Econ Final Chapters 1-5
Demand has increased
If a demand curve shifts to the right, then
The demand for gasoline would decrease
If the price of automobiles was to increase, then
A shortage of oranges
. In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see
The marginal social cost of producing a good or service exceeds the private cost
A negative extrernality exists if
The marginal social benefit to exceed the marginal private cost of the last unit produced
A positive externality causes
There is a positive relationship between price and quantity supplied, and as the price of a product increases, firms will supply more if it to the market
According to the law of supply,
A benefit or cost experienced by someone who is not a producer or consumer of a good or service
An externality is
Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.
Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?
the choices people make to attain their goals, given their scarce resources
By definition, economics is the study of
Unlike public goods, common resources are rival in consumption
Common resources differ from public goods in that
avoiding the private costs associated with disposing your trash some other way and creating a social cost
If you burn your trash in the backyard in spite of regulations against it, then you are
A decrease in quantity demanded
If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as
a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.
Economic efficiency is
portray reality in all its minute details
Economic models do all the following except
marginal benefit equals the marginal cost.
Economists reason that the optimal decision is to continue any activity up to the point where the
0
Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is
A command-and-control approach to pollution reduction
Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of
The supply curve shifted to the left resulting in an increase in the equilibrium price
In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit in 2004
The demand curve shifts to the right
In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?
landlords have an incentive to rent more apartments than they would without rent control.
In a city with rent-controlled apartments, all of the following are true except
One who waits for others to produce a good then enjoys its benefits without paying for it
In economics, the term "free rider" refers to
Marginal
In economics, the term ________ means "additional" or "extra."
All else equals
In general, the term "ceteris paribus" means
Scarcity
One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls
the highest valued alternative that must be give up to engage in an activity.
Opportunity cost is
A decrease in the price of orange juice processing
Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?
$75
Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is
Once produced, it will not be possible to exclude those who do not pay for the good
Private producers have no incentive to provide public goods because
The supply curve shifts to the right
Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?
the actual division of the burden of a tax between buyers and sellers in a market
Tax incidence is
Above;Below
The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market
if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.
The coase theorem states that
Consumer Surplus
The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
Equity
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
The quantity of bagels demanded will decrease
The law of demand implies, holding everything else constant, that as the price of bagels increases,
Absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a power opportunity cost
The primary difference between absolute and comparative advantage is
If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good
The production possibilities frontier model shows that
One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced?
Trade-offs force society to make choices, particularly when answering the following three fundamental questions:
The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it
What are property rights?
forcing producers to factor into their production costs the cost of the externalities created in the production of their output
What does the phrase "internalizing an external cost" mean?
the sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consume the product
What is a "social cost" of production?
It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.
What is a market failure?
A more than the economically efficient output level
When a negative externality exists, the private market procedures
Keeping a junked car parked on your front lawn
Which of the following activities create a negative externality?
Macroeconomics
Which of the following covers the study of topics such as inflation or unemployment?
Public Goods
Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?
Incomplete property rights or inability to enforce property rights
Which of the following is a source of market failure?
Planting trees along a sidewalk which add beauty and create shade
Which of the following is an example of a positive externality?
The price of bananas is lowered in order to increase sales
Which of the following is evidence of a surplus of bananas?
At equilibrium, quantity demanded equals quantity supplied
Which of the following is the correct way to describe equilibrium in a market?
The social cost of production
Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?
Scarcity refers to the situation in which unlimited wants exceed limited resources.
Which of the following statements about scarcity is true?
A decrease in the price of flour
Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?
Positive, normative, positive
______ is concerned with what is, and ________ is concerned with what ought to be. Economics is about ________, which measures the costs and benefits of different courses of action.
Economists assume that individuals
are rational and respond to incentives.