ECON EXAM 1
John is ready to pay $5 for an extra loaf of bread. Due to an ongoing discount in the store, he gets a loaf for $2. John's consumer surplus from the purchase is ______
$3
A rent ceiling results in a shortage. As a result, which of the following do you expect?
- a black market for apartments whereby higher rents are obtained through various other charges -discrimination as landlords choose their tents, possible based on race, age, or gender -the shortage will persist as long as the ceiling is in effect (all of the above would be expected)
Which of the following can be established using economic analysis:
-People should work on teams to produce things because there is more job satisfaction -Products should be made more reliably -The government should not be the entity to choose the amounts of all available goods and services in the economy (all of the above can be established through economic analysis)
why has the number of people living on farms gone down so drastically from 1900?
-Process innovations such as mechanized planting and harvesting -process innovations such as herd immunization -investment in capital such as tractors (all of these)
Why aren't imports of roses from South America and Africa high year-round instead of just around Valentine's Day?
-The spike in demand makes it profitable for producers with higher costs (like transportation) to enter the market. -Flower production in the US is particularly low in February, so US-based supply is shifted leftward that month because of the climate
which of the following will cause a shift in the demand curve for hoverboards?
-a change in wealth -a change in taste or preference -a change in income (all of the above)
which of the following will cause the price of beer to rise?
-a shift to the left in the supply curve of beer -a shift to the right in the demand curve for beer
which of the following are not product innovations
-chicken halters -purple strawberries and the seeds to grow them -laser printers -smart phones (all of the above are product innovations)
which of the following methods have been used to govern economic activity?
-customs -apprenticeships -markets -central control (all of the above have been used to govern economic activities)
Which of the following is NOT an example of central economic control
-family or clan leaders -warlords -dictators -tribal chieftains (all of the above are examples of central control)
Hunter-gatherer societies allocated resources by a combination of
-individual decisions -sharing customs -organized hunting/gathering activity (all of the above)
The video did not mention which of the following differences between the economy in 1900 and our economy today did not include:
-infective disease death rates -airline travel -prepared foods -recorded music (all of the above are mentioned in the video)
Advantages of trade include that
-it permits specialization -it can improve economic performance -it generally benefits both parties (all of the above)
The key advantage of market exchange compared to one-on-one(barter) trade is that
-markets allow for greater specialization -markets allow for greater specialization -markets are more efficient (all of the above)
Economic studies
-scarcity -the social institutions used to address scarcity -what to produce, how to produce it, and who gets it (all of the above)
Which of the following can be derived from other assumptions about numbers
-subtraction -multiplication -division (all of the above)
Using basic assumptions you can determine
-why markets are efficient -when markets are efficient -when goverment intervention helps or hurts economic performance (all of the above)
In which of the following ways did the video not indicate you were rich compared to King George?
Power
Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
S decreases, D no change, P increases, Q decreases
Economics is the study of
Scarcity and how societies deal with it
the price elasticity of supply for umbrellas is 2. Suppose you're told that following a price increase, quantity supplied increased by 30%. What was the percentage change in price that brought this about?
15%
what does it mean for a prediction to be "testable"?
its possible to show that the model making the prediction is wrong
Kiara makes $100 per week as a DJ. She spends all this income to buy pizza and hair gel. The price of pizza is $10 and the price of a bottle of hair gel is $4. If Kiara buys 5 bottles of hair gel, then she buys _____ pizzas
8
which of the following is a positive statement?
a 10% increase in income leads to a 4% increase in the consumption of beef
Which of the following is the formula to calculate arc elasticity of demand?
Arc elasticity of demand= [Q2-Q1]/[Q2+Q1]/2]/[(P2-P1)/P2+P1)/2}
what does it mean for a prediction to be "testable"
its possible to show the model is wrong
The elasticity of demand for turkeys at Thanksgiving and roses at Valentine's day:
Becomes less elastic.
Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
D increases, S no change, P and Q increase
Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?
Demand is likely to be relatively inelastic
The steps needed to evaluate the best way to organize an economy include:
Determining what will be produced, how it will be produced, and who gets it, and then evaluating these outcomes
Scarcity in an economy emerges from
Limited resources and infinite wants
Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?
Only individuals face scarcity; firms and the government do not
rank these 3 items in terms of elasticity of the demand for them at any given price, from most elastic to least elastic hot beverages, coffee and Peet's Coffee
Peets Coffee, coffee, hot beverages
According to the video, what is the cornerstone of all markets?
People are allowed to freely make the goods they want to make and then to freely sell those goods and trade with others
The price of turkeys goes down at Thanksgiving even though demand increases because:
Supply increases by relatively more than demand because frozen turkeys are brought to market.
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. Which of the following events would cause the price differences in these letters to get smaller?
The demand for Lincoln letters increases and the supply of Booth letters increases.
Suppose there is a simultaneous increase in the demand for rice and increase in the supply of rice. Which of the following will occur as a result of these simultaneous events?
The market clearing price may rise, fall, or stay the same, but the equilibrium quantity will rise.
The 3 fundamental questions that must be answered by any economy include
What to produce, how to produce goods, and who gets the goods
Which of the following statements is CORRECT?
When both demand and supply decrease, the quantity decreases and the price might rise, fall, or remain the same.
Which of the following factors will NOT cause a shift in the demand for a good?
a change in the market price of the good
suppose the value of the price elasticity of demand is -3. What does this mean?
a 1 % increase in the price of the good causes quantity demanded to decrease by 3%
Suppose the value of the price elasticity of supply is 4. What does this mean?
a 1% increase in the price of the good causes quantity supplied to increase by 4%
A change in the slope of a budget constraint indicates:
a change in the price of either good that causes a change in the opportunity cost
a change in the slope of a budget constraint indicates
a change in the price of either good that causes a change in the opportunity cost
a budget constraint is a straight line because
a consumer faces a fixed price of both goods that do not change with changes in consumption
Which of the following will definitely occur when there is a simultaneous decrease in demand and a decrease in supply?
a decrease in equilibrium quantity
Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?
a decrease in the price of flour
Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?
a decrease in the price of the cattle
which of the following raises the equilibrium price and increases the equilibrium quantity of used cars?
a fall in income if used cars are an inferior good
If the demand and supply curves for a commodity shift to the right by the same amount, then in comparison to the initial equilibrium, the new equilibrium will be characterized by:
a higher quantity and the same price.
An increase in the price of pineapples will result in
a larger quantity of pineapples supplied
which of the following pairs of goods is most likely to have a positive cross-price elasticity?
a privately-owned car and public transportation
what is an inferior good?
a product for which demand increases when income decreases, and demand decreases when income increases
instead of studying for an additional 2 hours for the economics final, Leann decides to watch a movie. Leann is making
a rational decision if her marginal benefit from the movie is greater than her marginal cost
a model refers to:
a simplified description, or representation, of reality
which of the following will lead a change in the opportunity cost of buying a pen and a pencil?
a twofold increase in the price of pens and a threefold increase in the price of pencils
which of the following will lead to a change in the opportunity cost of buying a pen and a pencil?
a twofold increase in the price of pens and a threefold increase in the price of pencils
causation occurs when:
change in one variable is the reason for the change in another variable
What is the difference between an "increase in supply" and an "increase in quantity supplied"?
an "increase in supply" means that supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price
The revenue received from the sale of _____ of a product is a marginal benefit to the firm
an additional unit
Which of the following would cause a decrease in the equilibrium price and an increase in the equilibrium quantity of salmon?
an increase in supply
Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?
an increase in supply and an increase in demand greater than the increase in supply
An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
Which of the following would cause an increase in the supply of peanut butter?
an increase in the number of firms that produce peanut butter
which of the following would cause a decrease in the supply of milk?
an increase the price of a product that producers sell instead of milk
Which of the following is a product innovation?
antibiotics
economists assume that individuals
are rational and respond to incentives
which of the following statements is an example of positive economic analysis?
as tuition rates increase, fewer students are enrolling in college
Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of his decision?
at least $80000
John has 2 hours of free time this evening. He ranked his alternatives, first go to a concert, second go to a movie, third study for an economics exam, and fourth answer his email. What is the opportunity cost of attending the concert for John?
attending a movie
Steve and Karen decide to watch a movie on Netflix using a promotion code so they do not need to pay for that movie. We know that
both bear an opportunity cost that depends on what each person is giving up to watch the movie
If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely.
budget constraint
If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because
buyers of steel are more sensitive to a price change if they have more time to adjust to the price change
We can derive the market demand curve for gold earrings
by adding horizontally the individual demand curves of each gold earring consumer
Process innovation would not include the following:
central air and heat in homes
When trying to assess your economic well-being you should:
compare your situation to that of most of the people alive today
The observation that the demand curve for grape jelly shifts rightward every time the price of peanut butter falls means that grape jelly and peanut butter are
complements
The ______ plots the relationship between prices and the quantity that buyers are willing to purchase
demand curve
The equilibrium price will rise and the equilibrium quantity might increase, decrease, or stay the same when the
demand for a good increases and the supply of it decreases.
When a government fines and/or imprisons persons convicted of using illegal drugs, the government is attempting to decrease the illegal drug trade by shifting the ________ curve for illegal drugs ________.
demand; leftward
Making "how much" decisions involves
determining the additional benefits and the additional costs of that activity
A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is
elastic
If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is
elastic
Economists use the concept of _________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price
elasticity
If a 1% change in the price of a good causes a 1% change in the quantity demanded, the good has an elasticity of demand:
equal to 1
the opportunity cost of going to an outdoor music festival is
equal to the highest value of an alternative use of the time and money spent on the festival
which of the following best describes a good with perfectly elastic demand?
even the smallest increase in the price of the good will cause consumers to stop consuming it completely
economists assume that rational behavior is useful in explaining choices people make
even though people may not behave rationally all the time
Which of the following statements is true
every individual, no matter how rich or poor, is faced with situations that require trade-offs
marginal utility is the
extra satisfaction received from consuming one more unit of a product
When the demand for a good decreases, its equilibrium price ________ and equilibrium quantity ________.
falls; decreases
An increase in the number of firms in a market will cause the quantity of a good supplied to increase
false
Because the demand for illegal drugs is inelastic and the supply is elastic, policies that reduce supply in the illegal drug market reduce revenue for drug dealers.
false
Government policies will have their intended effect irrespective of the laws of supply and demand.
false
Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1. Increasing ticket prices will increase the total revenue from ticket sales
false
When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic.
false
positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is"
false
which of the following is TRUE?
for an inferior good, when income increases, the demand curve shifts leftward
A good is said to have relatively elastic demand if the value of price elasticity is
greater than 1
a good is said to have a relatively elastic demand if the value of price elasticity is
greater than 1
The buyers of a good will want to purchase it as long as their willingness to pay for the good is:
greater than or equal to the price
the buyers of a good will want to purchase it as long as their willingness to pay for the good is:
greater than or equal to the price
an omitted variable is a variable that
has been left out, and if included, would explain why the variables considered in a study are correlated
which of the following could explain why the demand for table salt is inelastic?
households devote a very small portion of their income to salt purchases
price elasticity of demand measures
how responsive quantity demanded is to a change in price
price elasticity of supply is used to gauge
how responsive suppliers are to price changes.
when economists us the term "correlation", they are referring to
how two variables move together in a predictable way
We can observe the advantages of reptition
in virtually any task that can be repeated numerous times
The equilibrium quantity of a good will increase and its equilibrium price might rise, fall, or stay the same when
its demand and supply both increase.
the French Bakery ran a special which decreased the price of its croissants from $1.50 to $1.00. Although her money income had not changed, Toni decided to buy 2 croissants instead of her usual 1 bagel and 1 croissant. Toni's actions are explained by which of the following?
income and substitution effects
when a decrease in the price for wine increase Adam's real income, Adam will buy more of all normal goods.If wine is a normal good, then Adam will buy more wine due to
income effect
when a decrease in the price for wine increases Adam's real income, Adam will buy more of all normal goods. If wine is a normal good, then Adam will buy more wine due to
income effect
Billie's Billiard Barn has seen its business slow down ever since Patti's Ping Pong Parlour opened up across the street. Since the opening of Patti's Ping Pong Parlour, the opportunity cost of shooting pool at Billie's Billiard Barn has _______ for Billie's customers who also like to play ping pong.
increased
Which of the following was not mentioned in the video as a driver of economic growth?
increased demand
a production possibilities frontier with a bowed-outward shape indicates
increasing opportunity costs as more and more of one good is produced
which of the following statements is true?
individuals who have never been the best at doing anything can still have a comparative advantage in producing some product
If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be
inelastic
Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising the tuition will increase revenue it is assuming that the demand for attending the school is
inelastic
if a good has a negative income elasticity of demand, this indicates that the good is
inferior
In a production possibilities frontier model, a point _________ the frontier is productively inefficient
inside
opportunity cost
is always the value of the next best forgone opportunity
The principle of opportunity cost
is applicable to all decision-making
With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?
it has become more price elastic
New York City, which has had a rent ceiling law for more than 60 years, has many abandoned apartment buildings throughout the city. Which of the following explains this?
landlords have no incentive to finance maintenance and remodeling of apartment buildings
If demand is inelastic, the absolute value of the price elasticity of demand is
less than one
if demand is inelastic, the absolute value of the price elasticity of demand is
less than one
if the production possibilities frontier is _________, then opportunity costs are constant as more of one good is produced
linear
economists assume that the goal of consumers is to
make themselves as well off as possible
in economics, the term _____ means "additional" or "extra"
marginal
the extra cost associated with undertaking an activity is called
marginal cost
When a government imposes penalties on both sellers and buyers of an illegal good, the price of the good ________ and the quantity ________.
might rise, fall, or not change; decreases
higher price elasticity of demand means that a consumer's demand is
more responsive to price changes
higher price elasticity of demand means that consumer's demand is
more responsive to price changes
which of the following statements is TRUE?
no economic model captures every detail that affects a problem
Which of the following are assumptions needed for simple arithmetic
numbers exist & addition
the video describes the steps in simple arithmetic as proceeding from
numbers to cardinal numbers to addition to subtraction to multiplication to division
which of the following statements is a positive statement?
online shopping increased by 50% this Christmas season
Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5000 for the old automobiles. These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that
people respond to economic incentives
Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that
people with health insurance are most likely to be overweight than people without health insurance
If firms do not increase their quantity supplied when price changes, then supply is
perfectly inelastic
Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding steers. The equilibrium price of beef will
perhaps rise, fall, or stay the same, but more information is needed to determine which it does. rise.
which of the following is a normative economic statement?
pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable
if quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, and increase in the price of coffee will cause the budget constraint o:
pivot leftward (pivot in) along the vertical axis
a decrease in the price of either one or the other good will cause a consumer's budget constraint to
pivot rightward (pivot out)
if quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to:
pivot rightward (pivot out) along the horizontal axis
If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint:
pivots leftward(pivot in) without a change in the intercept on the horizontal axis
which of the following goods is likely to have the highest price elasticity of demand?
pizza
The price elasticity of an upward-sloping supply curve is always
positive
Total revenue equals
price per unit times quantity sold
By drawing a demand curve with ________ on the vertical axis and _____ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the _______ of the good
price;quantity;price
Assembly lines are an example of:
process innovation
the income effect of an increase in the price of salmon
refers to the effect on a consumer's purchasing power which causes the consumer to buy less salmon, holding all other factors constant
Central control of economics
regulated resources like land and water
If the price of a candy bar is $1 and the price of a fast food meal is $5, then the
relative price of a fast food meal is 5 candy bars per fast food meal
If a 35% increase in price of golf balls led to an 42% decrease in quantity demanded, then the demand for golf balls is
relatively elastic
If a firm raised its price and discovered that its total revenue fell, then the demand for its product is
relatively elastic
if, for a given percentage increase in price, quantity demanded falls by a proportionally smaller percentage, then demand is
relatively inelastic
a change in the quantity demaded of a good is:
represented by a shift to a new demand curve
_______ occurs when the direction of cause and effect is mixed up in a study
reverse casuality
which of the following is a positive economic statement?
scarcity necessitates that people make trade-offs
which of the following is a process innovation?
self checkout lines
Economic decline (negative growth) is represented on a production possibilities frontier model by the production possibility frontier
shifting inward
the supply curve for watches
shows the relationship between the price of watches and the quantity of watches supplied.
Amy can study for an hour or spend that hour sleeping or going out for dinner. If she decides to study for the hour the opportunity cost of the hour spent studying is
sleeping or going out for dinner, whichever she would have preferred the most
when referring to "marginal" changes, the economic focus is on
small or incremental changes
Lily wants to maximize her benefit of consuming apples and bananas, given her fixed budget of $10 for these 2 fruits. The price of an apple is $1, and the price of a banana is $0.50. In order to derive Lily's demand curve for bananas, we need to _______
solve the buyer's problem for her multiple times and find the optimal number of bananas, when price of a banana is at a different level each time
what is the difference between static efficiency and dynamic efficiency?
static efficiency refers to efficiency at a point in time, while dynamic efficiency refers to efficiency over time
The market for smartwatches has begun to grow, due in part to the success of the Apple Watch. Following the successful launch of the Apple Watch in 2015, companies such as Samsung, Sony, and LG have all developed products to compete with the Apple watch. The smartwatches introduced to compete with the Apple Watch would be considered
substitutes for the Apple Watch
holding real income constant, the change in quantity consumed that is caused by a change in the relative price of the good describes the
substitution effect
which of the following is NOT a normative economic statement?
teenagers are responsible for most driving fatalities
which of the following statements is true?
testing with data enables economists to distinguish between good models and bad models
The video did not mention which of the following differences between the economy in 1900 and our economy today did not include:
the Internet
the quantity demanded of a good is:
the amount of a good that buyers are willing to purchase at a given market price
an opportunity cost is
the benefits of the highest-valued alternative forgone
The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as
the budget constraint
the marginal product of labor is defined as
the change in output that a firm produces as a result of hiring one more worker
which of the following is a normative economic statement?
the price of wheat is too low
the income effect of an increase in the price of peaches is
the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant
the Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books?
the demand curve for new books shifts to the left
Assume that tortilla chips and salsa are complements. When the price of tortilla chips decreases,
the demand for salsa increases.
Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil. What does this indicate about the long-run price elasticity of supply for oil?
the elasticity coefficient is likely to be higher in the long run than in the short run
if a firm expects that the price of its product will be higher in the future that it is today, then
the firm has an incentive to decrease supply now and increase supply in the future
when the price of audio books, a normal goods, falls, causing your purchasing power to rise, you buy more of them due to
the income effect
a change in the price of a good has 2 effects on the quantity consumed. What are these effects?
the income effect and the substitution effect
which of the following statements is true about the income elasticity of demand?
the income elasticity of demand for normal goods is always positive
When the demand is elastic, a fall in price causes total revenue to rise because
the increase in quantity sold is large enough to offset the lower price
the slope of a demand curve is not used to measure the price elasticity of demand becasue
the measurement of slope is sensitive to the units chosen for price and quanitty
Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases:
the opportunity cost of buying sweaters increases
the slope of a budget constraint represents:
the opportunity cost of one good in terms of another.
if the demand for a steak is unit elastic, then
the percentage change in quantity demanded is equal to the percentage change in price
if the demand for cell phone service is inelastic, then
the percentage change in quantity demanded is less than the percentage change in price (in absolute value)
The price elasticity of supply is equal to
the percentage change in quantity supplied divided by the percentage change in price
The attainable production points on a production possibility curve are
the points along and inside the production possibility frontier
When sellers sell goods in a market they are doing so because
the price is at least as much as the cost to produce
which of the following is evidence of a surplus of bananas?
the price of bananas is lowered in order to increase sales
which of the following is a normative economic statement?
the price of gasoline is too high
one would speak of a change in the quantity of a good supplied, rather than a change in supply, if
the price of the good changes
the law of demand implies, holding everything else constant, that as the price of bagels increases,
the quantity of bagels demanded will decrease
elasticity is
the ratio of the percentage of change in two variables
Adam Smith's book, the Wealth of Nations, investigated
the role of markets in determining economic efficiency
after a good falls in price, consumers will tend to buy more of the good that has become cheaper and less of those goods that are now relatively more expensive. This fact is called:
the substitution effect
The popularity of digital cameras has enticed large discount stories like Walmart and Costco to offer digital photo printing services. How does the offering of the printing service by Walmart and Costco affect the digital photo printing market?
the supply curve for digital photo printing services shifts to the right
In Feb., market analysts predict that the price of titanium will rise in March. What happens in the titanium market in February, holding everything else constant?
the supply curve shifts to the left
if in the market for peaches the supply curve has shifted to the left,
the supply of peaches has decreased
when buyers and sellers operate in a competitive market, it is because
the value to consumers is at least as great as the cost to produce
If the market for a product is broadly defined, then
there are few substitutes for the product and the demand for the product is relatively inelastic
Auctions in recent years have resulted in higher prices paid for letters written by John Wilkes Booth than those written by Abraham Lincoln. What is a reason for this difference in price?
there are more letters available for collectors to buy that were written by Lincoln than there are letters that were written by Booth
a correlation between 2 variables implies that:
there is a mutual relationship between both the variables
which of the following statements about positive economic analysis is false?
there is much more disagreement among economists over positive economic analysis than over normative economic analysis
Consumers determine what gets made in the economy because
they buy things they like
when buyers buy goods in a market they are doing so because
they value those goods at least as much as the price changed
Which of the following can be derived from other assumptions of economics
tradeoffs & opportunity costs
a change in supply is represented by a shift of the supply curve
true
a downward-sloping marginal product of labor curve demonstrates the law of diminishing marginal returns
true
a surplus occurs when the actual selling price is above the market equilibrium price
true
the additional cost to a producer of hiring an additional unit of labor is called the marginal cost
true
the enjoyment or satisfaction people receive from consuming goods and services is called utility
true
a complement is a good
used in conjunction with another good
in economics, another term for satisfaction is
utility
when a rent ceiling is imposed in a housing market, the opportunity cost of housing equals the
value of the time and resources spent searching plus the rent
Scarcity means that
wants are greater than what we can produce with our resources
when people make rational choices, they
weigh the costs and benefits of their options and act to satisfy their wants
making optimal decisions "at the margin" requires
weighing the costs and benefits of a decision before deciding if it should be pursued
A major question that faced societies 250 years ago was
what would happen if you organized more of the economy with markets
the opportunity cost of an activity is
what you sacrifice to engage in the activity
which of the following statements is true?
when a firm lowers its price its total revenue may either increase or decrease
which of the following examples best describes the Law of Demand?
when the price of tea increased, the quantity demanded of tea decreased
A decrease in the equilibrium quantity for a product will result
when there is a decrease in supply and a decrease in demand for the product.
A decrease in the equilibrium price for a product will result
when there is an increase in supply and a decrease in demand for the product.
Which of the following is NOT an economic question
why do we need more Blue Bell ice cream?
If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded
will decrease by 45 %
if the demand for a product is perfectly inelastic, a decrease in the price of the product
will decrease total revenue
On Saturday morning, you rank your choices for activities in the following order:go to the library, workout at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost it
working out at the gym
rational self-interest means
your looking out for what is best for you as an individual
