ECON 2101 Test 1 Study Guide
An increase in price and quantity
Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:
The set of acquired skills and abilities that workers bring to the production of goods and services
Human Capital is
1/2 pound of potatoes
If Farmer Erasmus MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is
It indicates combinations of good A and good B that society can produce using all of the economy's factor efficiently
If all the points are on the curve
Has no idle resources and is using resources efficiently
If an economy is producing a level of output that is on its production possibilities curve, the economy
Command economy
If an economy's factors of production were owned by the government sector and the coordinating activity was done by a government planning board, the economy would be called
Maximizing profits or minimizing losses.
In a market economy, entrepreneurs are most concerned with
The cost, if any, to the American and South Korean economies of the tariff
In considering the effects of South Korea's tariff on imported of US corn, an economist considers
Technology does not change
In drawing a production possibilities curve, it is assumed that:
Specialization in the production of goods
International trade is possible in part through
The analysis of the aggregate values in the economy
Macroeconomic deals with
Relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity
Supply is best defined as the:
What, how, and for whom
The fundamental economic questions that every economic system must answer are:
Prices
The key signals that sends messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged
Downward sloping
The law of demand is illustrated by a demand curve that is:
An increase in the purchases of personal computers results from lower prices.
The law of demand is illustrated when
Resources are not equally productive in all output categories.
The law of increasing opportunity costs is a result of the fact that:
Emphasize basic relationships by abstracting from complexities in the everyday world
The models used in economics
What is given up to acquire it
The opportunity cost of something is:
The equilibrium price falls, and the equilibrium quantity rises
The price of an apple falls. What happens in the market for apple pies
A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve
The primary difference between a change in demand and a change in the quantity demanded is:
Aggregates in the economy
The primary emphasis in macroeconomics is on:
Most goods can be produced with different combinations of resources.
The problem of determining how goods and services should be produced exists because:
Natural ability and human capital
Two components of labor are
Demand
When economists study the behavior of buyers, they are studying
Scarcity
When we are forced to make a choice we are facing the concepts of
Suppliers' expectations of higher prices in the future
A decrease in supply could be caused by
A shift to the left of the entire supply
A decrease in supply means
An increase in the quantity demanded
A decrease in the price of a good will, all other things unchanged, result in:
Capital
A factor of production that has been produced for use in production of other goods and services is
Assigning opportunity costs a major role in their analyses of choices, assuming individuals make choices to maximize objectives, and emphasizing that choices are made at the margin.
A feature that distinguishes economists' approach to making choices is (are)
Entrepreneur
A person who seeks to earn profits by finding ways to organize factors of production is called a(n)
Resources are equally good at producing either good.
A production possibilities curve that is a straight line means
Advances in technology
A source of economic growth
If you achieve more of one, you will achieve less of the other.
A tradeoff between two economic goals means that
Dependent
A variable that responds to a change in another variable is called a(n) _______ variable.
Has the highest cost for producing that good
An economy is said to have a comparative advantage in producing a particular good if it
An increase in investment spending tends to reduce unemployment
An example of a positive statement
Technology
An example of a supply shifter
Was produced and can be used to produce other goods and services
Any factor of production is capital if it
One pair of blue mittens
Assume that the economy above wants to consume some green mittens and some blue mittens. They would never consume all blue mittens or all green mittens. In the production possibilities curve above, the opportunity cost of producing one pair of green mittens is
All other things unchanged
Ceteris paribus means:
Lower opportunity cost.
Comparative advantage leads to producing at a:
Specialize in producing green mittens and trade for blue mittens
Consider the economy whose production possibilities is shown above. If they have the opportunity to trade 1 pairs of green mittens for 2 pairs of blue mittens, this economy will
Specialize in producing blue mittens and trade for green mittens
Consider the economy whose production possibilities is shown above. If they have the opportunity to trade 3 pairs of green mittens for 2 pairs of blue mittens, this economy will
Demand shifters
Consumer preferences, prices of related goods, income, and demographic characteristics are often termed
The quantity buyers are willing to and able to purchase at various prices during a particular period, all other things unchanged
Demand is defined as
Social science concerned chiefly with how people choose among alternatives
Economics is a
The resources the economy has available to produce goods and services
Factors of production are
A choice must be made between two or more alternatives
Scarcity exists when
2 pounds of cabbage
Suppose Farmer Sam Macdonald faces a linear production possibilities curve for his farm. He can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes. The opportunity cost of producing an additional pound of potatoes is
Demand increases
Suppose scientists discover that eating asparagus slows down the aging process. How this will affect the market for asparagus?
Supply increases
Suppose the technology for producing automotive gasoline improves. How this will affect the market for automative gasoline?
Helps to restrict analysis to the effect of a single economic factor
The "all other things unchanged" assumption is useful because it
Is positive
The current rate of unemployment is 5 percent. This statement:
Making choices at the margin
The economic way of thinking has to do with
Opportunity cost
The sacrifice of an alternative is called
Normative statement
The statement that the minimum wage needs to be increased is a
Exist because of scarcity
The three fundamental economic questions of what, how, and for whom:
The equilibrium price and quantity rise
There is an increase in incomes. What happens in the market for steak, a normal good?