Econ Exam 1
Economics is all about making choices. The reason we have to choose one thing over another is:
economic resources are scarce
Marginal analysis is a cost-benefit calculation that
focuses on the differences between one feasible alternative and the next feasible alternative
Law of Supply
in almost all cases, the quantity supplied rises when the price rises (holding all else equal)
If opportunity cost were to suddenly increase, total cost would
increase and net benefit would decrease
The Law of Supply states that as the price of a good increases, ceteris paribus, the ______ of that good increases. This can be shown graphically with _____ supply curve of numerically in a table using a ______
quantity supplied ; upward-sloping ; supply schedule (the relationship that exists between these two variables can be described as positively related)
The market supply is the ____ of all the supply curves of potential producers and would be graphed to ____ of the individual curves
sum ; right
Holding all else constant, if the number of cell phone manufacturers suddenly decreased due to increased regulations, then
supply would shift leftwards, equilibrium price would decrease, and equilibrium quantity would decreas
how would a decrease in demand affect the equilibrium price in a market?
the equilibrium price decreases
The concept of diminishing marginal benefits states that
the more you consume of a good, your willingness to pay for an additional unit declines
Which of the following would an economist use when conducting empirical analysis?
data
If an economic experiment works in a randomised controlled trial seting, its policy findings are readily applicable to real life scenarios:
False
When you have a randomised controlled trial in economics, the only difference between the two groups is the treatment because both groups have been randomly assigned.
False
Suppose the production of foreign-owned factors operating in the united states exceeds the production of the US owned factors operating abroad For the united states,
GDP is larger than GNP
Which is true regarding marginal analysis?
If total cost is rising, marginal cost could be falling.
What is meant by randomization in the context of an economic experiment?
Subjects are assigned by chance, rather than by choice, to a group
How would the equilibrium price in a market be affected if there were a large increase in supply and a small increase in demand?
The equilibrium price decreases.
How would the equilibrium price in a market be affected if there were a large decrease in supply and a small decrease in demand?
The equilibrium price increases.
When optimizing for total value, opportunity cost must be _______ to total cost. Assuming _______ benefits, the lowest cost option is the optimal choice.
added ; equal
When a cost-benefit analysis is done:
all relevant options must be considered
marginal analysis _____ always picks out the _____ optimum as minimization of total cost
always ; same
Which of the following is true regarding the concept of causation?
it describes how on event can bring about the change in another
an argument against evidence-based economics would be
it is only an approximation, often based on averages
Willingness to accept is the _____ price that a seller is willing to get paid to sell an extra unit of a good. Willingness to accept is the same as the _____ cost of production
lowest ; marginal
A competitive market will
move towards equilibrium quantity because both producers and consumers act in their own best interest.
A demand curve has a _____ slope due to the Law of demand. The law of demand is based off of a consumer's willingness to pay _____ as a marginal units are consumed.
negative ; less
Advising the residents of a town to choose a toll road over a freeway extension due to a limited budget and high trucking usage is an example of:
normative economics (analysis that recommends what an individual or society ought to do)
Making a prediction today about the worlds population in 20 years based on current growth trends is an example of:
positive economics (describing what has happened or predicting what will happen, such as predicting changes to the worlds population)
A supply curve has a ______ slope due to the law of supply. The law of supply states that supplies _____ as price increase.
positive; increase
The Law of Demand states that as a price of a good increases, certeris paribus, the ______ decreases. This can be shown graphically with a ______ demand curve or numerically in a table using a ______.
quantity demanded ; downward-sloping ; demand schedule (the relationship that exists between these two variables can be described as negatively related)
An aggregated demand curve is created by summing _______________ on the individual demand ________.
quantity demanded at each price ; curves
One reason free-riders exist could be that:
the private benefit exceeds the private cost
All of the following would fall under the study of microeconomics except:
the stock market's response to an interest rate increase (macroeconomics design government policies that improve overall, or "aggregate" economic performance, such as market reactions to changes in interest rates)
