Economics msu exam 1

If a tax is levied on the buyers of a product, then there will be a(n)

downward shift of the demand curve

In most societies, resources are allocated by

the combined actions of millions of households and firms

The production possibilities frontier illustrates

the maximum of output that an economy can produce

Which of the following will allow a nation to produce beyond its current production possibilities frontier

the nation increases its number of productive inputs

The only variable that can affect a movement along the demand curve is

the price of a good itself

The law of demand tells us that people will buy less of a good if

the price of the good increases

When a tax is imposed on the sellers of a good, the supply curve shifts

upward by the amount of the tax.

The opportunity cost of an item is

what you give up to get that item

According to the law of demand other things being equal

when the price of a good goes down then people buy more of that good

You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost $40 on the custom. you realize that the additional pieces you need will cost you $25 more. The marginal cost of completing the costume

$25

Suppose you have received $300 as a birthday gift. You can spend it today or you can put the money in the bank for a year and earn 5 percent interest. The opportunity cost of spending the money today in terms of what you could have after one year is

$315

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is

$42,600 21,000+11,000+1,800+(16,000-7200)

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

-can be thought of as a the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed y drinking just two sodas - determines her willingness to pay for the third soda -is likely different from the marginal benefit provided to her by the second soda (All of the above)

Assuming the market for lemons starts at a point of equilibrium, Qs=Qd and Pd=Ps, a rise in the equilibrium quantity supplied of lemons can be attributed to or cause by, which of the following.

A decrease in the number of people drinking lemonade

For which of the following individual would the opportunity cost of going to college be highest

A famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree

Concerning the burden of a tax imposed on take-out food, if the demand for takeout food is more inelastic than supply

Buyers bear most of the burden of the tax.

When a tax is placed on the sellers of energy drinks, the

burden of the tax will be shared by the buyers and the sellers, but the division of the burden is greatest on whichever side of the market is more inelastic

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

buyers of gasoline.

Rational people make decisions at the margin by

comparing marginal costs and marginal benefits

When we say that the demand for a good has decreased we mean

consumers are now willing to purchase more of the product in question at every possible price

An increase in the price of a good will

decrease in quantity demanded

A tax on the sellers of coffee mugs

decreases the size of the coffee mug market.

If the government wants to reduce the burning of fossil fuels, it should impose a tax on

either buyers or sellers of gasoline.

If the government removes a tax on a good, then the quantity of the good sold will

increase.

Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would

lower the equilibrium price by 25 cents.

A rational decision maker takes an action only if the

marginal benefit is greater that the marginal cost

If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will

not change, and the price received by sellers will not change.

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

people respond to incentives

When the term "price" is used in the law of demand

price refers to the of the good relative the price of another good

A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his

production possibilities frontier

Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the

quantity demanded of physicals increases, and the quantity supplied of physicals decreases.

Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the

quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.

The law of demand states that

quantity demanded will vary inversely with the price of the good

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have

scarcity

When we say the supply for a good has increased we mean

suppliers are now willing to supply more of the production in question at every possible chance