hw 1 dsm 1, hw 2, hw 3, dsm 4
The opportunity cost of any action is
the highest−valued alternative given up.
If Y = 800 - 4X, what is the slope of this line?
-4
Question Help ______ is an example of U.S. consumption expenditure
. Your purchase of a coffee from Starbucks
The table below shows the maximum output of wine and cloth that England and Portugal can produce under constant cost conditions. WINE CLOTH ENGLAND 150 140 PORTUGAL 110 70 What is the lowest possible price England will sell cloth for? What is the highest possible price Portugal will pay for cloth?
1.07; 1.57
______ earns ______.
A coal deposit; rent
Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?
A new house
Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then _______. #20
Alpha consumes morethan Beta today, but it will grow slower than Beta
______ good is an item that is bought by its final user during a specified time period. ______ good is an item that is produced by one firm, bought by another firm, and used as a component of a final good or service.
A final; An intermediate
How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?
By adding the value in dollar terms of all the final goods and services produced domestically.
In what type of economy does the government decide how most economic resources will be allocated?
Centrally planned economy
According to the economic way of thinking, people:
Compare costs and benefits and make a choice to achieve the greatest benefit over the cost for the person making the choice.
Which of the following is TRUE regarding real GDP? I. Real GDP is the value of the total production of the country's farms, factories, shops, and offices. II. Real GDP rises whenever inflation occurs. III. Real GDP does not measure all that is produced.
I and III
Economic decisions are made at every level in society. When we try to decide which production method to use among several alternatives, which of the following key economic questions are we trying to answer?
How do we produce the products?
Which of the following are not counted as final goods and used in the GDP calculation?
Intermediate goods
Which of these is not a shortcoming of GDP as a measure of standard of living?
It only counts final goods and services and not intermediate goods.
Who is Chairman of the Board of Governors of the Federal Reserve?
Janet Yellen
Martha can produce 6060 quilts or 180180 batches of chocolate chip cookies in a month. Jane can produce 99 quilts or 1818 batches of chocolate chip cookies in a month. Martha has an absolute advantage in both goods. ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.
Jane; Martha
__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.
Microeconomics
Anything accepted as a means of payment Makes trading efficient Facilitate trade Enable buyers/sellers to get info and do business with each other Hire factors of production Organize factors of production to produce and sell goods and services Govern ownership & use of things people value Provide incentive to specialize/produce
Money Markets Firms Property rights
Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?
North Korea
Choose the option that is an example of government expenditure.
Secret service protection for the President
Which of these is a macroeconomic study?
The study of how fast prices in general are rising.
Macroeconomics focuses on which of the following topics?
Unemployment, inflation, growth, and trade
The waste basket you bought when you moved into residenceThe waste basket you bought when you moved into residence is an example of ______ good. Biscotti bought by Delta Airlines and served to passengersBiscotti bought by Delta Airlines and served to passengers is an example of ______ good.
a finala final; an intermediatean intermediate
Nominal GDP is ______. Real GDP is ______.
a more precise name for GDPa more precise name for GDP; the value of final goods and services produced in a given year when valued at the prices of a reference base year
All of the following are examples of investment except ______.
a student increasing his human capital by attending collegea student increasing his human capital by attending college
n the graph, real GDP is the blue curve and potential GDP is the black curve. In 2017 comma Upper Q 42017, Q4, U.S. real GDP increased by $108108 billion from the previous quarter. >>> Answer with a positive number. In 2017 comma Upper Q 42017, Q4, the U.S. economy was in ______ because real GDP ______.
an expansionan expansion; did not decreasedid not decrease for two successive quarters
The use of purchasing power parity prices
accounts for differences in the prices of the same goods in different countries when measuring real GDP.
Potential GDP is
achieved when all factors of production are fully employed.
If Nike, an American corporation, produces sneakers in Thailand this would
add to Thailand's GDP but not to U.S. GDP.
An U.S. firm buys a new industrial sewing machine from a company located in France. Which of the following is true? I. U.S. net exports decrease. II. U.S. investment increases.
both I and II
The price of food increased during the past year. The law of demand applies to food because when the price of food rises, there is ______.
both a substitution effect and an income effect
Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______.
both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs
The cycle of short-term ups and downs in the economy is called:
business cycle
Graphs are often used in economics because they:
can simplify complex topics
What kind of economic system relies on private ownership of resources, direct incentives and decisions made via markets and the price mechanism?
capitalism
If, as the price of a gym membershipa gym membership increasesincreases, the quantity of bottled waterbottled water that people buy decreasesdecreases, then gym membershipsgym memberships and bottled waterbottled water are _______.
complements
The expenditure approach to measuring GDP sums together ______, and the largest component is ______.
consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure
Which of the following is not a possible opportunity cost of attending college?
cost of housing
Real GDP ______.
does not include a measure of leisure time or environmental qualitydoes not include a measure of leisure time or environmental quality
As the value of a country's real GDP increases, the country is likely to:
devote more resources to pollution reduction
Harry enjoys tennis but wants a high grade in his economics course. Figure 1 shows the limits to what he can achieve. Figure 2 shows Harry's marginal benefit curve from tennis. Now Harry becomes a tennis superstar with big earnings from the sport. Harry's PPF ______and his MB curve ______. Harry's efficient time allocation________.
does not change; shifts rightward increases
What are the four goals of any economic system? (Order does not matter but spelling does! Separate them with a comma.)
efficiency, equity, stability, growth
Understanding economics can help policymakers devise strategies to do all of the following except:
eliminate climate change
A typical business cycle can be described by the sequence ______.
expansion, peak, recession, trough
I calculated real GDP by summing the components of aggregate _____, so I used the _____ approach.
expenditure; expenditure
The factor market can best be described as where
firms buy the services of labor, land and capital.
Which of the following is a final good?
flour purchased at the store to bake cookies
If we compare the four sources of spending in the economy we see that
household consumption is the largest.
Macroeconomics can be used to understand all of the topics listed below, except:
how a consumer decides between the purchase of two different cars
Scarcity - be it in time, talent, or money - forces all of us to make choices. But according to economists, those choices can be influenced. What do choices respond to?
incentives
Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a blanketblanket ______.
increases. Resources are not equally productive in all activities
A movie star is an example of the factor of production _______.
labor
The GDP is a measure of the __________.
market value of the final goods and services produced within a country in a given time period
The figure shows the circular flows in the market economy. When Apple Inc. hires a student intern during the summer hires a student intern during the summer, the flows are a ______ from firms to households and a ______ from households to firms.
money flow; real flow
When you buy a new e dash book from Amazon you buy a new e-book from Amazon, the flows are a ______ from households to firms and a ______ from firms to households.
money flow; real flow
Your checking accountYour checking account is an example of ______ good. Sugar purchased by Angelo's bakery to make pies and cakesSugar purchased by Angelo's bakery to make pies and cakes is an example of ______ good.
neither a final nor an intermediate
If the president announced that "we should do something to stimulate economic growth" this is an example of a __________.
normative statement
In 2011, Ozzie purchased a 2008 Ford Escort from his neighbor for his son, purchased a 2007 "one owner" Camry from Larchmont Toyota for his wife, bought a 2011 new Ford for himself, and sold his 2000 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2011?
only the purchase of the Ford
Mario's, a pizza and pasta producer, experiences increasing opportunity cost. Draw a production possibilities frontier for Mario's that illustrates this fact. Label it PPF. Draw a point that is attainable. Label it Attainable. Draw a point that is not attainable. Label it Unattainable.
outside the PPF
The stock of computers, factory buildings and machine tools used to produce goods is known as:
physical capital
In the United States, GDP is typically measured
quarterly
The GDP per capita is computed by dividing a country's:
real GDP by its population
The relationship between real GDP and potential GDP is that
real GDP fluctuates about potential GDP.
Economics is the study of choice under conditions of:
scarcity
The principle of opportunity cost evolves from the concept of:
scarcity
The role of the entrepreneur always involves:
taking risks
GDP Expands 11.4 percent, Fastest in 13 Years China's gross domestic product grew 11.4 percent last year and marked a fifth year of double-digit growth. The increase was especially remarkable given that the United States is experiencing a slowdown due to the sub-prime crisis and housing slump. Citigroup estimates that each 1 percent drop in the U.S. economy will shave 1.3 percent off China's growth, because Americans are heavy users of Chinese products. In spite of the uncertainties, China is expected to post its sixth year of double-digit growth next year. Read the news clip, then answer the following questions. According to the expenditure approach for calculating China's GDP, "each one percent drop in the U.S. economy will shave 1.3 percent off China's growth" because as the U.S. economy shrinks, ______. China's ______ and China's real GDP decreases.
the United States imports less from China; exports decrease
The point where economic activity bottoms out in a full business cycle is known as:
the trough
The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.
vertical, divided
All economic questions arise because we
want more than we can get.
Kim can produce 40 pies or 400 cakes an hour. Liam can produce 100 pies or 200 cakes an hour. Draw Kim's PPF. Label it. Draw Liam's PPF. Label it. Draw a point to show Kim's production of pies and cakes when she spends 30 minutes of each hour producing pies and 30 minutes producing cakes. Label it 1. Draw a point to show Liam's production of pies and cakes when he spends 30 minutes of each hour producing pies and 30 minutes producing cakes. Label it 2. Draw a point to show Kim's production if she specializes and produces one good. Label it 3. Draw a point to show Liam's production if he specializes and produces one good. Label it 4. When Kim and Liam move from spending 30 minutes of each hour producing pies and 30 minutes producing cakes to specializing in the good in which they have a comparative advantage, the total gains from trade are ______ pies and ______ cakes. If they share the total gains equally, Kim gives Liam ______ and Liam gives Kim ______.
30; 100 50 cakes; 15 pies
Suppose that there is a substantial fall in the price of apples. Apples are (obviously) the major ingredient in apple juice. As a result of this event, the market for apple juice changes in this way: ________________.
falls; rises
Upper A dairy produces butter and ice cream.A dairy produces butter and ice cream. The marginal cost of producing each of these products increases as more is produced. Draw the firm's PPF. Label it PPF1. The dairydairy adopts a new technology that allows it to use fewer resources to make buttermake butter. Draw a PPF that shows the impact of the new technology. Label it PPF2. With this new technology, the opportunity cost of producing a ton of ice creamton of ice cream ______ and the dairydairy is ______ efficient.
increases; equally
In an hour, SimonSimon can catch 44 pounds of bass or pick 88 pounds of peaches. In an hour, JohnJohn can catch 44 pounds of bassbass or pick 2020 pounds of peachespeaches. The opportunity cost of catching a pound of bass is ______ for SimonSimon than for JohnJohn, and the opportunity cost of picking a pound of peaches is ______ for Simon than for John. So ______ has a comparative advantage in producing ______.
lower; higher Simon; bass
Coal and oil are ______. A skateboard and an iPod are ______.
substitutes; complements
You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $8,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $3,000, visas cost $300, and living expenses are $1,700. What is the opportunity cost of your plan to travel in Europe?
$1300
You plan to go to school this summer. If you do, you won't be able to take your usual summer job that pays $12,000 for the summer. The cost of tuition is $3,000 and textbooks cost $100 You live with your family, which covers your living expenses of $1,700. What is your opportunity cost of going to school this summer?
$15,100
Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime?
$18.00
Marilyn, a computer science student, buys three cups of coffee a day, which costs her $9.00 She decides to buy one more cup each day and her expenditure on coffee increases to $12.00 The marginal cost to Marilyn of a cup of coffee is _______.
$3.00
The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies?
10 percent off your grade.
The graph shows the marginal cost of producing blue jeansblue jeans and the marginal benefit from blue jeansblue jeans in Oakdale. Oakdale achieves allocative efficiency if _______. Hw 2, # 19 SLB look at graph
44 pairs of blue jeanspairs of blue jeans an hour are produced
The U.S. GDP per capita in 2013 was approximately __________.
50,000
Which of the following is a positive economic statement?
If minimum wage rates rise, then unemployment will rise.
Which of the following best defines capital as a factor of production?
Instruments, machines, and buildings used in production.
Kelly is an architect, and she is trying to decide whether to hire Mike, a draftsman, to assist with her work. Kelly could hire Mike at $20 per hour, but it would take him three times as long to complete a task as it takes Kelly. Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle. Which of the following is true?
Mike should be hired at the $20 per hour wage rate.
Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?
Real GDP
Choose the correct statements. 1. To describe preferences comma economists use the concept of marginal cost. 2. The marginal benefit from a good or service is the benefit received from consuming one more unit of it. 3. We measure the marginal benefit from a good or service by the most that people are willing to pay for an additional unit of it. 4. We measure the marginal benefit from a good or service by the least that people are willing to pay for all the units they consume.
Statements 2 and 32 and 3 are correct.
Choose the correct statements. a. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis andThere is no relationship between the opportunity cost of producing an additional good measured on the x-axis and the opportunity cost of producing an additional good measured on the y dash axis.the opportunity cost of producing an additional good measured on the y-axis. nothing b. Opportunity cost of a good is the decrease in the quantity produced of one good divided by the increase in the quantityOpportunity cost of a good is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the PPF .produced of another good as we move along the PPF. nothing c. The opportunity cost of an action is the highest dash valued alternative forgone.The opportunity cost of an action is the highest-valued alternative forgone. nothing nothing d. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods.Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. nothing
Statements b and cb and c are correct.
When most economists wake up in the morning, their first decision is whether or not to hit the snooze alarm. What statement best represents their thought process as a rational decision maker? (How does an economist approach analyzing a situation like this?)
The marginal benefit of sleeping 10 more minutes is greater than the marginal benefit of 10 more minutes of work.
Every week, HassanHassan skates for one hour, and his grade on each econ test is 90 percent. Last week after skating for one hour, hassan considered skating for another hour. He decided to skate for another hour and cut his study time by one hour. But last week, his econ grade fell to 70 percent. Given that Hassan spent a second hour skating, what can you conclude about the marginal benefit and marginal cost of the first hour of skating?
The marginal benefit of the first hour of skating exceeded its marginal cost.
We know that there have been shifts of both the demand curve for and the supply curve of a good. We also know that one end result of the changes in this market was that the equilibrium price of the good fell. Given this information, which combination of supply and demand changes could NOT have possibly occurred?
a decrease in supply and an increase in demand
Which of the following --- by itself --- causes a decrease in demand for a certain good?
a rise in the price of some item that is a complement of the good
What kind of efficiency are we achieving when we are producing at a point of the PPF that we prefer above all other points:
allocative
A cellphone and a phone call are ______. A text message and an email are ______.
complements; substitutes
Pizza and sausage are ______. Wheat and rye are ______.
complements; substitutes
Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream. A rise in the wage rate of dairy workers ______ the supply of low-fat milk. A rise in the price of cream ______ the supply of low-fat milk.
decreases, increases
One of the first steps in deciding whether to complete your education is to:
evaluate the marginal cost and marginal benefit of that decision.
VickyVicky currently produces at point A in the figure. If VickyVicky moves from point A to point C, her opportunity cost of a magazinemagazine _______. on the curve decreasing
increases
Economics:
is concerned with how people respond to incentives
The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
its relative price rises; purchase more of a different food that is less expensive
The resources provided by nature and used to produce goods and services are also known as:
land
Which of these covers the study of topics such as inflation and unemployment?
macroeconomics
Factors of production include all of the following EXCEPT ________.
money
The table shows Brazil's production possibilities for ethanol and food crops. Marginal benefit from a good or service is the benefit received from consuming ______. It is measured by the most that people are willing to pay for ______. Marginal benefit from food crops _______. Ethanol Food crops (barrels per day) (tons per day) 70 and 0 64 and 1 54 and 2 40 and 3 22 and 4 0 and 5
one more unit of it; an additional unit of it cannot be calculated from the table
The equilibrium price is the best deal available for both buyers and sellers because buyers ______ and sellers ______.
pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell
Macroeconomics is concerned with all of the following except:
political party affiliation
Read the news clip, then answer the following question. A shortage in the market for oil implies that ______. Oil soars to new record over $135 In the summer of 2008, the price of crude oil hit a record high above $135 a barrel. OPEC reported that there was no shortage of oil and that speculators had forced the price up.
price adjustments are being prevented from playing their role as the regulator of buying and selling plans
Harry produces 22 balloon rides and 77 boat rides an hour. Harry couldcould produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier.
producing inside
What kind of efficiency do we achieve when we produce goods and services at the lowest possible cost?
production
Jobs alone are not the measure of economic well-being. If this were the case, then we could increase the well-being of an economy by giving highway workers spoons rather than backhoes and garment workers needles and thread instead of computerized sewing machines. What does provide the source of high living standards?
production of goods and services people value
Suppose that there is a substantial fall in the price of apples. Apples are (obviously) the major ingredient in apple juice. As a result of this event, the market for apple juice changes in this way: ________________.
supply increases, and price falls
A supply curve _______.
tells us the lowest price at which someone is willing to sell or is a minimum-supply-price curve
If Americans still worked sixty hour weeks, as they did in 1890, __________.
the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher
Events in the market for a particular good are such that the market (equilibrium) price and market (equilibrium) quantity of the good move opposite direction (i.e., price falls as quantity rises, and\or price rises as quantity falls). It must therefore be true that _________.
the decisive event in the marketplace is a shifting supply curve
Which of the following is correct? Factors of production are
the inputs used to produce goods and services.
Kelsey has three slices of pizza for lunch. The marginal benefit that Kelsey receives from the third slice of pizza is _______.
the maximum amount that she is willing to pay for the third slice of pizza
The table shows some of Brazil's production possibilities for ethanol and food crops. Marginal cost of a good is _______. Ethanol Food crops (barrels per day) (tons per day) 70 and 0 64 and 1 54 and 2 40 and 3 22 and 4 0 and 5 When the quantity of food produced is 2.52.5 tons a day, the marginal cost of producing a ton of food is 1414 barrels of ethanol.
the opportunity cost of producing one more unit of it
The income effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______.
the price rises relative to income; cannot afford to buy all the things they previously bought, so they normally buy less of the food that has experienced the price rise
Real GDP is __________.
the value of final goods and services produced in a given year when valued at the prices of a reference base year
Allocative efficiency occurs when ______.
we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal cost
The what, how, and for whom questions in economics are questions about ______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
"Kids learning business basicsKids learning business basics" involves a ______ question. "Fiber replaces aluminum in airplanesFiber replaces aluminum in airplanes" involves a ______ question. ; "Delta Airlines fails to reach deal with pilotsDelta Airlines fails to reach deal with pilots" involves a ______ question.
what; how for whom
Harry enjoys tennis but wants a high grade in his economics course. Figure 1 shows Harry's PPF. Figure 2 shows Harry's marginal benefit curve for tennis. If Harry uses his time to achieve allocative efficiency, he plays 77 hours of tennis a week and his economics grade is 6565 percent. Harry would be ______ off getting a higher grade in economics because ______
worse; his marginal benefit from tennis would exceed his marginal cost
The slope at a line tangential to the maximum or minimum of a nonlinear curve will always be equal to:
zero
The figure shows the production possibilities frontier for a firm that produces pet food. Point A is ______ and point B is ______. This PPF ______ illustrate scarcity because ______.
attainable; unattainable does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food
"As fewerfewer people buy bicyclesbicycles, the demand for bicycle helmetsbicycle helmets will decreasedecrease and the price of a helmeta helmet will increaseincrease. The riserise in the price of a bicycle helmeta bicycle helmet will increaseincrease the supply of bicycle helmetsbicycle helmets." This statement is ______ because ______.
false; a decreasea decrease in demand for bicycle helmetsbicycle helmets does not increaseincrease the price of a bicycle helmeta bicycle helmet and an increasean increase in the price of a bicycle helmeta bicycle helmet does not increaseincrease the supply of bicycle helmets
Before starring as Tony Stark in Iron Man, Robert Downey Jr. had played in 45 movies that had average first-weekend box office revenues of a bit less than $5 million. Iron Man grossed $102 million in its first weekend. The success of Iron Man ______ the opportunity cost of hiring Robert Downey Jr. Movie producers now have ______ incentive to hire Robert Downey Jr.
increases; more
Upper A decreaseA decrease in the demand for ramen noodlesramen noodles together with a decreasea decrease in the supply of ramen noodlesramen noodles ______ create a surplus or a shortage of ramen noodlesramen noodles at the original price. The price of ramen noodles ramen noodles ______.
might; might fall, rise, or not change
When a shortage arises, the price ______ to its equilibrium, which _______.
rises; decreases the quantity demanded and increases the quantity supplied
Pasta and pizza are ______. A video game and a laptop are ______.
substitutes; complements
