ECON 2301 Test 1, Chapters 1-4

(Exhibit: Demand and Supply of Gasoline) A factor that may have changed supply from S 1 to S 2 is:

better technology in the production of gasoline.

Between 1930 and 1933, the prices received by farmers tended to:

decrease.

A hypothesis is an assertion that can be:

proven to be false.

Something whose value does not change is a:

proven to be false.

According to the textbook, much of the discussion about the health-care "problem" in the United States has focused on:

rising spending for health care.

Economics is a:

social science that deals with making choices among alternatives.

A firm owned by one individual is called a:

sole proprietorship.

(Exhibit: Demand and Supply of Gasoline) When the supply curve shifted from the initial equilibrium to the new intersection of supply and demand at a price of ________ and quantity of 400, this could have resulted from ________.

$1.50; an improvement in refining technology

Health care is a(n):

normal good.

Statements that make value judgments are:

normative.

Scarcity in economics means:

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

A key theme fundamental to all of economics is:

people have unlimited wants facing limited means to satisfy them.

A maximum price set below the equilibrium price is a:

price ceiling.

(Exhibit: The Demand for music downloads) A decrease in the price of iPods and other similar devices would result in a change illustrated by:

the move from h to i in Figure (b).

(Exhibit: The Demand for music downloads) A decrease in the fee charged for music downloads would result in a change illustrated by:

the move from j to k in Figure (c).

How a supply curve is sloped and located is affected by:

resource prices.

Most firms in the United States today are:

sole proprietorships and partnerships.

(Exhibit: Rent Controls) If rent controls are set at Rent 0:

some renters would be willing to pay a price as high as Rent4 for Q0 units.

A supply curve that is upward sloping means that:

suppliers will want to sell more at higher prices.

An arrangement in which consumers choose their health-care services while other institutions pay a share of the cost of those services is called a(n) ________ payer system.

third-party

Reaching the incorrect conclusion that one event causes another because the events tend to occur together is called:

the fallacy of false cause.

The process through which an economy's production possibilities curve is shifted outward is:

economic growth.

A person who seeks to earn profits by finding ways to organize factors of production is called a(n):

entrepreneur.

The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

demand.

The relationship between the price of a good and the quantity people are willing and able to purchase is:

demand.

The set of acquired skills and abilities that workers bring to the production of goods and services is:

human capital.

Resources from nature that can be used to produce other goods and services are called:

natural resources.

When economists study the behavior of sellers, they are studying:

supply.

The slope and location of the demand curve depend on:

the number of buyers.

The basic concern of economics is to:

to study the choices people make.

Anything whose value can change is a:

variable.

The fundamental economic questions that every economic system must answer are:

what, how, and for whom.

(Exhibit: Demand and Supply of Gasoline) The initial price and quantity (at intersection of S 1 and D) in equilibrium are:

$2.50 and 300 gallons.

(Exhibit: Demand and Supply of Gasoline) Given the initial equilibrium of S 1 and D, any price lower than _____________ will create pressure for the price to ________.

$2.50; rise

In 1960, the percentage of total output the United States devoted to health care was about ________ percent.

18

(Exhibit: Production Possibilities Schedule 1) If the economy produces 10 units of capital goods per period, it also can produce at most _______ unit(s) of consumer goods per period.

4

In 2015, the percentage of total output the United States devoted to health care was about ________ percent.

5

(Exhibit: Production Possibilities Schedule 1) The opportunity cost of producing the fourth unit of consumer goods is ___ __ units of capital goods.

8

Improvements in technology provide benefits to:

A. consumers, through lower prices. B. workers, although some jobs may be eliminated. C. firms, through lower production costs. >>D. all of the above.

In enforcing the legal system, the government in a market capitalist economy acts to:

A. enforce contracts. B. enforce property rights. C. discourage fraud. >D. do all of the above.

In the market for health care:

B. the effect of third-party payers decreases the price that consumers pay. C. providers are encouraged to supply a greater quantity than they would without third-party payers. >>D. B and C are true.

During the Great Depression what years:

By 1933, 25 percent of the nation's workers had lost their jobs.

In the 1960s the dominant maker of mainframe computers was:

IBM.

(Exhibit: Rent Controls) If rent controls are imposed, they will most likely be set at either _______ or _______.

Rent 0; Rent 1

Exhibit: Rent Controls) Without rent controls, the equilibrium rent is _______ and the equilibrium quantity is _______.

Rent 2; Q 2

(Exhibit: Demand and Supply of Gasoline) What might cause the supply curve to shift from S 2 back to the initial supply curve S 1?

The Organization of Petroleum Exporting Countries (OPEC) restricts the production of crude oil.

Which of the following would lead to an increase in the demand for health care?

The average population age increases.

If a demand curve shifts to the left, then:

a lower equilibrium price and quantity would result.

The primary emphasis in macroeconomics is on:

aggregates in the economy.

During the Great Depression:

agriculture was hit particularly hard.

Ceteris paribus means:

all other things unchanged.

Positive statements:

are factual and can be tested.

The law of increasing opportunity cost says that:

as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater.

A choice made _______ is a choice whether to do a little more or a little less of something.

at the margin

(Exhibit: Demand and Supply of Gasoline) Given the equilibrium after a change in supply from S1 to S2:

at the old price of $2.50, there will be pressure for the price to fall.

For a factor of production to be called capital it must:

be produced.

(Exhibit: Guns and Butter) This production possibilities curve is:

bowed out from the origin because of increasing opportunity costs.

The combination of guns and butter at point H:

cannot be attained given the level of technology and the factors of production available.

The three broad types of factors of production are:

capital, labor, and natural resources.

The bulk of the nation's output is produced by:

corporations.

A negative relationship between the quantity demanded and price is called the law of ______.

demand

(Exhibit: Guns and Butter) Points A, B, E, and F:

indicate combinations of guns and butter that society can produce using all of its factors efficiently.

Technology is:

knowledge that can be applied to the production of goods and services.

The factors of production are:

labor, capital, and natural resources.

A theory that has won virtually universal acceptance is a:

law.

Making choices that are expected to achieve the highest possible value for some objective is termed:

maximizing.

The branch of economics that examines the choices of consumers and firms is:

microeconomics.

A simplified representation of a particular problem is a:

model.

A minimum price set above the equilibrium price is a:

price floor.

A price that the government guarantees farmers will receive for a particular crop is a(n):

price support.

The key signals that send messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged:

prices.

In the personal computer industry, the reason for the fall in prices and the increase in quantity after 1980 was:

primarily due to technological change and an increase in the number of sellers.

A curve that shows the relationship between the price and quantity supplied during a particular period, all other things unchanged, is the:

supply curve.

In the textbook, the prices of the factors of production, returns from alternative activities, technology, seller expectations regarding future prices, and the number of sellers are called:

supply shifters.

Knowledge that can be applied to the production of goods and services is:

technology.

(Exhibit: The Demand for music downloads) A decrease in the price of CDs (a substitute) would result in a change illustrated by:

the move from f to g in Figure (a).

Factors of production are:

the resources the economy has available to produce goods and services.

Human capital is:

the set of acquired skills and abilities that workers bring to the production of goods and services.

Opportunity cost is:

the value of the best alternative forgone in making any choice.

A hypothesis that has been tested extensively without being rejected and has won widespread acceptance is a:

theory.