B higher than pt A on same curve) Refer to Figure 3-2. A change from Point A to Point B represents a(n): increase in demand. decrease in demand. decrease in quantity demanded. increase in quantity demanded.

decrease in quantity demanded.

The labor ____________ curve(s) will shift _______________ if there is an increase in productivity or an increase in the demand for the final product. demand; left supply; left demand; right supply; right

demand; right

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. division of labor interconnected economy task economy modern economy

division of labor

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. market economy production firm

economy

Price D 1 D 2 S 1 S 2 $12 5 9 19 14 $10 8 12 17 12 $8 11 15 15 10 $6 13 18 13 8 $4 16 21 11 6 $2 18 24 9 4 Table 4-1 Refer to Table 4-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then: equilibrium price decreases from $6 to $4. equilibrium quantity decreases from 15 to 13. equilibrium quantity increases from 13 to 18. equilibrium price increases from $6 to $8

equilibrium price increases from $6 to $8

Price D 1 D 2 S 1 S 2 $12 5 9 19 14 $10 8 12 17 12 $8 11 15 15 10 $6 13 18 13 8 $4 16 21 11 6 $2 18 24 9 4 Table 4-1 Refer to Table 4-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then: equilibrium price increases from $6 to $8. equilibrium quantity increases from 13 to 18 equilibrium quantity decreases from 15 to 13. equilibrium price decreases from $6 to $4.

equilibrium quantity decreases from 15 to 13.

The circular flow diagram of economic activity is a model of the: flow of goods, services, and payments between households and firms. influence of government on business behaviour. role of unions and government in the economy. interaction among taxes, prices, and profits.

flow of goods, services, and payments between households and firms.

In the ______________, households receive goods and services and pay firms for them. labor market financial capital market goods and services market savings market

goods and services market

Which of the following best describes a fiscal policy tool? government spending bank lending financial capital markets household spending

government spending

Which of the following would reduce the supply of microcomputers? a technological improvement that lowers the cost of producing the computers higher wage rates for the workers that assemble the computers a reduction in the price of computer chips used to produce the computers a reduction in the price of computers.

higher wage rates for the workers that assemble the computers

Which of the following best describes a monetary policy tool? interest rates taxes household savings government spending

interest rates

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. utility opportunity cost benefit analysis marginal analysis

marginal analysis

Are markets always in equilibrium? No, they never "settle down" into a stable price and quantity. No, but if there is no outside interference, they tend to move toward equilibrium. Yes, because very few things tend to alter supply and demand. Yes, they are always at the equilibrium point, or very close to it.

No, but if there is no outside interference, they tend to move toward equilibrium.

Which of the following statements most likely lies within the realm of microeconomics? Unemployment rises during a recession and falls during an expansion. An increase in government spending will increase the aggregate demand for goods and services in the economy. A rapid acceleration of the supply of money may create inflation. An increase in labor costs will increase the additional cost of producing another bus.

An increase in labor costs will increase the additional cost of producing another bus.

Why is there scarcity? Because the opportunity set determines this. Because theory dictates it. Because our unlimited wants exceed our limited resources Because human wants are limited.

Because our unlimited wants exceed our limited resources

Which of the following best characterizes the circular flow of income? Businesses buy resources from the government, and households buy goods and services from businesses. Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses. The government purchases resources from businesses and households and then sells goods and services to businesses and households. Households buy factors of production from businesses, and businesses buy goods and services from households.

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: the price of Good Y will increase. Goods X and Y are normal goods. Goods X and Y are substitute goods. Goods X and Y are complement goods.

Goods X and Y are complement goods.

How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known? They increase the supply of apples. They increase the quantity of apples supplied. They decrease the supply of apples. They decrease the quantity of apples supplied.

They increase the quantity of apples supplied.

Price D 1 D 2 S 1 S 2 $12 5 9 19 14 $10 8 12 17 12 $8 11 15 15 10 $6 13 18 13 8 $4 16 21 11 6 $2 18 24 9 4 Table 4-1 Refer to Table 4-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then: a 5 unit shortage will result. a 5 unit surplus will result. a 10 unit surplus will result. a 10 unit shortage will result.

a 10 unit shortage will result.

The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to: a decline in college tuition. a sharp increase in the demand for and construction of wood-frame homes. an increase in the supply of lumberjacks. an end to government regulations that limit timber harvesting in national forests.

a sharp increase in the demand for and construction of wood-frame homes.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. Opportunity cost productive efficiency budget constraint production possibilities frontier

budget constraint

The opportunity cost of an action: can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action. can be determined by adding up the bills incurred as a result of the action. can be objectively determined only by economists. is a subjective valuation that can be determined only by the individual who chooses the action.

is a subjective valuation that can be determined only by the individual who chooses the action.

Macroeconomics: is concerned with the expansion of a small business into a large corporation. is narrower in scope than microeconomics. analyzes mergers and acquisitions between firms. is concerned with the expansion and contraction of the overall economy.

is concerned with the expansion and contraction of the overall economy.

Other things being equal, a __________ supply of workers tends to __________ real wages. smaller; not change larger; increase smaller; decrease larger; decrease

larger; decrease

The marginal benefit of a slice of pizza is the: total amount that a consumer is willing to pay for a whole pizza, divided by the number of slices difference between the value of the slice to the consumer and the price of the slice. maximum amount that a consumer is willing to pay for the slice. price of the slice of pizza

maximum amount that a consumer is willing to pay for the slice.

The demand curve for a typical good has a(n): negative slope because some consumers switch to other goods as the price rises. negative slope because consumer incomes fall as the price of the good rises. negative slope because the good has less "snob appeal" as its price falls. inverse slope because as the price goes up, the good has more profitability.

negative slope because some consumers switch to other goods as the price rises.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: the supply curve. the demand curve, as consumers try to economize because of the shortage. both the supply and demand curves. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

the supply curve.

If macroeconomics looks at the economy as a whole, it focuses on which of the following? households business firms unemployed people the division of labor

unemployed people

Scarcity exists because of: the market mechanism. specialization and division of labor. the allocation of goods by prices unlimited wants and limited resources.

unlimited wants and limited resources.