econ
Claire and Don are farmers who produce beef and corn. In a year, Claire can produce 1010 tons of beef or 100100 bushels of corn. In a year, Don can produce 3030 tons of beef or 240240 bushels of corn.. To maximize their total output of beef and corn _______.
Don produces beef and Claire produces corn
We use a time-series graph to show ______.
. the upward trend in U.S. output over the last 25 years
Every day, we make many choices. We can't avoid having to make choices because _______.
. we can't afford to do all the things we'd like to do/. our wants exceed the resources available to satisfy them
One of the reasons why this rapid increase occurred during this decade was that ______.
. women had more time for paid employment/. more women graduated from college/. more white dash collar jobs were created
When sales of nondurable goods fell, ______ decreased. An example of a nondurable good is ______.
consumption expenditure; a cup of coffee
To make comparisons of real GDP between two countries we must ______.
convert the real GDP of one country into the same currency units as the real GDP of the other country, and use the same prices to value the goods and services in the countries being compared
A minimum wage set above the equilibrium wage rate for low-skilled workers _______.
creates unemployment among low-skilled workers
the type of unemployment that fluctuates over the business cycle is
cyclical unemployment
When the economy goes into recession, the biggest increase in unemployment is _______.
cyclical because jobs are lost in many industries as they cut production
Full employment is when there is no _____ unemployment or, equivalently, when all the unemployment is _____ or _____.
cyclical; frictional; structural
A reduction in unemployment compensation will
decrease the amount of frictional unemployment.
Which of the following events illustrates the law of demand: Other things remaining the same, a rise in the price of a good will ______.
decrease the quantity demanded of that good
Other things remaining the same, a fall in the price of peanuts will ________.
decrease the quantity supplied of peanuts
A poor rice harvest will _____ rice and ____ its price.
decrease the supply of; raise
Choose the correct statement.
Market prices and factor cost diverge because of indirect taxes and subsidies.
In the market for smartphones, which of the following events increases the supply of smartphones?
New technology that lowers the cost of making a smartphone
Who in the following statements is a part-time worker for economic reasons?
Sherrie is a graduate who started working at Safeway pharmacy for 4 hours each day, three days a week, as they do not currently have a full-time opening.
What is a characteristic of an economy at full employment?
There is no cyclical unemploymentthe natural rate of unemployment prevailsthe unemployment rate is greater than zeroall remaining unemployment is either frictional or structural
The United Nations Human Development Report gives the following data for real GDP per person in 2002: China, $4,580; Russia, $8,230; Canada, $29,480; United States, $35,750. Life expectancy at birth is 79.3 in Canada, 77.0 in the United States, 70.5 in China, and 66.7 in Russia. Freedom House rates political freedom each year, and its ratings are as follows: Canada and the United States, 1.1 (1.0 is the most free); Russia, 4.5; and China, 7.6 (ratings in the 7+ range are the least free). How do life expectancy at birth and political freedom change the relative ranking of living standards that real GDP per person indicate?
They don't change the relative ranking because they rank countries in a similar way as real GDP per person ranks them.
When sales of durable goods fell, ______ decreased. An example of a durable good is ______.
consumption expenditure and investment; a car purchased by a household or a delivery van purchased by FedEx
The two types of goods and services produced are _______. An example of _______.
consumption goods and services and capital goods; a consumption good is your iPad, and an example of a capital good is the pizza oven at a pizzeria
GM and the UAW agree on restructuring workers' jobs. This restructuring, with no change in the wage rate, will save GM billions in labor costs. Source: Wall Street Journal, May 22, 2009 Will this reduction of labor costs, with no change in the wage rate, change GM's supply of vehicles? The cut in labor costs with no change in the wage rate will ______.
increase productivity, which will increase GM's supply of vehicles
If the New England statesthe New England states introduceintroduce a minimum wage of $6.00 an hour, 5,000p ickers are employed and 0 pickers are unemployed.
grapg
The unemployment rate in this community is _______ the unemployment rate in the United States in 2016. The labor force participation rate in this community is _______ the labor force participation rate in the United States in 2016.
greater than; less than
On Friday May 14, 2009, the following headlines appeared in The Wall Street Journal. 1. US Set to Rethink Fed's Role 2. Wal-Mart Makes Electronics Push 3. VW, Porsche Take Break in Talks 4. Economists Foresee Protracted Recovery Macroeconomic topics are dealt with in ______. Microeconomic topics are dealt with in ______.
headlines 1 and 4; headlines 2 and 3
When Cindy buys a bike, she makes a rational choice because she thinks about _______.
her benefit from the bike along with the cost of the bike
The U.S. unemployment rate ______.
increses in ressions/ . averaged 5.8 percent between 1948 and 2016/. was lower during World War II than during the Vietnam War
The unemployment rate is the percentage of the people in the _____ who are unemployed.
labor force
Pump prices slide as crude oil falls to six-year low The average price for regular gasoline at U.S. pumps fell almost 4 cents in March to $2.50 a gallon. The price of crude oil dropped to $43.46 per barrel on March 17, the lowest since March 2009. Source: Bloomberg Business, March 23, 2015 Explain the effect of a lower crude oil price on the supply of gasoline. A fall in the price of crude oil will ______.
lower the cost of producing gasoline and increase the supply of gasoline
A rational choice is ______.
made by comparing marginal benefit and marginal cost
The news headline "Fiber replaces aluminum in airplanes" deals with the ______ question(s) of economics.
how
You've seen that the global distribution of income is unequal. Why do you think it is unequal? The global distribution of income is unequal because there is an unequal distribution of _____
human capital and physical capital
You've seen that the global distribution of income is unequal. Why do you think it is unequal? The global distribution of income is unequal because there is an unequal distribution of ______.
human capital and physical capital
GDP is a poor measure of economic well-being because it _______.
includes only production that is traded in markets
Saving equals ______
income minus consumption expenditure minus net taxes`
Between 1960 and 1999, the labor force participation rate ______.
increased mainly because the number of women who entered the labor force increased
When Leisure Island is producing on its PPF, the opportunity cost of producing a unit of entertainment _______ as more entertainment is produced
increases
Crusoe's opportunity cost of producing an extra pound of berries _______ as he produces more berries.
increases
The rise in net exports ______.
increases GDP
Read the news clip, then answer the following question. A doubling of the current minimum wage rate _______This city proposes highest minimum wage in America Berkeley Labor Council in California plans to increase the minimum wage rate each year from $9 an hour today until its hits $19 an hour in 2020.
increases the quantity of labor supplied, decreases the quantity of labor demanded, and increases unemployment
A bumper wheat crop ____ wheat and ____ its price.
increases the supply of; lowers
A minimum wage set above the market equilibrium wage rate ______.
increases unemployment and decreases employment
Unemployment falls to 4.9 percent, lowest in 8 years U.S. unemployment of 4.9 percent is full employment. Only 151,000 jobs were created in January, down from 262,000 in December. With falling oil prices, 7,000 energy jobs were lost in January but 29,000 manufacturing jobs were added. Source: CNN Money, February 5, 2016 How would you expect a shrinking energy sector and an expanding manufacturing sector to influence the actual and natural unemployment rate? The shrinking energy sector _______ the unemployment rate and the expanding manufacturing sector _______ the unemployment rate.
increases; decreases
Real GDP per person is not an accurate measure of the standard of living because it ______.
omits the goods and services that people produce for themselves
The flows of the services of the factors of production are _______.
real flows from households through factor markets to firms
In the circular flow model, governments _______.
receive taxes and make transfers directly to households and firms, which do not flow the goods or factor markets
The price of ice cream
rises
The price of potato chips
rises
The price of potato chipspotato chips
rises
An increase in the demand for hot dogs brings a______ in the price of a hot doga hot dog and______ in the quantity of hot dogs supplied.
rise; an increase
An example of a capital good is a _______.
shopping mall
The Z-Pop ratio ________.
shows an upward trend since 2000 but by 2016 it does not reach the pre-recession level
GDP calculated by the expenditure approach minus GDP calculated by the income approach equals ______.
statistical discrepancy
The economy is at full employment when all unemployment is _______.
structural and frictional
. complements in production
surplus;fall
A decrease in the demand for chocolate chip cookies brings a______ of chocolate chip cookies at the originalprice, and the price of a pack of chocolate chip cookies will______ .
surplus;fall
A ______ is a final good and ______ is an intermediate good.
tank of gasoline bought by you; jet fuel bought by Southwest Airlines
Exports of goods and services are items that firms in _____ produce and sell to _____.
the United States; any other country
What is the "quantity demanded"?
the amount of a good people are able and willing to buy during a specific time period and at a given price
The trend in the labor force participation rate of women is due in part to _______. The trend in the labor force participation rate of men is due in part to _______.
the creation of more white-collar jobs with flexible work hours; some men taking early retirement
When motorists increase their driving in the summer months, ______ and the price of a gallon of gasoline ____.
the demand for gasoline increases; rises
When an effective minimum wage is introduced, the number of hours of labor employed is determined by ______ and ______.
the demand for labor; the minimum wage
The riserise in the price of popcornpopcorn ______ potato chipspotato chips and ______.
the demand for; increasesincreases the quantity of potato chipspotato chips supplied
Human capital is _______.
the knowledge and skill that people obtain from education, on-the-job training, and work experience
If we observed a fall in the price of margarine and an increase in the quantity of margarine that producers sell, the most likely explanation would be that _______.
the law of supply applies to margarinemargarine, but some other influence on selling plans has also changed and the supply of margarinemargarine has increased
Gross national product is ______.
the market value of all the final goods and services produced anywhere in the world in a given time period by the factors of production supplied by the residents of that country
When cyclical unemployment increases and other things remain the same, ______.
the natural unemployment rate does not change
You think hard about how to allocate the next hour between walking the dog and doing housework. You decide to spend the first 45 minutes walking the dog and the remaining 15 minutes tidying your bedroom. Your decision is an example of _______.
making a choice at the margin
You think hard about how to allocate the next hour between watching football and going for a walk. You decide to spend the first 5 minutes watching footballl and the remaining 5 minutes going for a walk. Your decision is an example of _______.
making a choice at the margin
What you get from a one-unit increase in an activity that you enjoy is called _______.
marginal benefit
u get from a one-unit increase in an activity that you enjoy is called _______.
marginal benefit
the university's decision is a _______ decision.Economists measure the benefit you get from something by _______.
microecomomics
The incomes earned by the factors of production are _______.
money flows from firms through factor markets to households
Compared to the developing economies, the advanced economies have _______ human capital and _______ physical capital.
more;more
In each of the following transactions, classify the item as a final good, an intermediate good, or neither. Second dash hand blue jeans you bought from your friendSecond-hand blue jeans you bought from your friend is an example of _______. Concrete purchased by Your Swimming Pool Inc.Concrete purchased by Your Swimming Pool Inc. is an example of _______.
neither an intermediate nor a final good,neither an intermediate nor a final good
The sum of all incomes equals ______.
net domestic product at factor cos`
The value of exports of goods and services minus the value of imports of goods and services is _______.
net exports of goods and services
Which of the following are included in the expenditure approach to measuring GDP?
net exports of goods and services;.consumption expenditure investment
Michelle is a student who wants to work 20 hours a week at Cost Cutters so she can attend school. Cost Cutters schedules her for 20 hours a week. Michelle works part time for _______ reasons. Florence is semi-retired and wants to work 15 hours a week at Walgreens so she can spend time with her grandchildren. Walgreens schedules her for 15 hours a week. Florence works part time for _______ reasons.
noneconomic; noneconomic
Saving is the amount of income that is _____ in net taxes or spent on _____ goods and services.
not paid; consumption
The labor force is the number of people employed plus the _____.
number unemployed
You can spend the evening studying or you can go to see a movie. Your rational choice will be to spend the evening studying if ______.
the net benefit from spending the evening studyingspending the evening studying is greater than the net benefit from going to see a movie
You can spend the weekend at college or go home. Your rational choice will be to spend the weekend at college if ______
the net benefit from spending the weekend at collegespending the weekend at college is greater than the net benefit from going home
Goods and services are ______ and ______ is an example of a good and ______ is an example of a service.
the objects and actions that people value and produce to satisfy human wants; a hockey pucka hockey puck; drycleaning
To accurately assess the relative standard of living in these countries, we need additional information about _____.
the value of household production, the underground economy, leisure, and environment differences
The labor force participation rate is the percentage of the _____ who are members of the labor force.
working-age population
When you choose to buy a good or service you make your decision in ____________ while the people who produce the good or service make their choice in ___________.
your self-interest; their self interest
The table sets out Crusoe's production possibilities frontier in winter. Crusoe currently catches 11.011.0 pounds of fish and picks 16.516.5 pounds of berries a day. His opportunity cost of producing a pound of berries is ______ because he ______.
zero and his opportunity cost of producing a pound of fish is zero; is producing inside his PPF.
A south sea island produces only coconuts. In 2010, the price of a coconut is $2.502.50 and the quantity produced is 200200. In 20172017, the price of a coconut is $2.002.00 and the quantity produced is 150150. 2010 is the base year. Real GDP in 20172017 is ______.
$375
In which year, 2000 or 2016, was real GDP below potential GDP? How can you tell from the graph to the right? Consider 2000 and 2016. We can tell that real GDP was below potential GDP in _______ because _______.
2016; in 2016 the output gap is negative
Think about the trends in what and how goods and services are produced in the U.S. and global economies. Do you think that at some future time, there will be no jobs in the United States and all the jobs will be in developing economies? Why or why not?
No, because we will always want personal services and entertainment and talented people will always be available to produce these items in the United States.
Bernie Sanders thinks the _______ measure of unemployment is more relevant than the official unemployment rate. At the start of 2016, this measurement was _______.
U-6; 10 percent
A marginally attached worker is a person who does not have a job, is _____ and _____ to work, has _____ specific efforts to find a job within the previous _____ weeks, but has looked for work sometime in the recent past
available; willing; not made; four
The resulting rise in unemployment is mostly a rise in ______ unemployment because _______.
cyclical; it is related to the state of the economy
Depreciation is the _____ in the value of _____ that results from its use and from obsolescence.
decrease; capital
Read the news clip, then answer the following questions. When people are concerned about coming into contact with swine flu, the demand for air travel ______. When consumer confidence and consumer spending increase, the demand for air travel ______. When airlines cut capacity, the demand for air travel ______.
decreases; increases; does not change
The working-age population is the total number of _____ aged _____ years and over who are not in jail, hospital, or some other form of institutional care or in the U.S. Armed Forces.
people; 16
The business cycle is a _____ but _____ up-and-down movement of total _____ and other measures of economic activity.
periodic; irregular; production
At a business cycle trough, cyclical unemployment is ______ and at a business cycle peak, cyclical unemployment is ______.
positive; negative
The news clip is incorrect that the value of production is _________.
$30 million because when Facebook pays its workers, it incurs a loss of $30 million
A shortage is the amount by which the quantity demanded* exceeds the quantity supplied* .
*
The table shows the demand and supply schedules for running shoes. The equilibrium price of a pair of running shoes is $90.00 and the equilibrium quantity is 700 pairs a week. If the price of a pair of running shoes 80.00, there is a shortage of running shoe. The price of a pair rises, the quantity demanded decreases, and the quantity supplied increases. The market moves to an equilibrium.
*
*You buy a coffee at Starbucks. *The government buys some Dell computers *A student works at Kinko. *Donald Trump rents a building to Marriot hotels. *You pay your income tax.
*A money flow from households through goods markets to firms *A real flow from firms through goods markets to government *A real flow from households through factor markets to firms *A real flow from households through factor markets to firms *A money flow from households to government
Emily owns an ice cream parlor. In an hour she can produce 10 milkshakes or 30 ice cream sundaes. Ben also owns an ice cream parlor. In an hour he can produce 88 milkshakes or 88 ice cream sundaes. Emily's opportunity cost of producing 1 milkshake is _____. Ben's opportunity cost of producing 1 milkshake is _____.
. 3 ice cream sundaes3 ice cream sundaes; 1 ice cream sundae
The Population Survey in Blogsville reports the following numbers for the past month: 7373 million people had full-time jobs. 1111 million people had part-time jobs. 88 million people were without work but were available for work and had made specific efforts to find a job within the past four weeks or were waiting to be recalled from a layoff. 3939 million people of working age did not have jobs and did not want jobs. Last month, the labor force was ______ million and the working-age population was ______ million.
. 92; 131
Look at today's newspaper and find an example of a want that is not satisfied. We can't anticipate what will be happening on the day that you look at your newspaper (or Web news source). But here are five headlines, only one of which is an example of a want that isn't satisfied. Which one is it?
. Domestic programs cut to the bone/. Upper A billion people starve on a dollar a day
Choose the statement that is an example of a normative statement.
. Every American should have access to post dash secondary educationEvery American should have access to post-secondary education.
Economics studies choices that arise from one fact. What is that fact?
. Everyone faces scarcity
Ezra and Di are the only people in an isolated village who grow tomatoes and lettuce. Ezra has a comparative advantage in growing tomatoes if _______.
. Ezra's opportunity cost of producing lettuce is greater than Di's opportunity cost of producing lettuce
One of the following statements is an example of a positive statement. Which one is it?
. Gasoline engines create air pollution./. It is possible to meet all our energy needs with renewable sources
Explain how the following headlines concern self-interest and the social interest: 1. Business Depot, a U.S. office supply store, is opening in Europe opening in Europe while McDonalds is expanding in India. 2. Vitamin jars must carry dose information.
. Harrod'sHarrod's and Taco BellTaco Bell make decisions in their self-interest. Seat beltsSeat belts areare in the social interest, but people decide whether to wear themwear them in their self-interest.
Which of the following questions is an example of one of the two big questions that summarize the scope of economics.
. How do choices end up determining what comma how comma and for whom goods and services are produced /. When do choices made in the pursuit of self dash interest also promote the social interest question mark
Which statement is an example of economics as a policy tool?
. More people are buying used cars./. Interest rates are rising
One of the following statements is an example of a normative statement. Which one is it?
. Poverty should be abolished/. Workers must not be lazy
Consider the market for coffee. Suppose producers announce that the price of a cup of coffee will will fall next week. Explain the effect of this event on the quantity of coffee demanded and on the demand for coffee.
. The demand for coffeeThe demand for coffee decreasesdecreases.
Consider the market for smartphones. Suppose a study is published that says smartphone use is bad for health. Explain the effect of this event on the quantity of smartphones demanded and on the demand for smartphones.
. The demand for smartphonesThe demand for smartphones decreasesdecreases.
Which of the following is an example of government expenditure on goods and services?
. The purchase of office supplies for the office of the junior senator from New York
Consider the U.S. market for Caribbean cruises. Suppose the price of a Caribbean cruise falls. Explain the effect of this event on the quantity of Caribbean cruises demanded and on the demand for Caribbean cruises.
. The quantity of Caribbean cruises demanded increases and the demand for Caribbean cruises is unchanged.
Consider the U.S. market for ice skates. Suppose the price of a pair of ice skates falls. Explain the effect of this event on the quantity of ice skates demanded and on the demand for ice skates.
. The quantity of ice skates demanded increasesThe quantity of ice skates demanded increases and the demand for ice skates is unchanged.
In the market for skim milk, the price of a carton of skim milk rises. Explain the effect of this event on the quantity of skim milk supplied and on the supply of skim milk
. The quantity of skim milk supplied increasesThe quantity of skim milk supplied increases and the supply of skim milk is unchangedand the supply of skim milk is unchanged.
Choose the correct statement.
. The sum of wages comma interest comma rent comma and profitThe sum of wages, interest, rent, and profit is net domestic product at factor cost.
Consider the market in which publishers operate. Suppose the wage rate of printers rises. Explain how this event will change the quantity of fiction books supplied and the supply of fiction books today.
. The supply of fiction books decreases.
An example of ceteris paribus is the statement ______.
. To study the effect of increased tuition of student loans ,keep the interest rate constant
Does the following statement describe actions taken in self-interest or actions that serve the social interest or both? Today's business-class traveler goes on safari in southern Africa or stays at eco dash resorts that cost $ 1 comma 000 a night but do not have electricity.
. Today's business dash class travelerToday's business-class traveler's action is taken inin self-interest but not inbut not in the social interest.
Choose the statement that is an example of a positive statement.
. U.S. sugar farmers receive higher subsidies from the government than do Australian sugar farmersU.S. sugar farmers receive higher subsidies from the government than do Australian sugar farmers.
Explain how the following headlines concern self-interest and the social interest: 1. Whole Foods, a U.S. supermarket, is opening in Britain, and Starbucks is expanding in China. 2. Cigarette packs must carry a health warning.
. Whole Foods and Starbucks make decisions in self-interest and by serving the self-interest of customers they contribute to the social interest.Health warnings are in the social interest, but people's decisions about whether to heed them is made in self-interest.
Explain how the following headlines concern self-interest and the social interest: 1. Whole Foods, a U.S. supermarket, is opening in Britain while Starbucks is expanding in Asia 2. All automobiles must be fitted with seat belts
. Whole FoodsWhole Foods and StarbucksStarbucks make decisions in their self-interest. Seat beltsSeat belts areare in the social interest, but people decide whether to wear themwear them in their self-interest.
Identify which of the following questions is NOT a microeconomic question.
. Why does the government spend more than it collects in taxes question mark/. How does Dell decide what price to charge for a computer question mark
. Which of the following is NOT a macroeconomic question
. Will a rise in the sales tax decrease the quantity of goods and services that people buy
If the government sets a price on dog food that is below the equilibrium price, ______.
. a shortage of dog food occurs
Economics is all of the following except _______.
. a subject that tells governments what they must do/. a subject that tells countries what goods they must trade
The relationship between two variables that are unrelated can be shown by ______.
. a vertical line
Item 3 is ______ and item 4 is ______.
. an intermediate goodan intermediate good; a final good that is consumption expenditure
Which of the following is an example of investment?
. the purchase of new bookshelves by Barnes and Noble/. the purchase of a new espresso machine by Starbucks
A university decides to change its late night bus service between the campus and student housing from a fare dash based service to a free service.student housing from a fare-based service to a free service. With this decision ______.
. bus ridesbus rides remain scarce, but the incentive to ride the busride the bus changes
If the cost of a textbook rises by a large amount, you have an incentive to _______.
. buy fewer textbooks and share with your friends
Johnny graduates from college and his income increases by $30 comma 00030,000. Nothing else changes. Johnny decreases the quantity of Upper T-shirts and chocolate chip cookies that he buys and increases the quantity of classical music downloads that he buys. For Johnny, _______.
. classical music downloads are normal goods
In the United States today, three wants that are especially pressing and are not satisfied are ______
. cleaner energy, better public schools, and fewer highway accidents
If as the price of wheat bran increases, the quantity of bread that firms plan to sell increases, then wheat bran and bread are _______.
. complements in production
An electrician who is laid off because the economy is in a recession and who gets rehired some months later when theAn electrician who is laid off because the economy is in a recession and who gets rehired some months later when the expansion begins experiencesexpansion begins experiences ______.
. cyclical unemployment
All of the following are examples of scarcity except _______.
. deciding whether or not Pluto should be considered a planet
For consumers, hot dogs and burgers are substitutes. If the price of a hot dog decreases, the demand for burgers will _______.
. decreasedecrease, and the demand curve for burgersburgers will shift leftward
For consumers, T-shirts and tank tops are substitutes. If the price of a T-shirt decreases, the demand for tank tops will _______.
. decreasedecrease, and the demand curve for tank topstank tops will shift leftward
Real GDP ______.
. does not accurately measure household production comma underground economic activity comma or life expectancy
real GDP ______.
. does not accurately measure leisure time, environment quality, or political freedom and social justice
Net exports of goods and services increase when ______.
. exports of goods and services decrease but imports of goods and services decrease by more than exports decrease
Daniel Radcliffe Earns $50 million for Final Potter Movies" is an example of a what question.
. false
The U.S. labor force participation rate ______.
. increased from 59 percent in 1960 to 67 percent in 1999/. decreased between 2000 and 2016
If the price of popcorn rises, the quantity of potato chips consumed will increase and the price of potato chips Use the laws of demand and supply to explain whether the above statement is true or false. The rise in the price of popcorn ______ potato chips and ______.
. increases the demand for; increases the quantity of potato chips supplied
If the price of frozen yogurt rises, the quantity of ice cream consumed will increase and the price of ice cream will fall. Use the laws of demand and supply to explain whether the above statement is true or false. The rise in the price of frozen yogurt______ ice cream and ______.
. increasesincreases the demand for; increasesincreases the quantity of ice creamice cream supplied
One of the reasons why this decrease occurred was that _____.
. more younger men decided to remain in full time education/. more older men decided to retire early/. more men lost their jobs and decided to withdraw from the labor force
A possible headline from the local media is: "By cutting interest rates comma the Fed avoided a recession" This headline provides an example of a ______.
. positive statement about a macroeconomic issue
A possible headline from the local media is: "The price of roses has rocketed" This headline provides an example of a ______.
. positive statement about a microeconomic issue
The table shows the demand and supply schedules for chocolate. Upper A drought in cocoa growing areas decreases the quantity supplied by 60 bars a day at each price. At the initial equilibrium price, there is a shortage of chocolate. The price of a bar of chocolate_____ and the quantity of chocolate demanded _____ as the market moves to its new equilibrium.
. rises; decreases
An increase in the demand for shirts brings a ______ of shirts at the original price, and the price of a shirt will ______ .
. shortageshortage; rise
the quantity of laptops demanded decreases
. ski trips are normal goods
A relationship with a maximummaximum _______.
. starts out sloping upward comma and then slopes downward
Suppose that the number of jobs in the fishing industry decreases but the number of jobs in the travel industry increases.
. structural unemployment increases
At the original equilibrium price, a ____ occurs. The price of a pair of running ____, the quantity demanded ____, and the quantity supplied ____. The new equilibrium price is ____ a pair.
. surplus falls; increases decreases; $80.00
When you spend two hours reading, you can read 50 pages and if you spend three hours reading, you can read 70 pages To read for the extra hour, you give up working out at the gym for that hour The marginal benefit from reading one more hour is _______. The marginal benefit from reading is measured by _______.
. the extra 20 pages you readthe extra 20 pages you read; the time at the gym you are willing to give up
When new and better ways of producing all goods and services are discovered or when the quantity of capital increases, _______.
. the production possibilities frontier shifts outward
When you spend four hours studying comma your mark on an exam is 80 percent.you spend four hours studying, your mark on an exam is 80 percent. And if you spend five hours studying comma your mark is 85 percent.you spend five hours studying, your mark is 85 percent. To study for the extra hour, you give up playing cards for that hour with your friends for that hour with your friends. The marginal benefit from studying one more hour is _______. The marginal benefit from studying is measured by _______.
.the 5 percent increase in your mark; the card game you are willing to give up
The table shows the demand and supply schedules for breadbread. If the price is $2.102.10 a loafloaf, the quantity supplied _____ the quantity demanded and _____ of breadbread exists.
1)is greatergreater than; a surplus
The United States does not allow oranges from Brazil (the world's largest producer of oranges) to enter the United States. If Brazilian oranges were sold in the United States, oranges and orange juice would be cheaper. Use the laws of demand and supply to explain whether the above statement is true or false. In your explanation, distinguish between a change in demand and a change in the quantity demanded and between a change in supply and a change in the quantity supplied.
1. The statement is true. 2. Allowing Brazil to enter the U.S. market for oranges would increase the supply of oranges, which would lower the price and increase the quantity of oranges demanded. 3. Oranges are an input used to produce orange juice so the supply of orange juice would increase, which would lower its price and increase the quantity of orange juice demanded.
The labor force participation rate of women increased most during the _______.
1970s
On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of bananas?
2 lbs of apples
The labor force participation rate of men decreased most during the _______.
2000s
Real GDP in 2015 and real GDP in 2016 are measured in ------- dollars.
2015
Bob and Elizabeth each own an ice cream parlor. In an hour, Bob can produce 12 milkshakes or 60 ice cream sundaes and Elizabeth can produce 22 milkshakes or 132 ice cream sundaes. Bob's opportunity cost of producing 1 milkshake is ____ ice cream sundaes. Elizabeth's opportunity cost of producing 1 milkshake is ____ ice cream sundaes.
5;6
At the beginning of 2016, the broadest measure of unemployment was at approximately _______ of its peak.
60 percent
The equilibrium wage rate of appleapple pickers is _____ an hour and the equilibrium quantity of appleapple pickers employed is_____
9.00 5,000
Every week, Kate plays the piano for three hours, and her grade on each French test is 9595 percent. Last week, after playing for three hours, Kate considered playing for an additional hour. She decided to play for another hour and cut her study time by one hour, but last week her French grade was 8080 percent. What was Kate's opportunity cost of the fourth hour of playing the piano?
A 1515 percentage point drop in her French grade.
Consider the business cycle, and then choose the statement that is correct.
A business cycle is periodic but irregular.
Read Eye on the Price of Coffee and explain how we know that the price increased in 2014 because the supply of coffee decreased and not because the demand for coffee increased. Using the demand and supply model we know the following: _____ brings an increase in price and a decrease in quantity, which is what happened in the market for coffee. _____ brings an increase in price and an increase in quantity, which is not what happened in the market for coffee.
A decrease in supply; An increase in demand
Classify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. Upper A computer purchased for a senator's officeA computer purchased for a senator's office B. Upper A haircut bought by a studentA haircut bought by a student C. Aluminum sheets bought by BoeingAluminum sheets bought by Boeing D. Upper A new house bought by Beyoncé
A is a final good that is government expenditurea final good that is government expenditure, B is a final service that is consumption expenditurea final service that is consumption expenditure, C is an intermediate goodan intermediate good, and D is a final good that is investmenta final good that is investment.
Classify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. Steel sheets bought by General MotorsSteel sheets bought by General Motors B. Upper A DVD bought by a householdA DVD bought by a household C. New cars bought by Hertz comma the car rental firmNew cars bought by Hertz, the car rental firm D. Upper A computer purchased for a senator's office
A is an intermediate goodan intermediate good, B is a final good that is consumption expenditurea final good that is consumption expenditure, C is a final good that is investmenta final good that is investment, and D is a final good that is government expenditurea final good that is government expenditure.`
Which of the following is a consumption good or service?
A pack of bubble gum because it is an item bought by an individual and used up in the current period/A movie because an individual pays to see the movie and then watches it in the current period
Which of the following is an example of a price ceiling or price cap?
A regulation requires cable service to be provided for no more than $30 a month.
Which of the following statements describes the law of market forces?
A shortage of cabbage increased the price of cabbage and a surplus of corn lowered its price.
Which of the following is a factor of production?
An ATM and a strawberry field because they are used to produce goods and services
Which of the following are capital goods?
An interstate highway and a stealth bomber because governments buy these to increase productive resources to use during future periods to produce other goods and services/An airplane, a garbage truck, and an ATM because businesses use these to produce other goods and services in the future
______ good is used as a component of a final good. We ______ add the value of intermediate goods produced to the value of final goods to measure GDP.
An intermediate; do not
Recovery won't improve unemployment Despite some optimism about the seeds of recovery, the Congressional Budget Office (CBO) sees joblessness rising. The CBO sees unemployment peaking at 10.4% next year from an average of 9.3% this year, before it falls to 9.1% in 2011. Source: Fortune, August 25, 2009 Why does unemployment continue to rise as an expansion begins?
As an expansion begins, previously marginally attached workers look for jobs, exceeding the number of people hired.
Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?
At a price of $1 gallon, we plan to sell 2,000 gallons per day.
Choose the statement that is correct about U.S. unemployment.
At the height of the Great Depression, one in four people who wanted jobs couldn't find them.
_______ has a comparative advantage in milkshakes and _______ has an absolute advantage in both goods.
Bob; Elizabeth
Boeing does not manufacture all the components of the Dreamliner at its own factory in the United States because _________.
Boeing wants to produce the Dreamliner at the least possible cost. To do so Boeing buys from the firms that have the lowest costs for delivering the components
If Boeing manufactured all the components of the Dreamliner at its own factories in the United States all of the following would occur except _______.
Boeing would be able to make more business decisions about the Dreamliner
Chained-dollar real GDP is the measure of real GDP calculated by the _____.
Bureau of Economic Analysis
Which of the following is a positive statement?
Competition among cell phone providers across the borders of Canada, Mexico, and the United States has driven roaming rates down.
Uncertain outlook The Commerce Department reported that in December 2015, retail sales rose by 0.2, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses fell by 0.6 percent. Source: Commerce Department, February 2016 Which component of GDP changed because retail sales increased? Which component of GDP changed because business inventories increased?
Consumption expenditure; Investment
Uncertain outlook The Commerce Department reported that in December 2015, retail sales rose by 0.2, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses fell by 0.6 percent. Source: Commerce Department, February 2016 Which component of GDP changed because retail sales increased? Which component of GDP changed because business inventories increased? ______ changed because retail sales increased. ______ changed because business inventories increased.
Consumption expenditure; Investment
If Country A allocates more resources to producing capital goods than does Country B, _________.
Country A will incur a larger opportunity cost of growth, but it will grow more quickly than Country B
Which of the following is an example of a final good or service?
Dan bought a Toyota Camry.
Who in the following statements is a discouraged worker?
Dan is available to work but has not looked for a job in the past eight weeks because of repeated applications but no single offer.
Who in the following statements is a full-time worker and who is a part-time worker?
Dan works at Subway for 8 hours each day from Monday through Friday. Mary works at Starbucks' for 4 hours each day on weekends.
Each of the following four events occurs (one at a time) in the market for air travel. A. Airfares rise comma while train fares don't changeAirfares rise, while train fares don't change. B. The price of jet fuel fallsThe price of jet fuel falls. C. Airlines reduce the number of flights each dayAirlines reduce the number of flights each day. D. People expect airfares to increase next summerPeople expect airfares to increase next summer.
Event A changes neither the supply of nor the demand for air travel.
Now in the market for air travel, four additional events occurs one at a time. E. Upper A severe winter in New York induces more people to vacation in FloridaA severe winter in New York induces more people to vacation in Florida. F. With no snow in the Rockies comma fewer people travel to the ski slopesWith no snow in the Rockies, fewer people travel to the ski slopes. G. The price of train travel risesThe price of train travel rises. H. The price of a pound of air cargo fallsThe price of a pound of air cargo falls.
Event G increasesincreases the demand for air travel.
Which of the following events in the market for Caribbean cruises illustrates the law of demand? 1. The price of a Caribbean cruise rises. 2. Caribbean cruises become more popular. 3. The price of a cruise to Asia falls. 4. Celebrity Cruises launches its new "students only" Caribbean cruises. 5. Cruise companies increase the number of leading rock artists for their onboard entertainment.
Event #1 only
Factories that produce smartphones can also produce smart watches. Which of the following events in the market for smartphones illustrates the law of supply? 1. The price of a smart watch falls. 2. A new robot technology lowers the cost of producing smartphones. 3. The price of a smartphone falls. 4. The price of a smartphone is expected to rise next year. 5. The wage rate paid to smartphone factory workers increases.
Event #3 only
Examples of capital include all of the following except _______.
Google stock
Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.
I and IV are changes in supply and II and III are changes in the quantity supplied
Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.
I is a change in demand and II and III are changes in the quantity demanded.
Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.
I is inferior, II is normal, III is neither, and IV is both
Bill Gates has donated billions of dollars through the Bill and Melinda Gates Foundation to support universities, cancer research, a children's hospital, and the Seattle Symphony, etc. Choose the correct statement.
If Bill Gates' marginal benefit from a donation exceeds its marginal cost, his decision to make the donation is rational.
The table shows the demand and supply schedules for mouse padsmouse pads. The equilibrium price of a mouse padmouse pad is $2.252.25 and the equilibrium quantity is 168168 padspads a week.
If the price of a mouse padmouse pad is $2.002.00, there is a shortage of mouse padsmouse pads. The price of a padpad rises , the quantity demanded decreases , and the quantity supplied increases . The market moves to an equilibrium.
Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply?
If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers
Consider how incomes are distributed within economies and across the world. Choose the statement that is correct.
Income inequality across the entire world has decreased during the past 20 years, and extreme poverty has declined.
Indicate all the items in the following list that are not consumption goods and services and explain why. Item a: A hamburger Item b: A beach Item c: A tennis racquet Item d: An interstate highway Item e: A university Item f: A stealth bomber
Items b, d, e, and f because they are not items that individuals and governments buy and use up in the current period.
Which of the following countries is facing a recession?
Japan's real GDP of 3.8 percent in the first quarter decreased by 0.3 and 0.4 percent respectively in the second and third quarters of 2012.
Which of the following events in the market for smartphones illustrates the law of demand? 1. The price of a smartphone falls. 2. Producers announce that smartphone prices will fall next month. 3. The price of a call made from a smartphone falls. 4. The price of a call made from a land-line phone increases. 5.An increase in memory makes smartphones more popular.
Only Event #1
Which of the following statements illustrates structural unemployment?
Outsourcing resulted in many job losses in the mid 2000s.
Which of the following is not a key idea in the economic way of thinking?
Poor people are discriminated against and should be treated more fairly.
Which of the following is an example of consumption expenditure?
Rachel buying a TV.
Which of the following statements illustrates frictional unemployment?
Robin is quitting his current job to find another that has better prospects.
Which of the following is an example of consumption goods and services?
Ron bought a Nissan Altima last summer.
Which of the following is an example of an intermediate good or service?
Samsung buys compressors for manufacturing refrigerators.
Classify the following newspaper headlines as positive or normative statements Statement 1 Nuclear energy costs less than oil.costs less than oil. nothing Statement 2 The minimum wage should be increased.should be increased.
Statement 1 is a positive statement because it can be tested.it can be tested. Statement 2 is a normative statement because it can't be tested.
Which of the following headlines deal with what, how, and for whom questions? A. Major league baseball's turf keepers earn about $85,000 a year, umpires earn about $350,000, and players make millions B. Smoking is on the decline C. Women earn more than men in some jobs
Statement A deals with for whomfor whom, B deals with whatwhat, and C deals with for whomfor whom.
Which of the following headlines deal with what, how, and for whom questions? A. e-Textbooks displace traditional textbooks B. Snowboard sales beat skis C. Airports install more self dash check in machines
Statement A deals with whatwhat, B deals with whatwhat, and C deals with howhow.
The following news items are either normative or positive statements. 1. Pets are killed for food in Zimbabwe 2. Higher income taxes will lead to a decrease in work hours 3. The United States should spend more on the environment and less on space exploration. 4. Flat screen is better than than traditional television.
Statements # 3 and # 4 are normative.
Here are four statements about the types of unemployment. Which of these statements is correct? 1. An unemployed graduate searching for a first jobAn unemployed graduate searching for a first job is an example of frictionalfrictional unemployment. This type of unemployment arises from normal laborarises from normal labor turnoverturnover. 2. An unemployed textile worker in South Carolina who loses her job because of competition from ChinaAn unemployed textile worker in South Carolina who loses her job because of competition from China is an example of structuralstructural unemployment. This type of unemployment arises when changes in technology or international competition change the skillsarises when changes in technology or international competition change the skills needed to perform jobsneeded to perform jobs. 3. An unemployed textile worker in South Carolina who loses her job because of competition from ChinaAn unemployed textile worker in South Carolina who loses her job because of competition from China is an example of cyclicalcyclical unemployment. This type of unemployment arises inin recessionsrecessions. 4. An autoworker who loses his job because of a slowdown in the economyAn autoworker who loses his job because of a slowdown in the economy is an example of structuralstructural unemployment. This type of unemployment arises inin recessionsrecessions.
Statements 1 and 2 are true; the others are false
Here are four statements about the types of unemployment. Which of these statements is correct? 1. An autoworker who loses his job because of a slowdown in the economyAn autoworker who loses his job because of a slowdown in the economy is an example of cyclicalcyclical unemployment. This type of unemployment increases in recessions andincreases in recessions and decreases in expansiondecreases in expansion. 2. An unemployed graduate searching for a first jobAn unemployed graduate searching for a first job is an example of frictionalfrictional unemployment. This type of unemployment arises from normal laborarises from normal labor turnoverturnover. 3. An unemployed graduate searching for a first jobAn unemployed graduate searching for a first job is an example of structuralstructural unemployment. This type of unemployment arises when changes in technology or internationalwhen changes in technology or international competition change the skills needed to perform jobscompetition change the skills needed to perform jobs. 4. An unemployed textile worker in South Carolina who loses her job because of competition from ChinaAn unemployed textile worker in South Carolina who loses her job because of competition from China is an example of frictionalfrictional unemployment. This type of unemployment arises when changes in technology or internationalwhen changes in technology or international competition change the skills needed to perform jobscompetition change the skills needed to perform jobs.
Statements 1 and 2 are true; the others are false.
Choose the correct statement.
Statements A, B, and C are correct A. Gross domestic product (income approach) + statistical discrepancy = Gross domestic product (expenditure approach). B. Statistical discrepancy = gross domestic product (expenditure approach)minus−gross domestic product (income approach). C. Gross domestic product (expenditure approach)minus−statistical discrepancy = Gross domestic product (income approach)..
Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should be increased.should be increased. nothing 2. Gasoline engines pollute urban air.pollute urban air.
Statement #1 is a normative statementnormative statement because it can't be tested.it can't be tested. Statement #2 is a positive statementpositive statement because it can be tested.
Are either or both of these newspaper headlines positive or normative? 1. We ought to cut back on our use of coal.on our use of coal. nothing 2. The Butterfly House must be kept near 80 degrees or the butterflies won't fly..
Statement #1 is a normative statementnormative statement because it can't be tested.it can't be tested. Statement #2 is a positive statementpositive statement because it can be tested.
Are either or both of these newspaper headlines positive or normative? 1. Hydrogen is a cleaner fuel than gasoline.is a cleaner fuel than gasoline. nothing 2. Gasoline powered vehicle should be replaced with a cleaner technology.should be replaced with a cleaner technology. nothing
Statement #1 is a positive statementbecause it can be tested.it can be tested. Statement #2 is a normative statement because it can't be tested.
Consider unemployment in the industrialized world. Choose the correct statement
The Eurozone has a higher average unemployment rate than the United States.
Which of the following is an example of government expenditure on goods and services?
The White House buying internet services.
Consumers eating higher food costs With higher gasoline prices, the demand for ethanol increased. Because ethanol is made from corn, the price of corn rose, which in turn increased the price of bread, chicken, cheese, and the fast-foods that use cheese. As people in China and India become richer, they are eating more beef and chicken and less rice and tofulong dash—another source of higher food prices in the United States. Source: USA TODAY, September 6, 2007 Explain why food prices in the United States will rise as people in India and China become richer and can afford to buy beef and chicken.
The demand for food produced in the United States increases, the demand curve shifts rightward, and the price of food rises.
Which of the following is an example of a price floor?
The government guarantees that potato farmers will receive at least $50 a ton.
When Sally runs for four hours, and her grade on the economics test is 8080 percent. Last week, after running for four hours, Sally considered running for a fifth hour. She decided to run for one additional hour and cut her study time by one hour, but her economics grade fell to 6060 percent. What can you conclude about Sally's marginal benefit and marginal cost of the fourth hour of running?
The marginal benefit from the fourth hour of running exceeded its marginal cost.
Which of the following statements by Tom demonstrates that his buying plans obey the law of demand?
The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many.
In the market for jeans, which of the following events increases the demand for a pair of jeans?
The price of a denim skirt (a substitute for jeans) rises.
In the market for skim milk commaIn the market for skim milk, the price ofthe price of a carton of skim milka carton of skim milk risesrises. Explain the effect of this event on the quantity of skim milkskim milk supplied and on the supply of skim milkskim milk.
The quantity of skim milk supplied increases and the supply of skim milk is unchanged
Consider what is included in the measurement of GDP, and then choose the correct statement.
The underground economy, which is not included in GDP is the part of the economy that is hidden from the view of the government.
Consider U.S. unemployment and choose the correct statement.
There is always someone without a job who is searching for one, so there is always some unemployment.
What is a characteristic of an economy at full employment?
There is no cyclical unemployment/The unemployment rate equals the natural unemployment rate/. All unemployment is frictional and structural
U.S. economy ended 2015 with slow growth GDP increased at an annual rate of 0.7 percent in the final quarter of 2015. Government expenditure grew at the same 0.7 percent rate, but consumption expenditure grew at a rate of 2.2 percent. Investment and net exports shrank. Source: BEA News Release, January 29, 2016 Use the figure to indicte the flows in which the items in the news clip occur. How can GDP increase by 0.7 percent if consumption expenditure increased at a 2.2 percent rate?
U is government expenditure on goods and services and J is investment
The graph shows the unemployment rate in the United States from 1960 to 2016. The average unemployment rate was lowest during the 1960s and it resulted from ______.
Vietnam war defence spending and consumer spending encouraged by expanded social programs
GDP in the United States increased between 2016 and 2017. Which of the following could NOT account for this increase?
We paid lower prices for our goods and services and production remained constant.
Choose the correct statement.
What we do in pursuit of our self dash interest can further the social/. Choices that are the best for society as a whole are said to be in the social interest. /. Social interest and self dash interest can come into conflict.
______ is an example of U.S. consumption expenditure.
Your purchase of a flight on American Airlines
______ is an example of U.S. consumption expenditure.
Your purchase of a model car kit
An example of a consumption good and service is _______.
a chocolate chip cookie
The average unemployment rate was highest during the 1980s and it resulted from ______.
a deep recession
The NBER Committee _______.
based its decision on peaks in the data on real personal income, real manufacturing, wholesale and retail sales, industrial production, and employment, which all peaked between November 2007 and June 2008
Classify each of the following items as a final good or an intermediate good, and classify the expenditure on each final good as consumption expenditure or investment: Item 1. New airplanes bought by United AirlinesNew airplanes bought by United Airlines Item 2. Upper A new bridge across the creek in the Augusta National Golf ClubA new bridge across the creek in the Augusta National Golf Club Item 3. Mufflers bought by Ford Motor CoMufflers bought by Ford Motor Co Item 4. Banking services bought by a studentBanking services bought by a student Item 1 is ______ and item 2 is ______.
a final good that is investmenta final good that is investment; a final good that is investment
Item 3 is ______ and item 4 is ______.
a final good that is investmenta final good that is investment; a final good that is investment
Which of the following is included in the measure of U.S. GDP?
a pizza produced and sold in the United States
An example of a capital good is ____________.
a satellite communication system
When using the income approach to measure GDP at market prices, in addition to summing all factor incomes it is necessary to ______.
add indirect taxes less subsidies to convert aggregate income from factor cost to market prices
The expenditure approach to measuring U.S. GDP equals ______.
all expenditure on final goods and services produced in the United States in a given time period
Classify each of the following items as a final good or an intermediate good, and classify the expenditure on each final good as consumption expenditure or investment: Item 1. Cardboard boxes bought by Amazon.comCardboard boxes bought by Amazon.com Item 2. Banking services bought by a studentBanking services bought by a student Item 3. Upper A new apartment buildingA new apartment building Item 4. Upper A new bridge across the creek in the Augusta National Golf ClubA new bridge across the creek in the Augusta National Golf Club Item 1 is ______ and item 2 is ______.
an intermediate goodan intermediate good; a final good that is consumption expenditure
An economy produces only fun and food. The table shows the prices and the quantities of fun and food produced in 2016 and 2017. The base year is 2016. Potential GDP in 2016 is $270 and it grew by 1 percent in 2017. The economy is in ______ because ______ between 2016 and 2017.
an expansion; real GDP is increasing
Capital goods _______.
are goods that businesses and governments buy to increase productive resources to use during future periods to produce other goods and services
Consumption goods and services _______.
are items that individuals and governments buy and use up in the current period
The natural unemployment rate is the unemployment rate when the economy is _____.
at full employment
The people of Leisure Island have 50 hours of labor a day that can be used to produce entertainment and good food. The table shows the maximum quantity of either entertainment or good food that Leisure Island can produce with different quantities of labor.
attainable and inefficient
Cyclical unemployment is the fluctuating unemployment over the business cycle that increases during _____ and decreases during _____.
a recession; an expansion
The percentage of the employed people who have part-time jobs increases in _______ because _______.
a recession; firms cut work hours
If Ezra has an absolute advantage in growing tomatoes and lettuce, he will _______.
be more productive than di
----has a comparative advantage in the production of milkshakes.
ben
The standard of living can be easily compared ______.
between China and Russia or between Canada and the United States, because household production, the underground economy, leisure hours, and the environment are similar in each pair
Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______.
both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs
If the cost of a textbook falls by a large amount, you have an incentive to _______.
buy more textbooks
Net taxes are taxes paid minus _____.
cash benefits received from governments
At the beginning of 2016, the unemployment rate was _______.
close to the natural unemployment rate and the economy was close to full employment
When making these donations, Bill Gates ______.
compares his marginal benefit from making a donation and the marginal cost
A substitute is a good that is _____ another good, and a complement is a good that is _____ another good.
consumed in place of; consumed together with
Uncertain outlook The Commerce Department reported that in December 2015, retail sales rose by 0.2 percent, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses fell by 0.6 percent. Source: Commerce Department, February 2016 Explain the effect of the fall in net exports on GDP.
decreases GDP
An increase in the minimum wage ______.
decreases employment and increases unemployment if it is set above the equilibrium wage rate
Suppose leather jackets is a complement in production of beef. An increase in the price of leather jackets will ______ the equilibrium price of beef and ______ the equilibrium quantity of beef.
decrease; increase
Uncertain outlook The Commerce Department reported that in December 2015, retail sales rose by 0.2 percent, net exports decreased, inventories held by businesses rose by 0.1 percent, and total sales by businesses fell by 0.6 percent. Source: Commerce Department, February 2016 Does the statement that total sales by businesses fell by 0.6 percent mean that GDP decreased by 0.6 percent? Explain your answer. The statement that total sales by businesses fell by 0.6 percent means that GDP ______ because ______.
did not change by 0.6 percent; GDP measures production of all final goods and services and "total sales by businesses" includes final and intermediate goods and services
National income less retained profits plus transfer payments less personal income taxes equals ______.
disposable personal income
With production of 100100 units of entertainment and 5050 units of good food, the people of Leisure Island _______.
do not face a tradeoff
The standard of living cannot be easily compared in ______ and ______ because ______.
either China or Russia; either Canada or the United States; in each pair household production, the underground economy, leisure hours, and the environment are different
The labor force is the number of people _______.
employed plus the number of people unemployed
Facebook is the reason for the productivity slowdown, no, really Facebook's WhatsApp is free and it sells no advertising. So WhatsApp's value of production in GDP is zero. Assume that WhatsApp's services are produced by 300 people all of whom earn $100,000 a year. By this measure, WhatsApp's value of production in GDP is $30 million. Source: Forbes, February 13, 2016 What are the two approaches to measuring GDP described in the news clip? Why is one of these measures of the contribution of WhatsApp to GDP wrong?
expenditure approach and the income approach
An economy decides to double the number of college graduates this year. The economy will ______.
experience economic growth next year because the increase in human capital will shift the PPF outward next year but at a cost of less consumption this year.
The items that firms in the United States produce and sell to the rest of the world are ______. The items that households, firms, and governments in the United States buy from the rest of the world are ______.
exports of goods and services; imports of goods and services
The statement "If the price of frozen yogurt rises, the quantity of ice cream consumed will increase and the price of ice cream will fall" is
false
The statement "If the price of popcornpopcorn risesrises, the quantity of potato chipspotato chips consumed will increaseincrease and the price of potato chipspotato chips will fallfall" is
false
"New York Transit Workers Strike for Better Pay" is an example of a what question.
false
"Robot Can Operate Vacuum Cleaner" is an example of a for whom question.
false
Gross domestic product is the market value of all the ______ in a given time period.
final goods and services produced by all firms located in the United States
U.S. gross domestic product is the market value of all the ______ produced ______ in a given time period.
final goods and services; within the United States
The news headline "American Airlines pilot talks fail to produce deals with the ______ question(s) of economics.
for whom
Unemployment falls to 4.9 percent, lowest in 8 years U.S. unemployment of 4.9 percent is full employment. Only 151,000 jobs were created in January, down from 262,000 in December. With falling oil prices, 7,000 energy jobs were lost in January but 29,000 manufacturing jobs were added. Source: CNN Money, February 5, 2016 Using the information provided in the news clip, which types of unemployment were present in the U.S. economy in January 2016? The unemployment that is present in the U.S. economy in January in 2016 is _______.
frictional and structural because the economy is at full employment
Which of the following are included in the income approach to measuring GDP?
indirect taxes less subsidies; rent; interest
An increase in inventories of durable goods increases _______.
investment
The table shows the demand and supply schedules for chocolate bars. If the price is $2.30 a chocolate bar, the quantity supplied _____ the quantity demanded and _____ of chocolate bars exists.The table shows the demand and supply schedules for chocolate bars. If the price is $2.30 a chocolate bar, the quantity supplied _____ the quantity demanded and _____ of chocolate bars exists.
is greater than; a surplus
The table shows the demand and supply schedules for bread. If the price is $2.752.75 a loaf, the quantity supplied _____ the quantity demanded and _____ of breadbread exists.
is greatergreater than; a surplus
A discouraged worker ______.
is a marginally attached worker who has not made specific efforts to find a job within the previous four weeks because previous unsuccessful attempts were discouraging
Hundreds line up for 5 p.m. Eminem ticket giveaway Hundreds of Eminem fans lined up today for a chance to get a free ticket to the Detroit rapper's secret concert. Despite the fact that tickets would not be released before 5 p.m., people lined up all day. Source: Detroit Free Press, May 18, 2009 Eminem announced on MySpace that he planned to release his new album Relapselong dash—first album in 5 yearslong dash—on the same day as his free concert in DetroitRead the news clip, then answer the following question. Eminem's decision to give a free concert _______.
is a rational choice if the marginal benefit he receives from the concert is greater than its marginal cost
When the unemployment rate ______ the natural unemployment rate, real GDP ______ potential GDP.
is less than; is greater than/equals; equals
When the output gap is positive, the unemployment rate ______ the natural unemployment rate. When the output gap is negative, the unemployment rate ______ the natural unemployment rate.
is less than; is greater than
Other things remaining the same, the natural unemployment rate _______.
is not expected to change because the events described are normal labor turnover
The natural unemployment rate ______.
is teh unemployment rate at full employemnt
The following statements about the business cycle are correct except ______.
it is a regular predictable cycle in real GDP around potential GDP
Consider the functional distribution of income. The largest percentage of income paid to the factors of production is paid to _________.
labor
Which of the following events in the market for timber beams illustrates the law of supply? 1. The wage rate of sawmill workers rises. 2. The price of sawdust rises. 3. The price of a timber beam rises. 4. The price of a timber beam is expected to rise next year. 5. Environmentalists convince Congress to introduce a new law that reduces the amount of forest that can be cut for timber. 6. A new technology lowers the cost of producing timber beams.
only event 3
The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded; and the ______ the price of a good, the greater is the quantity demanded.
other things remaining the same; higher; lower
Total expenditure in the United States is equal to consumption expenditure plus investment ______.
plus government expenditure on goods and services plus net exports
The output gap is real GDP minus _____ expressed as a percentage of _____.
potential GDP; potential GDP
The price controls described in the news clip are ______
price ceilings
A substitute in production is a good that is _____ another good, and a complement in production is a good that is _____ another good.
produced in place of; produced together with
Which of the following are included in the income approach to measuring GDP?
profitprofit; wageswages; interest
The main taxes of the federal government do not include _______.
property taxes
A demand schedule is a list of the ______ at each different price when all other influences on buying plans remain the same. A demand curve is a graph of _____ .
quantities demanded; a demand schedule
A supply schedule is a list of the ______ at each different price when all other influences on selling plans remain the same. A supply curve is a graph of _____ .
quantities supplied; a supply schedule
Read the news clip, then answer the following question. Heavy rain _______.Rain delays to U.S. planting lift corn and soybean prices Heavy rain has delayed the planting of corn and soybeans.
raises the price of corn and soybeans because the supply of corn and soybeans decreases
The unemployment rate is ______.
the percentage of the people in the labor force who are unemployed
The labor force participation rate is ______.
the percentage of the working-age population in the labor force
As the market moves to equilibrium, _______.
the price of a loafloaf fallsfalls, the quantity demanded increasesincreases, and the quantity supplied decreases
The supply curve of timber beams shifts leftward when ______.
the price of a timber beam is expected to rise next year or a new law reduces the amount of forest that can be cut for timber
The supply curve of timber beams shifts rightward when ______.
the price of sawdust rises or new technology lowers the cost of producing timber beams (arrow)
In market equilibrium, at the equilibrium price and equilibrium quantity, _____ .
the quantity demanded equals the quantity supplied and equals the quantity bought and sold
If the price of a laptop rises, with all other influences on buying plans remaining the same, _______.
the quantity of laptopslaptops demanded decreases
Demand is _____, when all other influences on buying plans remain the same.
the relationship between the quantity demanded of a good and the price of the good
Supply is _____, when all other influences on buying plans remain the same.
the relationship between the quantity supplied of a good and the price of the good
It is possible for GDP to increase by only 0.7 percent when consumption expenditure grew at a 2.2 percent rate because _______.
the sum of investment and net exports shrank
Summer's here. So are higher gas prices The price of gasoline increased 15 percent in the past three weeks, mainly because of refinery shutdowns in the United States. As motorists increase their driving in the coming months, the price is predicted to rise further. CNN Money, May 21, 2009 Explain why the price rose in the past three weeks and why it is expected to rise in the coming months.When refineries shut down, ______ and the price of a gallon of gasoline ____.
the supply of gasoline decreases; rises
Full employment is defined as a situation in which _______.
the unemployment rate equals the natural unemployment rate
Potential GDP is the value of real GDP when _______.
the unemployment rate equals the natural unemployment rate
The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises,
there is a movement up along the demand curve to a smaller quantity demanded.
Economists use the ceteris paribus assumption _______.
to isolate the factor of interest and investigate its effects in the clearest possible way
Bumper Harvest in the Napa Valley" is an example of a what question.
true
When the government introduces a minimum wage above the current market wage rate, _______.
unemployment increases
If the BLS included all marginally attached workers as being unemployed, the _______ would be _______.
unemployment rate; higher
The trend in the labor force participation rate of all working-age people is _______.
upward until 2000, and then downward
Choose the best answer to the following multiple choice questions. A nation will experience economic growth if it does each of the following things except ______.
use all its resources to produce consumption goods
You buy a pair of eye glasses The opportunity cost of the pair of eye glasses is best defined as the _______.
value of the highest-valued alternative given up to buy the pair of eye glasses
You buy a textbook. The opportunity cost of the textbook is best defined as the _______.
value of the highest-valued alternative given up to buy the textbook
The BLS counts Jody as being unemployed if she _______.
wants a job and is willing to take a job but after searching last week cannot find a job
Hundreds of Eminem fans lined up today for a chance to get a free ticket to the Detroit rapper's secret concert. Despite the fact that tickets would not be released before 5 p.m., people lined up all day. Source: Detroit Free Press, May 18, 2009 Eminem announced on MySpace that he planned to release his new album Relapselong dash—first album in 5 yearslong dash—on the same day as his free concert in Detroit.Read the news clip, then answer the following question. For people who scored tickets, the concert ______ free because ______.
was not; the time they spent lining up for tickets could have been used doing something else
The news headline "Space travel only for rich and fitSpace travel only for rich and fit" deals with the ______ question(s) of economics.
what and for whom
Economists measure the benefit you get from something by _______.
what you are willing to give up to get it
ternational Air Transport Association reported that passenger numbers fell by 11 percent last month. What will be the impact of swine flu? Recovery of passenger numbers depends on a rise in consumer confidence and a return to increased consumer spending. In response to the fall in passenger numbers, airlines cut capacity.Read the news clip, then answer the following questions. When people are concerned about coming into contact with swine flu, the demand for air travel ______. When consumer confidence and consumer spending increase, the demand for air travel ______. When airlines cut capacity, the demand for air travel ______.
decreases; increases; does not change
Based on this information, differences in real GDP per person ______ correctly rank the standard of living in these countries because ______.
do; when other factors that influence the standard of living are similar the differences in real GDP per person are small, but when these other factors are not similar, the differences are huge
A marginally attached worker is a person who _______.
doesn't work, is available and willing to work, but hasn't looked for a job recently
Marla is an associate at JCPenney who wants to work 40 hours week but works 25 hours a week because sales at JC Penney are slow. Marla works part time for _______ reasons. Joe is a server at Olive Garden who wants to work 40 hours a week but works 15 hours a week because the number of patrons at Olive Garden has decreased. Joe works part time for _______ reasons.
economic; economic
When the unemployment rate_______ the natural unemployment rate, real GDP is _______ potential GDP and the output gap is _______.
exceeds; below; negative
Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.
exports; minus; imports
In 2014 and 2015, the unemployment rate was _______ and the output gap was _______.
falling; gradually shrinking
"As more people buy fuel dash efficient hybrid cars people buy fuel-efficient hybrid cars, the demand for gasoline will decrease and the price of gasoline will fall. The fall in the price of gasoline will decrease the supply of gasoline." This statement is ______ because ______.
false; as the price of gasoline falls, the supply of gasoline does not decrease
"As more people buy gas dash guzzling carsmore people buy gas-guzzling cars, the demand for gasolinegasoline will increaseincrease and the price of gasolinegasoline will riserise. The riserise in the price of gasolinegasoline will increaseincrease the supply of gasolinegasoline." This statement is ______ because ______.
false; as the price of gasolinegasoline risesrises, the supply of gasolinegasoline does not increase
When the unemployment rate is ______ than the natural unemployment rate, cyclical unemployment is _______.
less; negative
Real GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices in _____ year. Nominal GDP is the value of the _____ goods and services produced in a given year expressed in terms of the prices of _____ year.
final; a base; final; that same
Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.
final; within
A circular flow model shows the interrelationship between the ____ markets and the ____ markets.
goods; factor
Imports of goods and services are items that _____ in the United States _____ the rest of the world.
households, firms, and governments; buy from
When a firm decides to use skilled professionals to produce its output, it is answering the ______ question. When a firm decides to produce SUVs rather than compact cars, it is answering the ______ question. Who gets the goods and services that are produced answers the ______ question.
how; what; for whom
Below-trend real GDP growth _______ the unemployment rate and _______.
increases; cyclical unemployment increases Your answer is correct.
Bill Gates' decision about his donations ______ made on the margin because ______.
is; he considers the benefit and cost of donating one additional dollar
Consider the incomes paid to the factors of production. Wages are paid to ____ and interest is paid to ____
labor; capital
Potential GDP is the value of real GDP when all the economy's factors of production - _____, _____, _____, and _____ - are fully _____.
labor; capital; land; entrepreneurial ability; employed
Which of the following correctly lists the categories of factors of production?
land, labor, capital, and entrepreneurship
A minimum wage law is a government regulation that makes hiring labor services for _____ than a specified wage _____.
less; illegal
The price of a loafloafof breadbread _____ and the quantity of breadbread demanded _____ as the market moves to its new equilibrium.
rises ; decreases
When floods wiped out the banana crop in Central America, the equilibrium price of bananas ______ and the equilibrium quantity of bananas ______.
rose; decreased
At the original equilibrium price, a ____ occurs. The price of a mouse padmouse pad ____, the quantity demanded ____, and the quantity supplied ____. The new equilibrium price is ____ a padpad.
shartage ; rises; decreases; increase; $2.50
A rent ceiling creates a ______ of housing if it ______ the equilibrium rent.
shortage; is less thanIn the market for jeans, which of the following events increases the demand for a pair of jeans?
The markets of wheat and rice influence each other because wheat and rice are______.
substitutes, so a higher price of rice will increase the demand for wheat
A decrease in the demand for chocolate with no change in the supply of chocolate will create a ______ of chocolate at today's price, but gradually the price will ______.
surplus; fall
Capital consists of _______.
tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services
The Great Depression was a period of high _____, low _____, and extreme economic hardship that lasted from _____ to _____.
unemployment; incomes; 1929; 1939
One of the big questions in economics is: What determines ______ goods and services are produced?
what, how, and for whom