Econ 2302: Chapters 1-4

In 2010, Americans had about _____________ outstanding in credit card debts not paid on time.

$900 billion

Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is:

7 points on the economics exam

Refer to Figure 2-2. When the economy moves from Point A to Point B in the diagram above:

All of the above occur.

Which of the following statements most likely lies within the realm of microeconomics?

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

Why is there scarcity?

Because our unlimited wants exceed our limited resources

Which of the following best characterizes the circular flow of income?

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

For both the U.S. economy and global economy, what are the primary social mechanisms for answering the basic questions about what is produced, and for whom it is produced?

Markets—that is, demand and supply

Refer to Figure 4-1. The movement from __________ to __________ is consistent with a successful advertising campaign that claims wool keeps you warm.

Point A; Point F

Which scenario exemplifies the concept of the invisible hand?

When Carl purchases local products because they are cheaper, he is not thinking of the advantage it has on his area's manufacturing sector.

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel?

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.

allocative efficiency

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

both the equilibrium price and quantity will rise.

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.

budget constraint

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.

budget constraint

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Specialization:

can lead to an increase in overall production.

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.

What is most likely to encourage underground economies?

command economies

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

demand; right

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

Which of the following best describes a fiscal policy tool?

government spending

Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n):

increase in demand.

If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.

increases; fall

Other things being equal, a __________ supply of workers tends to __________ real wages.

larger; decrease

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

The marginal benefit of a slice of pizza is the:

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

What is used in economics interchangeably with the term "theory"?

model

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.

new technologies

What do economists call a product whose demand rises when income rises, and falls when income falls?

normal good

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

price, quantity demanded

_________________ refers to the total number of units that are purchased at that price.

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:

shift to the right, decreasing the price of the drug

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.

sunk costs

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .

supply curve to the right

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

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

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 shift to the right.

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

According to the law of supply:

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

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

usury laws

In economics, the demand for a good refers to the amount of the good that people:

will buy at various prices.

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 quantity of apples supplied.