Econ test 1 BYUH

The price of apples falls. What happens in the market for apple pies?

The equilibrium price falls, and the equilibrium quantity rises.

Suppose that voters in your community pass a one-cent sales tax increase to fund education, knowing full well they will have to forgo other goods they typically consume. This primarily addresses the economic question of:

What goods and services should a society produce?

The problem of determining for whom to produce exists because:

a decision that one person or group will receive a good or service usually means that another person or group will not.

Which of the following always results in an increase in price and quantity?

an increase in demand with no change in supply

A shift to the left of a supply curve is caused by:

an increase in the returns from other supply possibilities.

Those things held unchanged when an equilibrium price is established:

are called demand shifters if a change in one (or more) of them would change demand.

The law of increasing opportunity cost says that:

as output increases for one good on its production possibilities curve, the opportunity cost of additional units of the other good will be greater and greater.

One of the two criteria for a resource to be considered as a natural resource is that it must:

be found in nature.

The three broad types of factors of production are:

capital, labor, and natural resources.

If an economy is producing a level of output that is on its production possibilities curve, the economy

has no idle resources and is using resources efficientl

A cost that farm subsidies and price floors imposes on the rest of the economy is:

higher consumer commodity prices.

The Case in Point on earnings of economics majors made all of the following points EXCEPT:

Firms that use maquiladoras have transferred from the United States to Mexico the stages of the manufacturing process that use more machinery and less labor.

Third-party payer systems are most likely to ________ the quantity of health care ________.

increase; demanded

If the quantity of housing supplied in a community is greater than the quantity of houses demanded, the existing price:

is above the market equilibrium price.

The current rate of unemployment is 5 percent. This statement:

is positive.

The equilibrium price established by supply and demand could be called a "just right" price because:

it is the only price where the quantity demanded and the quantity supplied are equal.

A theory that has won virtually universal acceptance is a:

law.

Making choices that are expected to achieve the highest possible value for some objective is termed:

maximizing.

Capital, labor, and natural resources combine to produce goods and services. Which of the following will not lead to an increase in the ability of an economy to produce goods and services?

new government restrictions on which technologies may be used to produce goods and services

Health care is a(n):

normal good.

The statement that the minimum wage needs to be increased is a:

normative statement.

An example of a natural resource is

oil in the ground.

A maximum price set below the equilibrium price is a:

price ceiling.

The price of eggs might go up because:

the price of chicken feed increased.

A systematic set of procedures through which knowledge is created is:

the scientific method.

The observed correlation between baldness and heart disease demonstrates that:

there is probably some other factor that causes both baldness and heart disease.

Whenever a choice is made:

the cost of that choice could be referred to as opportunity cost.

Which of the following would lead to an increase in the supply of health care?

An increase in the productivity of doctors.

Which of the following statements are true about price controls used by some local governments?

Price controls are put into place when it is thought that the market price is in some way unfair or inequitable.

Opportunity cost is the expected value of the alternative not chosen.

True

The economic way of thinking pays special attention to costs, assumes individuals seek to maximize some objective, and focuses on choices at the margin.

True

A market surplus occurs if the quantity:

demanded is less than the quantity supplied.

In economics, the function of theories, laws, and hypotheses is to:

discover relationships between events that are important to economic behavior.

If the United States decides to allocate more resources to capital goods and less to consumer goods, the United States will obtain a greater degree of:

economic growth.

A market price support policy attempts to assist the farm industry by:

establishing price floors in farm output markets.

A scarce resource is one that:

has alternative uses.

If the current price is above the equilibrium price, we would expect:

quantity supplied to exceed quantity demanded.

If demand and supply both shift to the right, then:

quantity will go up, but price could go up, down, or stay the same

How a supply curve is sloped and located is affected by:

resource prices.

A decrease in the price of milk (and ingredient of ice cream) will result in a(n):

shift of the supply curve of ice cream to the right.

Positive statements are:

statements that can be tested.

An example of a supply shifter is:

technology.