Macroeconomics Exam 1

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All of the following are examples of investment except ______.

a student increasing his human capital by attending college

An increase in the price of onions _______.

decreases the quantity of onions demanded and results in a movement up along the demand curve for onions

Understanding economics can help policymakers devise strategies to do all of the following except:

eliminate climate change

labor force

employed + unemployed

Points that are efficient are

on the curve

Unemployment Rate

# employed/ labor force x 100

employment to population ratio

# employed/ working age population x 100

The principle of opportunity cost evolves from the concept of:

scarcity

unlimited wants with limited resources

scarcity

Calculate U.S. GDP in 2017. U.S. GDP in 2017 is $______ billion.

$19740

Suppose you have been offered a choice of two part-time jobs: 10 hours a week stacking shelves at the supermarket for $10 dollars an hour; or 12 hours a week working in the bar of the local hotel for $8 per hour plus a free case of beer once a week. Assuming that you will take one and only one of the jobs, what is: the opportunity cost of taking the supermarket job? the opportunity cost of taking the hotel job?

$96 plus a case of beer $100 plus 2 hours of leisure

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

1. In terms of berries, what is the opportunity cost of going from 4 rabbits to 5 rabbits? 2. Is it possible to produce outside the PPF? Why or why not? 3. Is producing on point B better than producing on point A?

1. 100 berries (In the time it takes to get the 5th rabbit, you could have harvested 100 berries) 2. No, the PPF is the physical limit of the resources available. 3.We do not know that, since the term "better" is normative. Perhaps you are vegetarian and do not require any rabbits!

When the quantity of food produced is 1.5 tons a day, the marginal cost of producing a ton of food is _______ barrels of ethanol.

Draw the LAS curve, the SAS curve and the AD curve. Label the curves. Draw a point at the short-run macroeconomic equilibrium. Draw a horizontal arrow at the equilibrium price that shows the output gap.

102

The graph shows the foreign exchange market for Mexican pesos. Draw a point at the equilibrium exchange rate and equilibrium quantity of pesos. Label it 1. The Mexican peso is appreciating. Draw the new demand curve. Label it D1. Draw the new supply curve. Label it. S1. Draw a point at the new equilibrium exchange rate and equilibrium quantity of pesos. Label it 2.

145

The graph shows the aggregate demand curve and the short-run aggregate supply curve. Draw a curve that shows the effects of a decrease in consumer confidence. Label it. Draw a point at the new short-run macroeconomic equilibrium.

154`

working age population

16 - retirement

The graph shows an economy's short-run Phillips curve and long-run Phillips curve. Currently, the economy is at point A. Draw a short-run Phillips curve such that if the economy moves to this new curve, it will experience stagflation. Label it. Draw a point on the new SRPC1 curve such that when the economy moves from point A to this point, it experiences stagflation. Label it B.

172

The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget surplus of $1 trillion. Draw a curve that shows the effect of this surplus in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of investment. Label it 2. Draw a point to show private saving when the government budget surplus is $1 trillion. Label it 3.

The figure shows the demand for money curve in Epsilon. The quantity of money is $3.1 trillion. Draw the supply of money curve. Label it. Draw a point at the equilibrium in the money market.

Draw a short-run aggregate supply curve. Label it.

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is .......... . a. 7/10 of a sandwich b. 10/7 of a sandwich c. 1/3 of a sandwich d. 3 sandwiches

3 sandwiches

The graph shows aggregate demand, short-run aggregate supply, and long-run aggregate supply when the U.S. economy is at a long-run macroeconomic equilibrium. Draw a curve that shows the effect of the fiscal stimulus payments. Label it 1. Draw a point at the new short-run macroeconomic equilibrium. Label it E1. Draw a curve that shows the economy in the long run, with no intervention from the government or the central bank. Label it 2. Draw a point at the new long-run macroeconomic equilibrium. Label it E2.

Draw a supply curve for sweaters and label it. Use any prices and quantities you wish but make your supply curve obey the law of supply.

The graph shows the supply curve of running shoes. Draw a new supply curve that shows what happens in the market for running shoes if a tornado partially destroys a shoe factory but all other influences on selling plans remain the same. Label the curve. Use any prices and quantities you wish, but make your supply curve obey the law of supply.

Both Mia and Mario produce only the item in which they have a comparative advantage. Then they trade one pasta for one pizza. Before specialization and trade started, Mia and Mario were each producing 6 dishes of pasta and 6 pizzas an hour. The total gains from trade are ______ dishes of pasta and ______ pizzas an hour.

6, 6

The graph shows demand for loanable funds curve. Suppose the real interest rate falls. Draw either an arrow along the demand curve showing the direction of change or a new demand curve.

Draw a short-run aggregate supply curve. Label it.

Scarcity implies that every society and every individual face trade-offs because scarcity means that A. human wants are greater than what available resources can produce. B. government is unwilling to redistribute wealth. C. people refuse to limit their wants. D. people are greedy and won't share with others.

What do economists mean by the word "marginal"? A. extra or additional B. unimportant C. first D. small

what is a statistical investigation

A statistical investigation looks for correlations.

So ______ has a comparative advantage in producing ______.

Abe; trout

The following statements are about economic coordination. Choose the statement that is false.

B. The world oil market is not truly a market because it is not centralized in one place.

In 1966, the production possibilities per person in Canada were more than ______ times those in Hong Kong. A. four B. three C. five D. six

B. three

Why did nominal GDP have the faster growth rate?

Because prices increased.

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.

Economists believe that an activity should be continued up to the point where A. the marginal benefit from the activity is less than the marginal cost. B. the marginal benefit from the activity is greater than the marginal cost. C. the marginal benefit from the activity is equal to the marginal cost. D. the marginal benefit from the activity plus the marginal cost equals zero.

Choose the correct statement.

C. The sum of wages, salaries, and supplementary labour income, and other factor incomes is net doméstic income at factor cost.

The what, how, and for whom questions in economics are questions about ______.

Choices made in economics determine what, how, and for whom goods and services are produced. In economics, the WHAT question is "What goods and services do we produce?". The HOW question is "How do we use the factors of production to produce these goods?". The for WHOM question is "Who consumes the goods and services that are produced?".

Which of the following is an example of comparative advantage

Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

Which of the following is an example of comparative advantage?

Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

Choose the correct statement. A. Your decision to obtain a college education is in the social interest and in your self-interest. B. Grace's decision to have a measles vaccination is in the social interest and in her self-interest. C. The decision to protect the rainforest is in the social interest. D. Sam's decision to carry an umbrella on a cloudy day is in Sam's self-interest. E. All of the above are correct.

E. All of the above are correct.

Economics _______. A.is a subject that discusses why we react to positive incentives but not to negative incentivesis a subject that discusses why we react to positive incentives but not to negative incentives B.is a subject that studies how we cope with scarcityis a subject that studies how we cope with scarcity C.studies the performance of countries but not individualsstudies the performance of countries but not individuals D.divides into two main parts long dash global and nationaldivides into two main parts—global and national

Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, and the incentives that influence and reconcile those choices. Economics divides into two main partslong dash—microeconomics and macroeconomics.

social science that studies; cope with scarcity

Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.

Inelastic

Elasticity < 1

Unit elastic

Elasticity =1

Elastic

Elasticity > 1

choose the correct statement

Entrepreneurship is the human resource that organizes labor, land, and capital.

Choose the correct statement. A.Entrepreneurship is the work time and work effort that people devote to producing goods and services. B.Entrepreneurship is a service. C. Entrepreneurs come up with new ideas about what and how to produce. D. Entrepreneurship decreases over time.

Entrepreneurship is the human resource that organizes labour, land, and capital. Entrepreneurs come up with new ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.

What are the four goals of any economic system?

Equity, Efficiency, Stability, Growth

Olivia and Helen produce afghans and quilts. The figure shows Olivia's production possibilities frontier, PPFO, and Helen's production possibilities frontier, PPFH. Olivia and Helen can achieve gains from trade if _______.

Helen sells afghans to Olivia in exchange for some of the quilts that Olivia produces

You have four options to spend your next hour: 1. Jogging (valued at $34); 2. Watching a show (valued at $42); 3. Baking a cake (valued at $29) and doing homework for your online class (valued at $300). What is the opportunity cost (in terms of dollar value AND activity) of choosing: Jogging? Watching a show? Baking a cake? Homework for online class?

Homework for online class; $300 Homework for online class; $300 Homework for online class; $300 Watching a show ; $42

Consider economic growth in Hong Kong and in the United States, and then complete the statement. Since 1966, economic growth in ______ has been greater than in ______ because ______.

Hong Kong; the United States; the ratio of production of consumption goods to production of capital goods is greater in the United States than in Hong Kong

Choose the statement below that is one of the two big questions that summarize the scope of economics.

How do choices end up determining what, how, and for whom goods and services are produced?

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 statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.

I is inferior, II is normal, III is neither, and IV is both

Which of the following illustrates a *tradeoff*?

I will study for my exam instead of going to the movie tonight.

Which of the following illustrates an efficient outcome? A.Ted cuts the price of his sausages and his profit decreases. B.Ted pays $10,000 for a new meat slicer that operates at double the speed of his old one. C.Ted cuts the price of his sausages and his profit increases. D. Ted pays his workers a higher wage and his profit takes a dive.

If Ted cuts the price of his sausages and his profit increases, Ted and his customers are better off. That is an efficient outcome.

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.

Which of the following are not counted as final goods and used in the GDP calculation?

Intermediate goods

The Grand Canyon is an example of

Land

Which of the following is a normative statement? a. Low rents will restrict the supply of housing. b. Low rents are good because they make apartments more affordable. c. Housing costs are rising. d. Owners of apartment buildings are free to charge whatever rent they want.

Low rents are good because they make apartments more affordable.

An economy produces yoga mats. If less than the efficient quantity of yoga mats is produced________

Marginal cost exceeds marginal benefit.

pasta and pretzels are inferior goods

Maria graduates from college and her income increases by $40 comma 000 a year. Nothing else changes. Maria decreases the quantity of pasta and pretzels that she buys and increases the quantity of tickets to orchestra concerts that she buys. For Maria, _______.

Martha can produce 60 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 9 quilts or 18 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

Martha_______ has an absolute advantage in both goods. jane;Martha

Nominal GDP

Measured in current year's dollars

Which of the following illustrates *scarcity*?

Megan wants to buy a CD that costs $25 but has only $10 to spend.

__________ is the study of how households and businesses make choices, how they interact in markets, and how government influences their choices.

Microeconomics

2. If Leisure Island produces 4 shows and 9 meals a week, is production efficient? 3. If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff? 4. Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week? The opportunity cost of producing 2 additional shows per week is

No Yes 3 meals per week

Distinguish between production efficiency and allocative efficiency. _______ efficiency occurs when we produce goods and services at the lowest possible cost. _______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Production; Allocative

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. 1. Marginal benefit of a good is the opportunity cost of producing one more unitMarginal benefit of a good is the opportunity cost of producing one more unit of it.of it. 2. To describe preferences comma economists use the concept of marginalTo describe preferences, economists use the concept of marginal cost.cost. 3. The marginal benefit from a good or service is the benefit received from consuming one more unit of it.The marginal benefit from a good or service is the benefit received from consuming one more unit of it. nothing 4. We measure the marginal benefit from a good or service by the most that people are willing to pay for anWe measure the marginal benefit from a good or service by the most that people are willing to pay for an additional unit of it.

Statements 3 and 4 are correct.

the demand for smartphones increases

Taking a smartphone to the gym when you work out becomes more popular. What is the result of this event?

We observe that the equilibrium price of digital cameras has fallen and the equilibrium quantity of digital cameras has increased. Which of the following events could be responsible for this? a. The price of film cameras rose. b. Consumers' preferences changed in favor of digital cameras. c. Technological advances in digital camera production. d. Workers who make digital cameras received a pay rise.

Technological advances in digital camera production.

An example of a normative macroeconomic statement

The U.S. government should increase unemployment benefits

The benefit of something is the _____. Benefit is determined by preferences —by what a person _____ and the intensity of those feelings.

The benefit of something is the gain or pleasure it brings. Benefit is determined by preferences—by what a person likes and dislikes and the intensity of those feelings.

When we vote for larger police forces to fight crime comma we faceWhen we vote for larger police forces to fight crime, we face ______. A. a for whom tradeoff B. no tradeoff C. a how tradeoff D. a what tradeoff

The choice between voting for and voting against larger police forces is a for WHOM tradeoff. A for whom tradeoff tells us that for whom goods and services get produced depends on the distribution of buying power.

the movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit

The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if ______.

If the U.S. Surgeon General announces that increased wheat consumption could cause heightened anxiety levels among children and adults, what happens to the equilibrium price and quantity of shredded wheat?

The equilibrium price falls and the equilibrium quantity decreases.

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

The table gives the demand and supply schedules for hamburgershamburgers. What is the equilibrium price of a hamburgerhamburger and the equilibrium quantity of hamburgershamburgers per day?

The equilibrium quantity of hamburgers is 30 a day. The equilibrium price is $5 a hamburger.

negatively sloped.

The existence of the tradeoff along the PPF means that the PPF is

Which of the following is an example of capital goods?

The government will open another public school in the area.

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.

opportunity cost

The opportunity cost of an action is the highest-valued alternative forgone. Opportunity cost is a ratio. It 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 production possibilities frontier. We can use the PPF to illustrate the opportunity cost of a good. As we move down along the PPF, producing more of good x, we give up some production of good y. As we move up along the PPF, producing more of good y, we give up some production of good x. So the opportunity cost of producing more x is the inverse of the opportunity cost of producing more y.

The opportunity cost of an activity is the best alternative forgone when you choose to do the activity. For Pam and Pat, that next best alternative forgone is a cruise. For Pru, it is skiing. The opportunity cost of the New Year's celebration includes other goods and services forgone to pay for it. But if each of the three alternative trips cost approximately the same, the cost of going to Hawaii minus the cost of the alternative forgone is zero, which is not the opportunity cost incurred.

An example of a positive microeconomic statement

The price of an iPad will fall over the next year

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. In the market for low-fat milk, which of the following events illustrates the law of supply?

The price of low-fat milk rises.

The production possibilities frontier is the boundary between the combinations of goods and services that can __________, given the available factors of production and the state of technology

The production possibilities frontier is the boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology

can be produced and the combinations that cannot be produced

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

Consider the US market for ice skates. Suppose the price of a pair of ice skates falls. Explain the effect of this event on the quantity of ice skates demanded on the demand for ice skates

The quantity of ice skates demanded increases and the demand for ice skates is unchanged

actual money

accounting cost

the reason why people consume

benefit and satisfaction

stag inflation

high unemployment and high inflation

The market for frozen burritos is a competitive market _______.

if many people buy and many firms sell frozen burritos, so no single buyer or seller can influence the price

Microeconomics

individuals, households, firms

We can produce all combinations

inside the PPF and on the PPF

Overtime worked by a JCPenney associate is considered ____ and earns ____.

labor; wages

The price elasticity of demand for Craig's lasagna is 2.2. Craig wants to increase his total revenue. Craig should ___ the price of his lasagna because the demand for lasagna is __

lower; elastic

The GDP is a measure of the __________.

market value of the final goods and services produced within a country in a given time period

Rational choice is a choice that uses the available resources to _____ of the person making the choice.

maximize the benefit

As the relative price of a good falls, the substitution effect implies that people buy

more of that good and less of its substitutes.

Pianos and piano lessons are complements The cross elasticity of demand for piano lessons with respect to the price of a piano is

negative

The United States devotes ______ of its resources to accumulating capital and the remainder to consumption. Hong Kong devotes ______ of its resources to accumulating capital and the remainder to consumption. As a result, Hong Kong's production possibilities have _______ the United States.

one fifth; one third expanded more quickly than

one more unit of it; an additional unit of it

All of the following are consequences of scarcity faced by people in the United States except deciding _______.

pluto being a planet

Macroeconomics is concerned with all of the following except:

political party affiliation

absolute advantage

refers to a country's ability to produce a certain good more efficiently than another country

If workers who make DVDs get a pay raise, the equilibrium price of a DVD ____ and the equilibrium quantity of DVDs ____.

rises; decreases

A demand curve that illustrates the law of demand ______.

shows that the quantity demanded decreases as the price rises

Technological change is _____ new goods and of _____ of producing goods and services.

the development of; of better ways

In Pioneer Ville, the price elasticity of demand for bus rides is .5. When the prie of a bus ticket rises by 5%, ___

the quantity of bus rides demanded decreases by 2.5%

What is microeconomics?

the study of how households and firms make decisions and how they interact in markets

You would expect a lower price to increase the number of people who decide to take a cruise because

with a lower price more people will have a marginal benefit that exceeds price

When a shortage arises, the price ______ to its equilibrium, which _______.

rises; decreases the quantity demanded and increases the quantity supplied

In producing goods and services we answer the questions ______.

what, how, and for whom

Gross domestic product and gross investment are measured ______. Net domestic product and net investment are measured ______. Domestic product is _______. National product is _______.

before the depreciation of capital; after the depreciation of capital production within a country; the value of goods and services produced anywhere in the world by the residents of a nation

The marginal benefit of a good or service is the _____.

benefit received from consuming one more unit of it

The marginal benefit of a good or service is the _____.

benefit received from consuming one more unit of it.

The marginal benefit of a good or service is the _________

benefit received from consuming one more unit of it.

A country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.

benefit from; cost of a pencil

Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.

benefit from; cost of a pencil

*Rational choice* is a choice that uses the available resources to _____ of the person making the choice.

best achieve the objective

Rational choice is a choice that uses the available resources to _____ of the person making the choice.

best achieve the objective

the best solution, using all of the land, labor, and capital

better production possibilities diagram

Two countries, Blue Violet and Orange Rose, produce only two goods: tea pots and coffee pots. The table gives their production possibilities. _______ has a comparative advantage in tea pots and _______ has a comparative advantage in coffee pots.

blue violent; orange rose

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

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 ______. The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.

both a substitution effect and an income effect its relative price rises; purchase more of a different food that is less expensive

If country A has a comparative advantage in the production of automobiles and country B has a comparative advantage in the production of boats, ______.

both countries will gain if country A exports automobiles to country B and country B exports boats to country A

Suppose that the US 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 US will lie outside their PPFs

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

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

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 ______. A. both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs B. only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change C. only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change D. neither country; their consumption possibilities will not change

both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs

In economics, the term "capital" refers to a. the money in one's pocket. b. buildings and equipment. c. mineral resources. d. consumer goods.

buildings and equipment.

The cycle of short-term ups and downs in the economy is called:

business cycle

cyclical

business cycle lay offs

price you want to pay goes up- benefit goes up

buyer

A market is an arrangement that brings _____ together and enables them to get information and do business with each other.

buyers and sellers

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

Graphs are often used in economics because they:

can simplify complex topics

The graph shows Brazil's PPF. Brazil's PPF illustrates scarcity because Brazil ______. If Brazil produces 40 barrels of ethanol a day, it must produce _____ tons of food a day to achieve production efficiency.

cannot attain the points outside the PPF; 3

Marginal benefit from food crops _______.

cannot be calculated from the table

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.

cannot;less

A power generating plantA power generating plant is an example of the factor of production _______.

capital

Economic growth comes from _______.

capital accumulation and technological advance

Economic growth comes from _______. A. capital accumulation and technological advance B. capital accumulation and the avoidance of opportunity cost C. people being willing to increase their skills which makes economic growth free D. producing more goods than people want to consume

capital accumulation and technological advance

What kind of economic system relies on private ownership of resources, direct incentives and decisions made via markets and the price mechanism?

capitalism

Economic growth comes from _______.

captial accum and tech adv

government decides who gets it and where it comes from

centrally planned system

if demand goes up supply is the same, price goes up, quantity goes down

change in demand change in supply

supply chain- might be good for one, bad for another

change in technology

Which one of the following news headlines definitely concerns the social interest?

cigs must be labeled with health warning

Which of the following news headlines does not illustrate the potential for conflict between self-interest and the social interest?

college coaches are cashing in

If, as the price of a DVD player decreases, the quantity of DVDs that people buy increases, then DVD playersDVD players and DVDs are _______.

complements

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

If as the price of palm oil increases, teh quantity of soap that firms plan to sell increases, them palm oil and soap are___

complements in production

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

complements.

A cellphone and a phone call are ______. A text message and an email are ______.

complements; substitutes

Pizza and sausage are ______. Wheat and corn are ______.

complements; substitutes

Pizza and sausage are ______. Wheat and rye are ______.

complements; substitutes

Why do people specialize and trade? With specialization and trade, people can _______

consume at a point outside their PPF

By specializing and trading, a country is able to

consume but not to produce combinations of goods that lie beyond its production possibility frontier

CPI equation

consumer price index = market basket (this year)/ market basket (last year) x 100

Law of Demand

consumers buy more of a good when its price decreases and less when its price increases

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

The news clip illustrates a change in the supply of flights when it reports that American Airlines is _______.

cutting the number of flights with no mention of a change in the airfare

Making a choice at the margin means ________.

deciding to do a little bit more or a little bit less of an activity

deflation

decrease in the general price level

If macaroni and cheese is an inferior good, an increase in income will

decrease the demand for macaroni and cheese.

Which of the following events illustrates the law of demand: other things remaining the same, a rise in the price of a good will__

decrease the quantity demanded of that good

Other things remaining the same, a fall in the price of peanuts will

decrease the quantity supplied of peanuts

decrease;not change

Comparing the data for the fourth quarter of 2017 with that for the second of 2012 in Table 21.1 , how has consumption expenditure changed as a percentage of GDP? Consumption expenditure as a percentage of GDP has _______.

decreased

The demand curve for bus rides is a downward-sloping straight line. the price elasticity of demand for bus rides

decreases as the price of a bus ride falls

An increase in the price of a DVD player _______.

decreases the quantity of DVD players demanded and results in a movement up along the demand curve for a DVD player

An increase in the price of a gym membership _______.

decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership

The following events occur one at a time: (i) The price of crude oil rises. (ii) The price of a car rises. (iii) All speed limits on highways are abolished. (iv) Robots cut car production costs. The supply of gasoline _______. The quantity of gasoline demanded _______. The quantity of gasoline supplied _______.

decreases when the price of a car rises decreases when the price of crude oil rises decreases when the price of crude oil rises increases when the speed limits are abolished

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

The demand curve for a normal good shifts leftward if income ____ or the expected future price ____

decreases; falls

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

Suppose that the cost of producing aspirin increases and simultaneously, doctors find that one aspirin per day reduces the risk of heart attacks. The supply of aspirin .......... and the demand for aspirin .......... so that the equilibrium price of aspirin .......... . a. increases; increases; rises b. decreases; increases; rises c. increases; decreases; might rise, fall, or stay the same d. decreases; increases; might rise, fall, or stay the same

decreases; increases; rises

When supply decreases and demand does not change, the equilibrium quantity ____ and the equilibrium price ____.

decreases; rises

The price of a PC comma a substitute for an MP 3 player comma fallsa PC, a substitute for an MP3 player, falls. As a result, you predict that the equilibrium quantity of MP3 players _______ and the equilibrium price _______.

decreases;falls

Suppose the two goods, A and B, are complements and normal goods. If income increases or the price of good A falls, the a. demand curve for B shifts leftward. b. demand curve for B shifts rightward. c. supply curve for B shifts leftward. d. supply curve for B shifts rightward.

demand curve for B shifts rightward.

An unusually warm winter shifts the

demand curve for gloves leftward.

Marginal benefit ______.

describes preferences

As the value of a country's real GDP increases, the country is likely to:

devote more resources to pollution reduction

A rise in the price of low-fat milk ________ the supply of low-fat milk.

does not change

If after heavy rain and low production, the weather improves and coffee growers enjoy bumper crops, the demand for coffee ___, the supply of coffee ___, and the price of coffee___.

does not change; increases; falls

Real GDP ______.

does not include a measure of leisure time or environmental quality

Real GDP ______.

does not include a measure of leisure time or environmental qualitydoes not include a measure of leisure time or environmental quality

If shoes rise in price, the demand curve for shoes .......... and the quantity of shoes demanded .......... . a. shifts leftward; decreases b. shifts leftward; does not change c. does not shift; decreases d. does not shift; does not change

does not shift; decreases

With the period of low rainfall extending, dairies raise their expected price of low-fat milk next year. The supply of low-fat milk ______ today. With advice from health-care experts, dairy farmers decide to switch from producing full-cream milk to growing vegetables. The supply of low-fat milk ______.

does not change; decreases

Harry's PPF ______and his MB curve ______.

does not change; shifts rightward

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

This PPF ______ illustrate scarcity because ______.

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

Economic growth ______ overcome scarcity because ______.

does not; we can produce more goods and services but it is still impossible to satisfy all our wants

Economic growth ______ overcome scarcity because ______. A. does not; we can produce more goods and services but it is still impossible to satisfy all our wants B. does; with economic growth the PPF rotates outward and eventually becomes a horizontal line C. does not; economic growth requires capital accumulation and technological change D. does; we will eventually reach the point where we have too much

does not; we can produce more goods and services but it is still impossible to satisfy all our wants

labor, capital, land

economic resources

the study of scarcity

economics

Macroeconomics

economy as a whole, unemployment, inflation, GDP

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

The main functions of markets include _______.

enabling buyers and sellers to get info about eachother

Choose the correct statement.

entrepreneurship is the human resource that organizes land labor capital

Human resources that perform the functions of organizing, managing, and assembling the other resources are called

entrepreneurship.

The income earned by the people who sell the services of the factor of production ____ is called ____.

entrepreneurship; profit

Price elasticity of demand is not

equal to the slope of the demand curve

where price and quantity cross over each other, market demand is equal to quantity supply

equilibrium

One of the first steps in deciding whether to complete your education is to:

evaluate the marginal cost and marginal benefit of that decision.

buyer send money to the seller and the seller sends back goods and services

exchange

A typical business cycle can be described by the sequence ______.

expansion, peak, recession, trough

what is held constant while moving along a supply curve

expected future prices, prices of factors of production, the number of sellers

The Casino has given you $100 worth of complimentary chips which must be wagered this evening. There are two tables - roulette and blackjack. The expected value of $100 bet on roulette is $83, and the expected value of $100 bet on blackjack is $86. What is: the opportunity cost of betting the chips on roulette? the opportunity cost of betting the chips on blackjack?

expected opportunity cost of $86 expected opportunity cost of $83

Gross domestic product can be measured in two ways: By the total ______ or the total ______.

expenditure on goods and services; income earned producing goods and services

I calculated real GDP by summing the components of aggregate _____, so I used the _____ approach.

expenditure; expenditure

A model of the economy that shows a circular flow of _____ that result from decision makers' choices and the way these choices interact to determine _____ goods and services are produced is the circular flow model.

expenditures and incomes; what, how, and for whom

An economy that uses new technology _______.

experiences an increase in its standard of living but does not overcome scarcity

The main functions of markets include _______.

facilitating trade

Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts.

facotrs of prod

Complete the following sentence. Real flows are the flow of _______.

factors of production from households to firms and the flow of goods and services from firms to households

Suppose that the world price of sugar is 10 cents a pound, the United States does not trade internationally, and the equilibrium price of sugar in the United States is 20 cents a pound. The United States then begins to trade internationally. The price of sugar in the United States ______. U.S. consumers buy ______ sugar. U.S. sugar growers produce ______ sugar. The United States ______ sugar.

falls; more less imports

Consumers' actions indicate that airline tickets and hotel rooms are complements. Suppose that for some reason the price that airline companies pay to buy airplane fuel falls. As a result --- assuming all other relevant factors remain unchanged --- the price of airline tickets _____________, and the price of hotel rooms _______________.

falls; rises

true or false Economists assume that the only reason people take the actions they do is in response to economic incentives.

false

As fewerfewer people buy bicycles, the demand for bicycle helmets will decrease and the price of a helmet will increase. The rise in the price of a bicycle helmet will increase the supply of bicycle 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

"As more people buy bicycles, the demand for bicycle helmets will increase and the price of a helmet will decrease. The fall in the price of a bicycle helmet will decrease the supply of bicycle helmets." This statement is ______ because ______.

false; an increase in demand for bicycle helmets does not decrease the price of a bicycle helmet and a decrease in the price of a bicycle helmet does not decrease the supply of bicycle helmets

As more people buy bicycles, the demand for bicycle helmets will increase and the price of bicycle helmets will rise. The rise in the price of a bicycle helmet will increase the supply of bicycle helmets. The statement is ___ because ___.

false; as the price of a bicycle helmets rises, the supply of bicycle helmets does not increase.

If the price of frozen yogurt falls the quantity of ice cream consumed will decrease and the price of ice cream will rise. Use the laws of demand and supply to explain whether the above statement is true or false. The above statement is__. The fall in the price of frozen yogurt____ice cream and ___. The price of ice .

false; decreases the demand for; decreases the quantity of ice cream supplied; falls

_______ choose the quantities of factors of production to hire

firms

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

For each news item below, indicate whether it involves a what, how, or for whom question. "Oscar stars' swag dash bags may be taxableOscar stars' swag-bags may be taxable" involves a ______ question. "Cancer scientists hail breakthrough treatmentCancer scientists hail breakthrough treatment" involves a ______ question.

for whom;what

For each news item below, indicate whether it involves a what, how, or for whom question. "Health dash care professionals and drug companies say Medicaid drug rebates should be available to everyone in needHealth-care professionals and drug companies say Medicaid drug rebates should be available to everyone in need" involves a ______ question. "Scientists blast NASA program cutsScientists blast NASA program cuts" involves a ______ question.

for whom; what

Marginal benefit ______. A. does not change as more of a good is consumed B. is equal to the slope of the PPF C. from a good or service is the benefit received from consuming one more unit of it D. describes opportunity cost

from a good or service is the benefit received from consuming one more unit of it

expect to be higher in future so supply less

future prices

Land is the _____ that we use to produce goods and services.

gifts of nature or natural resources

a tradeoff is

giving up one thing to get something else.

what is a tradeoff

giving up something to get something else

If the price of camping at the beach falls by a large amount, you have an incentive to _______.

go camping more often

the demand for a good is more elastic if the

good is narrowly defined

A circular flow model shows the interrelationship between the ___markets and the __ markets

goods; factor

Centrally planned economies allocate resources based on decisions by_________________ while market economies answer these questions through decisions made by____________ .

governments, households and firms

A decrease in tuition fees will decrease your college's total revenue if the price elasticity of demand for college education is

greater than zero and less than 1

Both the United States and Canada produce lumber and wine. Canada exports lumber and imports wine. The United States imports lumber and exports wine. If the United States and Canada did not trade internationally, the price of lumber in the United States would be ______ than the world price and the price of lumber in Canada would be ______ than the world price. If the United States and Canada did not trade internationally, the price of wine in the United States would be ______ than the world price and the price of wine in Canada would be ______ than the world price. With international trade, Americans buy ______ lumber and Canadians buy __________ wine. With international trade, Americans produce ______________ lumber and Canadians produce ___________ wine.

greater; less less; greater more; more less; less

depreciation

gross investment - net investment

Human capital _______. A. is always used in the self dash interest B. is a gift of nature C. remains constant over time D. grows as people gain work experience

grows as people gain work experience

Capital accumulation is the _____, including _____ capital.

growth of capital resources; human

a good with perfectly elastic supply

has a vertical supply curve

The United States exports athletic coaching services. The price of athletic coaching services in the United States is _________with international trade than without international trade. As a result of trade in athletic coaching services, U.S. producers of athletic coaching services ______ and U.S. consumers of athletic coaching services ______.

higher win; lose

The law of demand states that other things remaining the same, the _______ the price of a good, the _______.

higher; smaller is the quantity demanded

If we compare the four sources of spending in the economy we see that

household consumption is the largest.

In the figure, flow B represents ________.

household purchases of goods and services

_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent

households

Macroeconomics can be used to understand all of the topics listed below, except:

how a consumer decides between the purchase of two different cars

how

how do we use the factors of production to produce these goods

The quality of labor depends on _________.

human capital

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

Late in the semester, a friend tells you, "I was going to drop my psychology course so I could concentrate on my other courses, but I had already put so much time into the course I decided not to drop it." Is your friend's reasoning correct or incorrect?

incorrect

As the average income in China continues to increase, we would expect the demand for beef to _______ and the demand for rice to _______.

increase if beef is a normal good; decrease if rice is an inferior good

inflation

increase in the general price level

As a country experiences economic growth, investment in capital and advances in technology _________.

increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate

For consumers, donuts, and chocolate chips cookies are substitutes. If the price of a donut increases, the demand for chocolate chip cookies will

increase, and the demand curve for chocolate chip cookies will shift rightward

A new technology lowers the cost of producing ice cream. The supply of low-fat milk

increases

Ann currently produces at point A in the figure. If Ann moves from point A to point C, her opportunity cost of a brownie _______.

increases

Harry's efficient time allocation

increases

Sheila currently produces at point A in the figure. If Sheila moves from point A to point C, her opportunity cost of a brownie _______.

increases

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

Don't Look for Cheap Food Anytime Soon Global food prices probably will rise in the first half of this century because of an expanding population and higher incomes and slower crop-yield growth. Explain the effect on food prices of a. Expanding population and rising incomes. b. Slower crop-yield growth.

increases the demand for food, which increases; decreases the supply of food, which increases

An increase in the number of fast-food restaurants a. increases the quantity demanded of fast-food meals. b. increases the demand for fast-food meals. c. increases the quantity supplied of fast-food meals. d. increases the supply of fast-food meals.

increases the supply of fast-food meals.

increases. Resources are not equally productive in all activities

If the two goods, A and B, are substitutes and the supply of good A falls, the price of good A .......... and the demand for product B .......... . a. does not change/decreases b. increases/increases c. increases/decreases d. increases/does not change

increases/increases

During wedding season, the demand for gold ________ and the supply of gold _______. Expectations of a rising gold price during wedding season in India ______ the supply of gold and ______ the demand for gold prior to wedding season. When the wedding season begins, the price rises by less than it would have done if the wedding season was a surprise.

increases; does not change decrease; increase true

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

With this new technology, the opportunity cost of producing a ton of ice cream ______ and the dairy is ______ efficient.

increases; equally

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

If the price elasticity of demand for razors is .32 the demand for razors is

inelastic

Points that are inefficient are

inside the curve

A demand curve _______.

is a marginal benefit curve

A supply curve _______.

is a minimum-supply-price curve

a supply curve ___________.

is a minimum-supply-price curve

A supply curve _______.

is a minimum-supply-price-curve

When the price of a good increased by 10 percent, the quantity demanded of it decreased 2 percent. Most likely, this good ___ and ____.

is a necessity; has poor substitutes

Hundreds line up for a 5 p.m. Eminem ticket giveaway. Eminem's decision to give a free concert____

is a rational choice if the marginal benefit he receives from the concert is greater than its marginal cost

A demand curve _______.

is a willingness-and-ability-to-pay curve

Economics:

is concerned with how people respond to incentives

A demand curve that illustrates the law of demand ______.

is downward sloping

The opportunity cost of economic growth _______.

is fewer consumption goods today

The opportunity cost of economic growth _______.

is fewer consumption of goods today

If the percentage change in price is 10% and the demand is elastic, then the percentage change in the quantity demanded

is larger than 10 percentage

The demand for diamond rings from Tiffany____the demand for diamond rings

is more elastic than

is the knowledge and skill; Tools, instruments, machines, buildings, and other items

The firm that printed your textbook bought the paper from XYZ Paper Mills. This purchase of paper ______ part of GDP because the paper is ______ good. The value of the paper is counted in GDP as ______.

is not; an intermediate part of the value of the textbook

Brazil faces a tradeoff on its PPF because if it increases the quantity of food produced _______.

it decreases the quantity of ethanol that it produces

Resource use is efficient when _______.

it is not possible to make someone better off without making someone else worse off

An economy produces ceramic plates. If the economy achieves allocative efficiency _______.

it produces the quantity on the PPF that is valued most highly

relationship between what seller will pay and what seller will except for it

item

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 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

A dog trainer is an example of the factor of production _______.

labor

A movie star is an example of the factor of production _______

labor

A movie star is an example of the factor of production _______

labor

A movie star is an example of the factor of production _______.

labor

labor force participation rate

labor force/ working age population x 100

Which of the following pairs does not match? A. Labor; rent B. Land; rent C. Capital; interest D. Entrepreneurship; profit

labor; rent

The resources provided by nature and used to produce goods and services are also known as:

land

____ is the gifts of nature or natural resources that we use to produce goods and services.

land

Factors of production are grouped into four categories, which are _______. A. land, labor, capital, and entrepreneurship B. land, capital, human capital, and entrepreneurship C. capital, human capital, financial capital, and labor D. land, labor, capital, and human capital ______ is an example of ______. A. The groundskeeper at a golf club; entrepreneurship B. Hoover dam; land C. The Florida Everglades; capital D. Upper A bus driver; labor

land, labor, capital, and entrepreneurship the bus driver; labor

What are the factors of production

land, labor, capital, entrepreneurship

Factors of production are grouped into four categories, which are _______.

land, labor, capital, and entrepreneurship

The productive resources that are used to produce goods and services - _____ are factors of production.

land, labor, capital, and entrepreneurship

The resources that are used to produce goods and services- ____ are factors of production.

land, labour, capital and entrepreneurship are factors of production.

price increase, quantity increase

law of upward supply

The opportunity cost of producing a loaf of bread is ______ at point A than at point B. The opportunity cost of producing a cake is ______ at point B than at point A.

less;less

Frictional

looking for a job in your field

The United States imports coffee. The price of coffee in the United States is __________ with international trade than without international trade. As a result of trade in coffee, the U.S. producers of coffee ______ and U.S. consumers of coffee ______.

lower lose;win

The opportunity cost of catching a pound of trout is ______ for Abe than for Fred, and the opportunity cost of picking a pound of strawberries is ______ for Abe than for Fred.

lower; higher

In an hour, Abe can catch 5 pounds of salmon or pick 10 pounds of cherries. In an hour, Fred can catch 3 pounds of salmon or pick 12 pounds of cherries. The opportunity cost of catching a pound of salmon is ______ for Abe than for Fred, and the opportunity cost of picking a pound of cherries is ______ for Abe than for Fred. So ______ has a comparative advantage in producing ______.

lower; higher Abe; salmon

In an hour, Simon can catch 10 pounds of tuna or pick 10 pounds of oranges. In an hour, Fred can catch 10 pounds of tuna or pick 20 pounds of oranges. The opportunity cost of catching a pound of tuna is ______ for Simon than for Fred, and the opportunity cost of picking a pound of oranges is ______ for Simon than for Fred So ______ has a comparative advantage in producing ______.

lower;higher simon;tuna

Which of these covers the study of topics such as inflation and unemployment?

macroeconomics

You want to watch football and play cards. You think hard about how to allocate the next hour between watching football and playing cards and decide to watch football for the first 35 minutes and then spend 25 minutes playing cards. Your decision is an example of _______. A. making a choice such that the marginal cost exceeds the marginal benefit B. good time management C. making a choice at the margin D. misallocating your time

making a choice at the margin

The benefit the arises from a one-unit increase in an activity is called

marginal benefit

An economy produces ceramic plates. If less than the efficient quantity of ceramic plates is produced _______. A. marginal benefit exceeds marginal cost B. it is not possible to be producing at a point on the PPF C. marginal cost equals marginal benefit D. marginal cost exceeds marginal benefit

marginal benefit exceeds marginal cost

The marginal benefit curve is a curve that shows the relationship between the _____

marginal benefit from a good and the quantity consumed of that good

The marginal benefit curve is a curve that shows the relationship between the _____.

marginal benefit from a good and the quantity consumed of that good

only need a buyer and seller

market based system

Efficiency means that goods are distributed in a way that..... is quick, is fair, or maximizes benefits to society.... while equity means that goods are distributed in a way that..... is quick, maximizes benefits to society, or is fair .

maximizes benefits to society, is fair

The quantity demanded of a good or service is ______.

measured as an amount per unit of time

Marginal benefit ______.

measured by th emost ppl willig to pay for an additional unit

Real GDP

measured in base year dollars

Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A. An increase in the number of police on inner dash city streets will reduce the crime rateAn increase in the number of police on inner-city streets will reduce the crime rate B. Why did production and jobs expand so slowly in the United States in the early 2000 s question mark Why did production and jobs expand so slowly in the United States in the early 2000s? C. Why are production and incomes stagnating in Japan question mark Why are production and incomes stagnating in Japan? D. The standard of living is improvingThe standard of living is improving Statement A involves a ______ issue. Statement B involves a ______ issue. Statement c and d ___

micro.macro macro.macro

The study of the choices made by individuals is part of the definition of

microeconomics

Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A. Are iTune downloads killing CDs question mark B. Will a cut in the income tax rate encourage people to work longer hours question mark C. It would be better if the United States spent more on the environment and less on space exploration D. Why are production and incomes stagnating in Japan question mark Statement A involves a ______ issue. Statement B involves a ______ issue.

micro; micro micro; macro

A decrease in the demand for pasta together with a decrease in the supply of pasta ______ create a surplus or a shortage of pasta at the original price. The price of pasta ______.

might; might fall, rise, or not change

An increase in the demand for tank tops together with an increase in the supply of tank tops ______ create a surplus or a shortage of tank tops at the original price. The price of tank tops ______.

might; might fall, rise, or not change

A firm operating in a market economy has a strong incentive to be productively efficient and allocatively efficient because the former enables it to ▼ maximize total output, or minimize production costs while the latter ensures it of ▼ ample revenues, or public adulation .

minimize production costs, ample revenues

combines the two main systems

mixed economy

Factors of production include all of the following EXCEPT ________.

money

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

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 Apple Inc. pays the designers of the iPad, 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

When you buy an iPad from the Apple Store, the flows are a ______ from households to firms and a ______ from firms to households.

money flow; real flow

A tradeoff occurs when we

move from a point on the PPF to another point on the PPF

f the price of a sundae rises, a ______ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs.

movement up along; shift of

Monday Island produces only potatoes and bananas. The marginal cost of a potato is the number of bananas that ______ to get one more ______.

must be forgone; potato

Monday Island produces only tomatoes and papayas. Complete the following sentence. The marginal cost of a tomato is the number of papayas that ______ to get one more ______.

must be forgone; tomato

To disentangle cause and effect, economists use economic models and use _______ to test the predictions of those models.

natural experiments, statistical investigations, and economic experiments

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

f the price of a CD is equal to the equilibrium price, there will be ____ of CDs and the price will ____.

neither a shortage nor surplus; not change

In the market for cell phones, which of the following events increases the supply of cell phones

new technology that lower the cost of making a cell phone

full employment

no cyclical unemployment

Which had the faster growth rate, nominal GDP or real GDP?

nominal GDP

If the president announced that "we should do something to stimulate economic growth" this is an example of a __________.

normative statement

Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should be increased. nothing 2. Nuclear energy costs less than oil. nothing Statement 1 is a ______ statement because it ______ be tested. A. normative; cannot B. positive; can C. normative; can D. positive; cannot Statement 2 is a ______ statement because it ______ be tested. A. positive; cannot B. positive; can C. normative; cannot D. normative; can

normative; cannot positive; can

ndicate whether each of the following news items is a positive or a normative statement. 1. Teenagers shouldn't beTeenagers shouldn't be be permitted to buy cigarettesbe permitted to buy cigarettes. 2. The United States should spend more on the environment andThe United States should spend more on the environment and less on space explorationless on space exploration. 3. More police on inner dash city streets willMore police on inner-city streets will lower the crime ratelower the crime rate. 4. Flat screen television creates less eye strainFlat screen television creates less eye strain than traditional televisionthan traditional television. Statement 1 is a ______ statement, and statement 2 is a ______ statement. 3/4 is__

normative;normative positive;positive

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

An economic model includes a. only normative statements. b. no use of marginal concepts. c. all known details in order to increase its accuracy. d. only details considered essential.

only details considered essential.

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

A bakery uses flour to produce bread. When calculating GDP, we include ______, because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is ______.

only the value of the bread sold in a store; double counting

An economic model is a description of some features of the economic world that includes _____ features assumed necessary to explain the _____facts.

only those; observed

National comparative advantage arises from the differences in _______ across countries.

opportunity cost

alternatives, choosing one thing as account of another choice

opportunity cost

The marginal cost of a good or service is the _____.

opportunity cost of producing one more unit of it

The law of demand states that ___, the ____ the price of a good, the smaller is the quantity demanded; and the ___the price of a good, the greater is the quantity demanded

other things remaining the same; higher; lower

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

Unattainable points are

outside the PPF

Unattainable points are ______.

outside the PPF

intermediate goods

part of the final good (ex. tires on a new car)

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

If the demand for a good is elastic, then

people substantially decrease the quantity of the good they buy if its price increases by a small percentage

the price elasticity of demand measures the ___ that results from a ___

percentage change in teh quantity demanded; percentage change in price

The stock of computers, factory buildings and machine tools used to produce goods is known as:

physical capital

population growth rate equation

population (this year) - population ( last year)/ population (last year) x 100

Indicate whether each of the following news items is a positive or a normative statement. 1. Music downloads have decreased CD sales 2. The number of farms has decreased over the last 50 years. 3. A ban on smoking will lower the healthcare budget 4. Nuclear energy is cleaner than coal and oil based energy.

positive, positive, positive , positive

The net gain from international trade is _______.

positive. Consumers gain more than PRODUCERS lose with imports, and PRODUCERS gain more than consumers lose with exports.

Indicate whether each of the following news items is a positive or a normative statement. 1. The number of farms has decreased over the last 50 years. 2. Teenagers shouldn't be permitted to buy cigarettes. 3. Nuclear energy is cleaner than coal and oil based energy. 4. We need more police on inner dash city streets. Statement 1 is a ______ statement, and statement 2 is a ______ statement. A. positive; positive B. positive; normative C. normative; normative D. normative; positive Statement 3 is a ______ statement, and statement 4 is a ______ statement. A. normative; positive B. normative; normative C. positive; positive D. positive; normative

positive; normative positive; normative

Indicate whether each of the following news items is a positive or a normative statement. 1. More police on inner dash city streets willMore police on inner-city streets will lower the crime ratelower the crime rate. 2. Flat screen is better thanFlat screen is better than traditional televisiontraditional television. 3. The PlayStation is better thanThe PlayStation is better than the XBoxthe XBox. 4. Work hours are tooWork hours are too longlong. Statement 1 is a ______ statement, and statement 2 is a ______ statement. 3/4

positive;normative nomative;normative

Indicate whether each of the following news items is a positive or a normative statement. 1. Nuclear energy is cleaner than coal and oilNuclear energy is cleaner than coal and oil based energybased energy. 2. More police on inner dash city streets willMore police on inner-city streets will lower the crime ratelower the crime rate. 3. Flat screen is better than traditionalFlat screen is better than traditional televisiontelevision. 4. The PlayStation has a larger range of gamesThe PlayStation has a larger range of games than the XBoxthan the XBox. Statement 1 is a ______ statement, and statement 2 is a ______ statement. Statement 3 is a ______ statement, and statement 4 is a ______ statement.

positive;positive normative;positive

Changes in what six things cause a shift of the demand curve?

preferences, related goods, future prices, income, future income, population

A shortage in the market for oil implies that ______.

price adjustments are being prevented from playing their role as the regulator of buying and selling plans

Read the news clip, then answer the following question. A shortage in the market for oil implies that ______.

price adjustments are being prevented from playing their role as the regulator of buying and selling plans

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

A change in ______ causes movement along a demand curve and a change in _____________ .

price; quantity demanded

substitute- ex. pepsi and coke - like coke, pepsi goes up, more coke demand complementary- PB and J - jam up, less pb number of buyers with access to the good - buyers increase, demand increases future prices - prices high in future, current demand high

prices of related goods

Ceteris paribus (often shortened to cet par) means "_____." A. if all variables are constant B. if all other relevant things change C. if all other relevant things remain the same D. if all things are equal

"if all other relevant things remain the same."

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $7 comma 000 for the summer, and you won't be able to live at home for free. The cost of transportation is $2 comma 000, visas cost $300, and living expenses are $2 comma 000. What is the opportunity cost of your plan to travel in Europe? Your opportunity cost is $

$11,300

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

Eric, a medical student, buys two cups of coffee a day, which costs him $6.00. He decides to buy one more cup each day and his expenditure on coffee increases to $9.00. The marginal cost to Eric of a cup of coffee is _______.

$3.00

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

GDP equation

(PxQ) + (PxQ)

Market Basket equation

(PxQ) + (PxQ)

Equilibrium price formula

(ad+bc)/(b+d)

What are the determinants of supply?

- Own price - Technology - State of nature - Number of firms - Price of inputs - Future price expected - Price of related goods produced

What are the determinants of demand?

- Own price (changes quantity demanded) - Income - Population size - Price of related goods - Tastes and preferences - Future price expected -Future income

William Gregg owned a mill in South Carolina. In December 1862, he placed a notice in the Edgehill Advertiser announcing his willingness to exchange cloth for food and other items. Here is an extract: 1 yard of cloth for 1 pound of bacon 2 yards of cloth for 1 pound of butter 4 yards of cloth for 1 pound of wool 8 yards of cloth for 1 bushel of salt Calculate the relative price of 1 pound of bacon1 pound of bacon in terms of pounds of butterpounds of butter. If the price of butterbutter is $0.300.30 a pound, what do you predict is the money price of a pound of woolpound of wool? >>> Answer to 2 decimal places. If the price of butterbutter is $0.30 a pound, you would predict that the price of a pound of woolpound of wool is $ nothing

.5 .6

Amber, a computer science student, has noticed that for every problem she works, her grade increases by a half a percent. She decides to work 200 problems before her next exam and try for a perfect 100. The marginal benefit to Amber of working a problem is ________.

.5%

In one hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets. A. 0.1; 0.05 B. 20.0; 10.0 C. 10.0; 20.0 D. 0.05; 0.1 ______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 15 caps, ______. A. Sue; both Sue and Tessa gain B. Sue; Tessa gains but Sue loses C. Tessa; Sue loses but Tessa gains D. Tessa; both Sue and Tessa gain

0.1; 0.05 Tessa; both Sue and Tessa gain

In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets. ______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______.

0.2;0.10 Tessa; both Sue and Tessa gain

In one hour, Sue can produce 60 caps or 18 jackets and Tessa can produce 60 caps or 24 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets.

0.3; 0.40

Which of the following statements are positivepositive? 1. China is the largest trading partner of the United StatesChina is the largest trading partner of the United States 2. Drunk drivers should have their licenses suspended for the remainder of their livesDrunk drivers should have their licenses suspended for the remainder of their lives 3. We ought to have a cure for cancerWe ought to have a cure for cancer 4. People who buy weekly lottery tickets win a prize at least once a year

1 and 4

Elizabeth owns an ice cream parlor. In an hour she can produce 40 milkshakes or 40 Ice cream sundaes. Ben also owns an ice cream parlor In an hour he can produce 20 milkshakes or 10 ice cream sundaes. Wlizabeths opportunity cost of 1 milkshake is ___. Ben;s opportunity cost of 1 milkshake is___. ___has a comparative advantage in milkshakes and ___ has an absolute advantage in both goods.

1 ice cream sundae; .5 ice cream sundae; Ben: Elizabeth

Imagine the price of a cup of coffee is $2. The marginal benefit of the first cup is $7, the second cup is $5, the third cup is $1, and the fourth cup is -$3. Answer the following questions with this information: 1. What is the marginal cost of the second cup of coffee? 2. What is the marginal net benefit of the second cup of coffee? 3. What is the total benefit of 4 cups of coffee? 4. How many cups of coffee should you buy?

1. $2 (the marginal cost is the same for every cup purchased since the price is a constant $2) 2. $3 (MB of 2nd cup = $5 minus MC of second cup = $2, so $5 - $2 = $3) 3. $10 ($7 + $5 + $1 + (-$3) = $10) 4. 2 cups (continue to purchase as long as MB > MC or as long as marginal net benefit is positive)

1. Franny can write 10 pages in one hour or wash 30 dishes in one hour. Douglan can write 5 pages in one hour or wash 15 dishes in one hour. Who has the absolute advantage in writing pages? a.Franny b.Douglan c. Both d. No absolute advantage exists 2. Franny can write 10 pages in one hour or wash 30 dishes in one hour. Douglan can write 5 pages in one hour or wash 15 dishes in one hour. Who has the comparative advantage in writing pages? a.Franny b.Douglan c. Both d. No absolute advantage exists Note: Answers to practice questions on the next page

1. Franny; she can produce more pages than Douglan 2. No absolute advantage exists (having the same opportunity cost means neither has the ability to produce something cheaper, therefore "both" would be incorrect)

Label each entry in the list as dealing with a microeconomic topic or a macroeconomic topic. 1. Motor vehicle production in China is growing by 10 percent a year. 2. Coffee prices rocket. 3. Globalization has reduced African poverty. 4. The government must cut its budget deficit. 5. Apple sells 3 million iPhones a month.

1. Microeconomic 2. Microeconomic 3. MACROeconomic 4. MACROeconomic 5. Microeconomic

Normative or Positive 1. Cell phones make people more productive. 2. Certain vaccinations cause autism. 3. The trump administration is "making america great again." 4. Gymnastics is the most difficult sport on the body because it has the highest injury rate compared to all other sports. 5. The color green is a mix between the colors red and yellow.

1. Normative (need to better define "productive") 2. Positive (but no link has been shown between the two from countless studies, so highly likely to be false) 3. Normative (define "great") 4. Positive (can be shown to be true or false) 5. Positive (but false)

Factors of production

1. land: natural resources (earns rent) 2. labor: work for a paycheck (earns wages) 3. capital: physical - buildings, plants, machinery human - skill set, knowledge (earns interest) 4. entrepreneurship: organize production, risk taker, idea person (earns profit)

Factors that shift the supply curve

1. resources/inputs 2. related goods 3. # of supplies 4. nature 5. technology

Factors that shift the demand curve

1. tastes and preferences 2. related goods a. substitutes b. complements 3. income a. normal b. inferior 4. population 5. expectations a. future income b. future prices

The table below shows the maximum output of wine and cloth that England and Portugal can produce under constant cost conditions. What is the lowest possible price England will sell cloth for? What is the highest possible price Portugal will pay for cloth?

1.07 and 1.57

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

Draw a labor supply curve and a labor demand curve for the United States. Label the curves LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Now suppose the United States returns millions of illegal immigrant workers to their home countries. Draw and label a curve that shows the effect of this return of workers. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

Suppose when a television assembly line runs for 6 hours, it produces 120 televisions. And if the assembly line runs for one more hour, it produces a total of 130 televisions. The marginal benefit from running the assembly line one more hour is

10 TVs

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

10 percent off your grade.

You plan to go to school this summer. If you do, you won't be able to take your usual summer job that pays $7 comma 000 for the summer. The cost of tuition is $3 comma 000 and textbooks cost $300. You live with your family, which covers your living expenses of $1 comma 000. What is your opportunity cost of going to school this summer? Your opportunity cost of going to summer school is $

10,300

The graph shows an economy's long-run aggregate supply curve. Draw an aggregate demand curve and a short-run aggregate supply curve such that when the economy is in long-run equilibrium, the price level is 110. Label the curves. Draw a point at the long-run macroeconomic equilibrium.

100

The graph shows an economy in long-run equilibrium. The price of oil rises. Draw a curve that shows the effect of this event. Label it 1. Draw a point at the new short-run equilibrium. Label it E1. Draw a curve that shows the economy returning toward a full-employment equilibrium with no action by the central bank or the government. Label it 2. Draw a point at the new short-run equilibrium. Label it E2.

101

Draw an aggregate demand curve. Label it AD. Draw a short-run aggregate supply curve. Label it SAS. Draw a point at the short-run macroeconomic equilibrium. Label it 1. Draw a point on the SAS curve at which firms are unable to meet the demand for their output. Label it 2.

103

Draw an aggregate demand curve. Label it AD. Draw an arrow on the AD curve that shows the international substitution effect when the price level falls. Label it 1. Draw an arrow on the AD curve that shows the international substitution effect when the price level rises. Label it 2.

104

105

The graph shows an economy's long-run aggregate supply curve and aggregate demand curve. Draw two curves that show the economy experiencing economic growth with inflation. Label the curves. Draw a point at the new long-run price level.

106

107

The graph shows a business cycle. Draw a vertical arrow that shows: 1) a recessionary gap. Label it 1. 2) an inflationary gap. Label it 2. Draw a point that shows the economy at full employment.

108

The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. Technology advances and the full-employment price level remains constant. Draw the new long-run aggregate supply curve and the new short-run aggregate supply curve. Label the curves. Draw a point at the full-employment price level and the new potential GDP.

109

Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label the point 1. Now suppose a large increase in investment increases labor productivity. Draw a curve that shows the effect of this increase in labor productivity. Label the curve. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label the point 2.

Draw the consumption function and label it CF.

110

The left graph shows an economy's AE curve and the right graph shows its AD curve. Equilibrium expenditure is $12 trillion and the price level is 115. Then the price level rises to 135 and the equilibrium expenditure falls to $11 trillion. In the left graph, draw a new AE curve that shows the effect of this price rise. Label it. Draw a point at the intersection of the new AE curve and the 45 degree line. In the right graph, draw a point on the AD curve at the new equilibrium real GDP and price level. Draw an arrow on the curve to shows the increase in the price level from the original equilibrium to the new equilibrium.

111

The graph gives an economy's AE curve when the economy is in long-run equilibrium. Equilibrium expenditure is $12 trillion. Draw a new AE curve that shows the effect of an increase in investment. Label it AE1. Draw a point at the new equilibrium expenditure. Label it B. Draw another AE curve that shows equilibrium expenditure in the short run. Label it AE2. Draw a point at the short-run equilibrium. Label it C. Finally, draw the AE curve when the economy returns to long-run equilibrium. Label it AE3.

112

The graph shows an economy's aggregate demand curve. Investment increases by $0.5 trillion, and the multiplier is 4. Draw a new demand curve that shows the effect of this increase in investment. Label it AD1. Draw a point to indicate the quantity of real GDP demanded following the increase in investment when the price level is 115. Label it B.

113

If real GDP is zero, investment is $1.0 trillion, government expenditure is $1.5 trillion, exports are $0.5 trillion, and consumption expenditure is zero. Draw a line that shows autonomous expenditure. Label it A.

114

Draw the saving function. Label it SF. Draw a shape that represents dissaving. Label it. Draw a shape that represents saving. Label it.

115

Draw the short-run Phillips curve if the natural unemployment rate is 6 percent and the expected inflation rate is 4 percent a year. Label it. Draw a point at the natural unemployment rate and the expected inflation rate.

116

The graph shows the aggregate demand curve, short-run aggregate supply curve, and long-run aggregate supply curve for this year. Draw a point at the price level and real GDP next year, if an inflation is correctly expected.

117

The graph shows a short-run Phillips curve. Draw an arrow on the curve that shows the effect of an unexpected increase in aggregate demand.

118

The graph shows an economy's aggregate demand curve, short-run aggregate supply curve, long-run aggregate supply curve, and equilibrium. Draw the AD curve when it is correctly expected that the inflation rate will be 5 percent a year. Label it. Draw the SAS curve when a change to the money wage rate occurs that correctly expects the increase in aggregate demand. Label it. Draw a point at the new equilibrium.

119

The left graph shows an economy's labor market. Draw a point that shows equilibrium in the labor market. The right graph shows the economy's production function. Draw a point on the production function that shows potential GDP in this economy.

Draw a production possibilities frontier for Hillary's Hobby Factory that shows a tradeoff. Label the curve.

120

The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of food crops from 2 tons per day to 3 tons per day, the opportunity cost of the additional ton of food crops is 14 barrels of ethanol. If Brazil increases production of ethanol from 40 barrels per day to 54 barrels per day, the opportunity cost of the additional 14 barrels of ethanol is 1 ton of food crops. The opportunity cost of producing an additional ton of food crops is equal to ______.

121

The left graph shows Monday Island's PPF. In the right graph, draw three points that show the marginal cost when the number of yams increases from 0 to 1, from 2 to 3, and from 4 to 5. Draw the MC curve through the points. Label it.

122

Draw a new PPF that illustrates the effect of a technological change that brings new and better ways of producing both ships and planes. Make the PPF that you draw show increasing opportunity cost. Label the curve.

123

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $9 comma 0009,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $1 comma 0001,000, visas cost $300300, and living expenses are $2 comma 0002,000. What is the opportunity cost of your plan to travel in Europe?

12300 (ALL TOGETHER)

Upper A farm grows wheat and produces pork. The marginal cost of producing each of these products increases as more is produced. Draw the firm's PPF. Label it PPF1. The farm adopts a new technology that allows it to use fewer resources to fatten pigs. Draw a PPF that shows the impact of the new technology. Label it PPF2.

124

The graph shows a demand curve for DVDs. Draw a demand curve that shows what happens in the market for DVDs if the price of a DVD is expected to fall in the future comma but all other influences on buying plans remain the same. Label the curve D1.

125

Draw a supply curve of cellphones. Label it. Use any prices and quantities you wish but make your supply curve obey the law of supply. Draw an arrow to indicate what happens to the quantity of cellphones supplied when the price of a cellphone rises.

126

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. The graph shows the supply curve of low-fat milk. Suppose dairy farmers decide to switch from producing full dash cream milk to growing vegetables. Draw a new supply curve that shows the effect of this event. Label the curve.

127

Given the demand and supply curves in the graph, draw a horizontal line at a price at which there is a shortage of raspberries. Label it Shortage.

128

The table shows the demand and supply schedules for gum. Price (cents per pack) Quantity demanded Quantity supplied (packs of gum per week) 20 180 60 40 140 100 60 100 140 80 60 180 100 20 220 Draw a demand curve and a supply curve using the numbers in the table. Label the curves. Draw a point to show the equilibrium price and equilibrium quantity.

129

5. The graph shows the production possibilities frontiers for Botswana and South Africa in 1980. Draw 1) a point on Botswana's PPF labeled Botswana1980 2) a point on the South African PPF labeled SA1980. Draw new PPFs for Botswana and South Africa that illustrate their production possibilities in 2012. Label both curves.

Given the demand and supply curves in the graph, draw a horizontal line at a price at which there is a surplus of snowboards. Label it Surplus.

130

The graph shows the demand curve for MP 3 players and the supply curve of MP 3 players. Draw a point at the equilibrium price and quantity of MP 3 players. Label it 1. Draw a second supply curve that shows what happens in the market for MP 3 players if the wage rates of workers who produce MP 3 players fall but all other influences on selling plans remain the same. Label the curve S1. Draw a point at the new equilibrium price and quantity. Label it 2.

131

The figure shows the flows of expenditure and income in PacificaPacifica. During 2013, flow A was $13,134 billion, flow B was $9,162 billion, flow D was $3,340 billion, and flow E was negative $−$777 billion. Calculate GDP and government expenditure. >>> Answer to 1 decimal place. During 2013, GDP was $ gov expend was

13134 1409

Draw the demand curve for tomatoes and the supply curve for tomatoes in January 2009 if the equilibrium quantity of tomatoes is 200,000 boxes a week and the equilibrium price is $6.50 a box. Label the curves. Draw a point to show the equilibrium quantity and equilibrium price. Label it 1. Show how the events in the news clip influence the market for tomatoes in January 2010 and decrease the quantity of tomatoes to 50,000 boxes and raise the price to $30 a box. Draw either a new demand curve or a new supply curve and label it. Draw a point to show the new equilibrium quantity and equilibrium price. Label it 2.

132

The graph shows the market for gasoline in the United States. Draw a point to show the equilibrium quantity and the equilibrium price of gasoline. Label the point 1. Draw a curve to show the effect of rising crude oil prices. Label it. Draw a point to show the new equilibrium quantity and the new equilibrium price of gasoline. Label the point 2.

133

The graph shows the market for gum. A fire destroys some factories that produce gum and the quantity of gum supplied decreases by 40 million packs a week at each price. Draw a curve to show the effect of this event. Label it 1. Draw a point to show the new equilibrium price and equilibrium quantity. Label it E1. At the same time the fire occurs, there is an increase in the teenage population, which increases the quantity of gum demanded by 40 million packs a week at each price. Draw a curve to show the effect of this event Label it 2. Draw a point to show the new equilibrium price and equilibrium quantity. Label it E2.

134

The graph shows the unemployment rate and the natural unemployment rate between 1980 and 2014. Draw a point that shows the unemployment rate when: 1) real GDP is less than potential GDP. Label it 1. 2) real GDP is greater than potential GDP. Label it 2. 3) real GDP is equal to potential GDP. Label it 3.

135

The tables describe an economy's labor market and its production function in 2014. What are the equilibrium real wage rate, the quantity of labor employed in 2014, labor productivity, and potential GDP in 2014?

136

137

Draw a market labor supply curve and a market labor demand curve. Label them LS0 and LD0. Draw a point at the market equilibrium. Label it 1. Now suppose a severe drought decreases labor productivity. Draw a curve that shows the effect of this decrease in labor productivity. Label it. Draw a point at the new market equilibrium. Label it 2.

138

139

In 2010, the Lee family had disposable income of $90,000, wealth of $270,000, and an expected future income of $90,000 a year. At a real interest rate of 2 percent a year, the Lee family saves $15,000 a year; at a real interest rate of 4 percent a year, they save $20,000 a year; and at a real interest rate of 6 percent, they save $25,000 a year. Draw a point to show the quantity of loanable funds supplied by the Lee family when the real interest rate is 1) 2 percent a year. Label it 1. 2) 4 percent a year. Label it 2. 3) 6 percent a year. Label it 3. Draw the Lee family's supply of loanable funds curve through the points. Label it.

The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of food crops from 2 tons per day to 3 tons per day, the opportunity cost of the additional ton of food crops is nothing barrels of ethanol. If Brazil increases production of ethanol from 40 barrels per day to 54 barrels per day, the opportunity cost of the additional 14 barrels of ethanol is ▼ 4 tons 2 tons 14 tons 1 ton of food crops. The opportunity cost of producing an additional ton of food crops is equal to ______.

14 1 the inverse of the opp cos of prod an additional barrel of ethanol

Draw a labor supply curve and a labor demand curve for Mexico. Label the curves LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Now suppose the United States returns millions of illegal immigrant workers to their home countries. Draw a curve that shows the effect of this return of workers in Mexico. Label it. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

140

First Call, Inc., a smartphone company, plans to build an assembly plant that costs $8 million if the real interest rate is 7 percent a year or a larger plant that costs $10 million if the real interest rate is 6 percent a year or a smaller plant for $6 million if the real interest rate is 8 percent a year. Draw a point to show the quantity of loanable funds demanded when the real interest rate is 1) 8 percent a year. Label it 1. 2) 7 percent a year. Label it 2. 3) 6 percent a year. Label it 3. Draw First Call's demand for loanable funds curve through the points. Label it.

141

Each graph shows the demand for money curve. In the left graph, draw a point to show the quantity of money demanded when the interest rate is 5 percent. Show the effect of an increase in the nominal interest rate. Draw either an arrow along the curve showing the direction of change, or a new demand for money curve. In the right graph, draw a point to show the quantity of money demanded when the interest rate is 5 percent. Show the effect of an increase in real GDP. Draw either an arrow along the curve showing the direction of change, or a new demand for money curve.

142

Columns A and B of the table show the demand for money schedule in Minland when real GDP (Y0) is $10 billion. Columns A and C show the demand for money schedule when real GDP (Y1) is $20 billion. A B C 1 r Y0 Y1 2 7 1.0 1.5 3 6 1.5 2.0 4 5 2.0 2.5 5 4 2.5 3.0 6 3 3.0 3.5 7 2 3.5 4.0 8 1 4.0 4.5 The graph shows the demand for money curve when real GDP is $10 billion. Draw the supply of money curve when the quantity of money is $3 billion. Label it. Draw a point to show the equilibrium in the money market. Label it 1. Draw the new demand curve for money if real GDP increases to $20 billion. Draw a point to show the new equilibrium in the money market. Label it 2.

143

The graph shows the foreign exchange market. Draw a point at the equilibrium exchange rate and the equilibrium quantity of dollars. Draw a horizontal line at a price at which there is a shortage of dollars. Label it Shortage. Draw an arrow that shows the change in the quantity demanded as the foreign exchange market moves from the price at which you have indicated the shortage toward equilibrium. Label it 1. Draw an arrow that shows the change in the quantity supplied as the foreign exchange market moves from the price at which you have indicated theshortage toward equilibrium. Label it 2.

144

LOADING... Click on the icon to read the news clip, then complete the following steps. The graph shows the foreign exchange market. Suppose Japanese exports are becoming more expensive. Show the effect in the graph. Draw either an arrow along the curve showing the direction of change, or a new curve. Label it 1. Now investors step up the sale of dollars. Show the effect in the graph. Draw either an arrow along the curve showing the direction of change, or a new curve. Label it 2.

146

The graph shows the market for U.S. dollars. People expect the exchange rate to fall. Draw the new demand curve. Label it. Draw the new supply curve. Label it. Draw a point at the new equilibrium exchange rate and equilibrium quantity of U.S. dollars.

147

The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. Potential GDP increases and the full-employment price level remains constant. Draw the new long-run aggregate supply curve and the new short-run aggregate supply curve. Label the curves. Draw a point that shows the new value of potential GDP at the full-employment price level.

148

The graph gives the long-run aggregate supply curve and the short-run aggregate supply curve for India. Suppose U.S. firms move their call handling comma IT comma and data functions to India. The full-employment price level does not change. If long-run aggregate supply changes, draw the new long-run aggregate supply curve and label it. If short-run aggregate supply changes, draw the new short-run aggregate supply curve and label it. Draw a point at the full-employment price level at potential GDP following this event.

149

In 2010, the Lee family had a disposable income of $110,000, wealth of $220,000, and an expected future income of $110,000 a year. The graph shows the Lee family's supply of loanable funds curve. In 2011, suppose the stock market crashes and default risk increases. Draw a new curve to show the effect of the change in default risk on the Lee family's supply of loanable funds curve. Label it.

The graph shows an aggregate demand curve. Suppose there is an increase in the exchange rate. Draw a new curve to show the effect of this change on aggregate demand. Label the new curve AD1. Now suppose that there is an increase in expected profits. Draw a new curve to show the effect of this change on the original AD curve. Label the new curve AD2.

150

The graph shows an economy's long-run aggregate supply curve. The economy is at a full-employment equilibrium. Draw an aggregate demand curve and a short-run aggregate supply curve. Label them. Draw a point at the short-run equilibrium.

151

The Bureau of Economic Analysis reported that real GDP during the second quarter of 2007 was $11.5 trillion and the GDP deflator was 120. The Congressional Budget Office estimated potential GDP to be $11.6 trillion in 2007. For the year 2007, draw: 1) the long-run aggregate supply curve 2) the aggregate demand curve 3) the short-run aggregate supply curve. Make the curves consistent with the numbers above and label them. Draw a point at the short-run equilibrium.

152

In September 2008, the Bureau of Economic Analysis reported that real GDP during the second quarter of 2008 was $11.7 trillion compared to $11.5 trillion in the same quarter of 2007. The GDP deflator was 122, up from 120 in the second quarter of 2007. The Congressional Budget Office estimated potential GDP to be $11.9 trillion in the second quarter of 2008 and $11.6 trillion a year earlier. The graph shows the U.S. economy in September 2007. Show how the economy arrived at its new equilibrium in 2008. Draw a new aggregate demand curve, a new short-run aggregate supply curve, and a new long-run aggregate supply curve. Label them. Draw a point at the new short-run equilibrium.

153

The graph shows the economy when consumers experience a decrease in consumer confidence. Draw a curve that shows how the economy returns to a full-employment equilibrium with no intervention by the government or central bank. Label it. Draw a point at the new long-run macroeconomic equilibrium.

155

LOADING... Click on the icon to read the news clip, then complete the following steps. The graph shows the aggregate demand curve and the short-run aggregate supply curve in the U.S. economy. Draw a curve that shows the effect of depreciation of the dollar. Label it. Draw a point at the new short-run macroeconomic equilibrium. `

156

The graph shows an economy in long-run equilibrium. The following events occur. A deep recession hits the world economy. The world oil price rises sharply. U.S. businesses expect future profits to fall. Draw a new AD curve and a new SAS curve that show the combined effects of the three events. Label the curves. Draw a point at the new equilibrium.

157

Suppose the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium quantity of loanable funds and real interest rate. Label it 1. Draw a curve that shows the effect of the increase in productivity. Label it. Draw a point at the new equilibrium quantity of loanable funds and real interest rate. Label it 2.

158

Suppose the business cycle in the United States is best described by RBC theory. An advance in technology increases productivity. Draw a demand curve for labor. Label it LD0. Draw a supply curve of labor. Label it LS0. Draw a point at the equilibrium quantity of labor and real wage rate. Draw two new curves that show the effect of the increase in productivity. Label the curves. Draw a point at the new equilibrium quantity of labor and real wage rate.

159

Show the effect on the real interest rate and equilibrium quantity of loanable funds of an increase in the demand for loanable funds and a smaller increase in the supply of loanable funds. Draw a demand for loanable funds curve. Label it DLF0. Draw a supply of loanable funds curve. Label it SLF0. Draw a point at the equilibrium real interest rate and quantity of loanable funds. Label it 1. Draw a curve that shows an increase in the demand for loanable funds. Label it DLF1. Draw a curve that shows a smaller increase in the supply of loanable funds. Label it SLF1. Draw a point at the new equilibrium real interest rate and quantity of loanable funds. Label it 2.

The graph shows the economy's long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Draw an AD curve that shows the effect of an increase in the expected inflation rate. Label it. Draw an SAS curve that shows the effect of an increase in the money wage rate when the economy experiences expected inflation and returns to an full-employment equilibrium. Label it. Draw a point at the new long-run equilibrium.

160

The graph shows an economy's aggregate demand curve, short-run aggregate supply curve, long-run aggregate supply curve, and equilibrium. Draw the AD curve when it is correctly expected that the inflation rate will be 5 percent a year. Label it. Draw the SAS curve when a change to the money wage rate occurs that correctly anticipates the increase in aggregate demand. Label it. Draw a point at the new equilibrium.

161

The graph shows the economy of Tomorrowland, which is currently at point A. Draw a point to show the new equilibrium when the following events occur: 1) There is an increase in aggregate demand. Label it B. 2) Then the money wage rate rises. Label it C. 3) The Fed then increases the quantity of money. Label it D. 4) The money wage rises again. Label it E.

162

The graph shows the aggregate demand curve, short-run aggregate supply curve, and long-run aggregate supply curve. Draw a curve that shows the effect of a rise in the price of food and a rise in the price of energy. Label it. Draw a point at the new equilibrium in the economy.

163

164

The graph shows China's long-run aggregate supply, short-run aggregate supply, and aggregate demand curves. Draw a curve that illustrates an initial one-time rise in China's price level. Label it C1. Draw a curve to show the money wage rate response that returns the economy to its long-run equilibrium. Label it C2. Draw a point at the new long-run equilibrium.

165

The graph shows China's aggregate demand curve, short-run aggregate supply curve, and the long-run aggregate supply curve. Draw a curve that shows the effect of an increase in the quantity of money. Label it C1. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C2. Draw a curve that shows the effect of an increase in the quantity of money. Label it C3. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C4. Draw a point at the new price level and real GDP.

166

The economy starts out on the curves AD0 and SAS0. Suppose that people expect deflation (a falling price level), but aggregate demand remains at AD0. Show what happens to the short-run and long-run aggregate supply curve. Label the new curve. Draw a point at the new macroeconomic equilibrium.

168

The graph shows a short-run Phillips curve. Draw an arrow along the curve that shows the effect of an unexpected increase in inflation. Label it 1. Draw an arrow along the curve that shows the effect of an unexpected decrease in inflation. Label it 2.

169

The graph shows demand for loanable funds curve. Suppose the real interest rate falls. Draw either an arrow along the demand curve showing the direction of change or a new demand curve.

Draw a short-run Phillips curve. Label it SRPC1. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 1. Draw the short-run Phillips curve if the expected inflation rate rises by 10 percent a year. Label it SRPC2. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 2.

170

LOADING... Click on the icon to read the news clip, then complete the following steps. The graph shows Iran's short-run Phillips curve and long-run Phillips curve when the natural unemployment rate is 10 percent and the expected inflation rate is 12 percent a year. Draw a point to show the current unemployment rate and inflation rate according to the news clip. Suppose Iran removes the subsidies and consumers don't know what the higher prices will be. Illustrate the most likely path of unemployment and inflation. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 1. Suppose instead that Iran removes the subsidies and announces the new prices so that consumers know what they are. Illustrate the most likely path of inflation and unemployment. Draw either an arrow along the SRPC showing the direction of change, or a new SRPC. Label it 2.

171

A new technology is developed that increases firms' expected profits. Draw a curve that shows the effect of this event. Draw a point at the new equilibrium quantity of loanable funds and the new equilibrium real interest rate.

The graph shows the loanable funds market. During the 1990s, the invention and use of fiber-optic technologies required billions of dollars to be spent laying new cables under the oceans and launching communications satellites. Draw a curve that shows the effect of this event. Label it. Draw a point to show the new equilibrium quantity of loanable funds and real interest rate.

If the money price of a cup of coffee is $1 and the money price of gum is 50 cents per pack, then the relative price of a cup of coffee in terms of a pack of gum is _____.

The graph shows the marginal cost of producing platesplates and the marginal benefit from platesplates in Oakdale. Oakdale achieves allocative efficiency if _______.

2 plates an hour are produced

When the price of tacos rise 4%, the quantity demanded decreases 10%. What is the price elasticity of demand for tacos?

2.5

The table gives the demand and supply schedules for batteries. Suppose that demand increases by 50 batteries a day and supply decreases by 100 batteries a day. What is the new equilibrium price of a battery and what is the new equilibrium quantity of batteries? The new equilibrium price is $ -- per battery. The new equilibrium quantity is --- batteries per day.

2/ 650

The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget deficit of $1 trillion. Draw a curve that shows the effect of this deficit in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of saving. Label it 2. Draw a point to show investment when the government budget deficit is $1 trillion. Label it 3.

The graph shows the demand for money curve. Draw a point to show the interest rate and quantity of money demanded when the interest rate is 5 percent a year. Draw an arrow to show the effect of an increase in the interest rate above 5 percent a year. Label it 1. Draw an arrow to show the effect of a decrease in the interest rate below 5 percent a year. Label it 2.

Real-Time Data Analysis Exercise* *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. In December 2017, the quantity of M2 was $13 comma 833 billion and the nominal interest rate was 1.41 percent. In the graph to the right, draw a point that shows the money market in December 2017 and label it A. Draw and label the M2 demand curve in December 2017. Draw and label the M2 supply curve in December 2017.

Real-Time Data Analysis Exercise* *Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. The graph to the right shows money market equilibrium in the United States in December 2017 (M2 definition of money). In the graph, draw a point that shows the outcome if the Fed wants to lower the interest rate to 0.705 percent and label it B. Draw and label the curve that the Fed shifts to achieve its desired outcome.

Draw the long-run aggregate supply curve when potential GDP is $14.0 trillion. Label it. As we move up along the long-run aggregate supply

The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. The quantity of capital increases and the full-employment price level remains constant. Draw the new long-run aggregate supply curve and the new short-run aggregate supply curve. Label the curves. Draw a point at the full-employment price level and the new potential GDP.

The graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in the expected future inflation rate. Label it.

1. decide what to make- item and quantity 2. how to make it- production question 3. who gets it/ who to sell it to- distribution

3 economic questions

Elizabeth owns a take-out counter. In an hour she can produce 10 sandwiches or 30 wraps. Ben also owns a take-out counter. In an hour he can produce 8 sandwiches or 8 wraps. Elizabeth's opportunity cost of producing 1 sandwich is ______. Ben's opportunity cost of producing 1 sandwich is ______

3 wraps; 1 wrap Ben has a comparative advantage in sandwiches and Elizabeth has an absolute advantage in both goods.

The money price of a pack of frozen burritos is $0.50 and the money price of a jar of pasta sauce is $1.50. The opportunity cost of a jar of a jar of pasta sauce is _______.

3.00 packs of frozen burritos, which is the relative price of a jar of pasta sauce

The graph shows an economy in long-run equilibrium. The world economy goes into an expansion, U.S. businesses expect future profits to rise, and the government increases its expenditure on goods and services in a time of war or increased international tension. Draw one new curve that shows the combined effect of the three events. Label it. Draw a point at the new short-run macroeconomic equilibrium.

In Japan, potential GDP is 600 trillion yen and the graph shows the aggregate demand curve, the short-run aggregate supply curve, and the long-run aggregate supply curve.

LOADING... Click on the icon to read the news clip, then complete the following steps. The graph shows the U.S. economy at full employment when potential GDP is $12.0 trillion. Draw a curve that shows the effect of a fall in consumption expenditure. Label it. Draw a point at the new short-run equilibrium real GDP and price level. Draw a horizontal arrow at the equilibrium price that shows the output gap that arises.

The graph shows the effects on the U.S. economy of a decrease in consumption expenditure. Draw a curve that shows the return to a full-employment equilibrium with no interference by the government or central bank. Label the curve. Draw a point at the new long-run macroeconomic equilibrium.

The graph shows the aggregate demand curve and the short-run aggregate supply curve in the Indian economy. Draw a curve that shows the effect of inflation expectations in India's economy. Label it. Show the new short-run macroeconomic equilibrium.

The graph shows a business cycle. Draw a vertical arrow that shows: 1) a recessionary gap. Label it 1. 2) an inflationary gap. Label it 2. Draw a point that shows the economy at full employment.

LOADING... Click on the icon to read the news clip, then complete the following steps. The graph shows a consumption function and the 45degrees line. Draw a point on the consumption function at which consumers were actually operating in the second and third quarters of 2011. Consider that households are "struggling to buy essentials" and "credit card debt increased."

The graph to the right is a scatter diagram of consumption expenditure against disposable income from the first quarter of 2009 to the fourth quarter of 2017. Draw a consumption function through these points and label it CF.

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.

The graph shows the marginal cost of producing plates and the marginal benefit from plates in Oakdale. Oakdale achieves allocative efficiency if _______.

4 plates an hour are produced

The opportunity cost of a pack of granola bars is _______.

4.00 boxes of ramen noodles, which is the relative price of a pack of granola bars

The table gives information about a consumption function. Disposable income Consumption expenditure (millions of 2009 dollars) 0 25 100 100 200 175 300 250 Draw the consumption function and label it CF.

The table gives data about a consumption function. Disposable income Consumption expenditure (millions of 2009 dollars) 0 80 100 140 200 200 300 260 Draw the saving function. Label it SF. Draw a shape that represents dissaving. Label it. Draw a shape that represents saving. Label it.

The table gives an economy's aggregate expenditure schedule. Real GDP Aggregate planned expenditure (trillions of 2009 dollars) 0 1.0 3 2.5 6 4.0 Draw the AE curve and label it. Draw a point to show equilibrium expenditure.

The graph shows an economy's AE curve. Draw a point on the AE curve at which planned expenditure exceeds real GDP. Label it 1. Draw a point on the AE curve at which real GDP exceeds planned expenditure. Label it 2.

The graph shows the aggregate demand curve, short-run aggregate supply curve, and the long-run aggregate supply curve. Draw a curve that shows the effect of an increase in the quantity of money. Label it C1. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C2. Draw a curve that shows the effect of another increase in the quantity of money. Label it C3. Draw a curve that shows the money wage rate response that returns the economy to potential GDP. Label it C4. Draw a point at the new price level and real GDP when the economy returns to its new long-run equilibrium.

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 graph shows the aggregate demand curve, short-run aggregate supply curve, and long-run aggregate supply curve. Draw a curve that shows the effect of a rise in the price of oil. Label it. Draw a point at the new equilibrium in the economy.

Draw the short-run Phillips curve if the natural unemployment rate is 8 percent and the expected inflation rate is 2 percent a year. Label it. Draw a point at the natural unemployment rate and the expected inflation rate.

Draw the short-run Phillips curve if the expected inflation rate is 5 percent a year. Label it SRPC1. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 1. Draw the short-run Phillips curve if the expected inflation rate is 15 percent a year. Label it SRPC2. Draw a point at the expected inflation rate and the natural unemployment rate. Label it 2.

The natural unemployment rate is 6 percent and the expected inflation rate is 10 percent a year. Draw the long-run Phillips curve. Label it LRPC0. Draw the short-run Phillips curve. Label it SRPC0. Draw a point at the natural unemployment rate and the expected inflation rate. Label it 1. Now the natural unemployment rate rises to 9 percent with no change in the expected inflation rate. Draw and label LRPC1. Draw and label SRPC1. Draw a point at the natural unemployment rate and the expected inflation rate. Label it 2.

The figure shows the demand curve for DVD rentals. Suppose that the price of renting a DVD falls but all other influences on renters' plans remain the same. Show the effect in the graph. Draw either an arrow on the demand curve showing the direction of change or a new demand curve.

The figure shows the production possibilities frontiers for two countries, Remus and Romulus in 1980. Production possibilities per person are smaller in Remus than in Romulus. Put a point on each curve and label the the curves. Between 1980 and 2015, economic growth occurred in both countries, so that production possibilities per person in Remus are now greater than production possibilities in Romulus. Draw the new PPFs for Remus and Romulus that illustrate their production possibilities in 2015. Label both curves.

The U.S. GDP per capita in 2013 was approximately __________.

50,000

If they share the total gains equally, Kim gives Liam ______ and Liam gives Kim ______.

50 cakes; 15 pies

In the right graph, draw three points to show the marginal cost of producing a hot tub when the number increases from 0 to 1, from 2 to 3, and from 4 to 5 hot tubs per month. Draw a marginal cost curve that is consistent with the PPF. Label it.

The figure shows the production possibilities frontier for Suzie's Smoothies, a health-drink producer. Draw a point at which Suzie's Smoothies achieves production efficiency.

Two countries, A and B, have identical production possibilities. The graph shows the PPF of these economies. The production possibilities of country B are growing faster than those of country A. Draw a point on the PPF at which: 1) country A might be producing. Label it A 2) country B might be producing. Label it B. Draw Country A's PPF after one year. Label it PPFA. Draw Country B's PPF after one year. Label it PPFB.

Mario's produces pizza and pasta and faces increasing opportunity costs. Draw a production possibilities frontier for Mario's. Label the curve.

The figure shows the production possibilities frontier for Mario's, a pizza and pasta producer. Draw a point at which the firm achieves production efficiency. Label it Efficient. Draw a point that is attainable but inefficient. Label it Inefficient.

The table provides information about the production possibilities of a firm that produces bed linens. Possibility Pillows (per hour) Quilts (per hour) A 0 and 16 B 4 and 12 C 8 and 0 Draw points that show the three possibilities defined by the table. Label them A, B, and C. Draw the firm's PPF by connecting the points. Label it.

People are willing to give up 12 tacos per pizza if only 1 pizza is available; 7 tacos per pizza if 3 pizzas are available; and 3 tacos per pizza if 5 pizzas are available. Draw three points on the marginal benefit curve for pizza. Draw the marginal benefit curve for pizza through the points. Label the curve.

The figure shows the demand curve for tacos. Suppose that the price of a taco rises but all other influences on buyers' plans remain the same. Show the effect in the graph. Draw either an arrow on the demand curve showing the direction of change or a new demand curve.

Given the demand and supply curves in the graph, draw a horizontal line at a price at which there is a shortage of dog food. Label it Shortage.

Draw a demand curve for football tickets labeled D, and a supply curve of football tickets labeled S. Use any prices and quantities you wish but make your demand and supply curves obey the laws of demand and supply. Draw a point to indicate the equilibrium price and equilibrium quantity.

The graph shows the market for computers. Draw a point at the equilibrium price and equilibrium quantity of computers. Label it 1. Draw a new demand curve that shows what happens in the market for computers if the price of a printer rises. Label it D1. Draw a new supply curve that shows fewer firms in the computer market. Label it S1. Draw a point at the new equilibrium price and equilibrium quantity of computers. Label it 2.

Given the demand and supply curves in the graph, draw a point at the equilibrium price and equilibrium quantity.

The graph shows the market for football tickets. Draw a horizontal line at a price at which there is a shortage of football tickets. Label it Price. Draw an arrow that shows the amount of the shortage.

Draw a demand curve for lattes and label the curve. Use any prices and quantities you wish, but make your demand curve obey the law of demand.

The graph shows the market for computers. Draw a point at the market equilibrium. Label it 1. Draw a demand curve that shows what happens if the price of a printer falls. Label the curve D1. Draw a supply curve that shows the effect of a technological advance that cuts the cost of producing computers. Label it S1. Draw a point at the new market equilibrium. Label it 2.

The figure shows the supply curve of milkshakes. Draw an arrow to show what happens to firms' plans if the price of a milkshake falls but all other influences on selling plans remain the same.

If the price of a calculator is $10, 8 million calculators a year are supplied. Draw a point at this combination of price and quantity. If the price of a calculator falls to $2, 2 million calculators are supplied. Draw a point at this combination of price and quantity. Draw a supply curve for calculators that is consistent with this information. Label the curve.

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 ______ hours of tennis a week and his economics grade is ________ percent.

7 hours; 65 percent

Vicky currently produces corn and beef at point A in the graph. Use the graph to complete the following sentence. Vicky's marginal cost of producing an additional unit of corn is _______

7 units of beef

If the price of a magazine is $10, 2 million magazines a year are bought. Draw a point at this combination of price and quantity. If the price of a magazine falls to $6, 10 million magazines are bought. Draw a point at this combination of price and quantity. Draw a demand curve for magazines that is consistent with this information. Label the curve.

Rule of 70

70/ growth rate

The graph shows the unemployment rate and the natural unemployment rate from 1980 to 2014. Draw a point on the Unemployment rate curve that shows a year in which the economy experiences full employment.

Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point at the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Draw and label a curve that shows the effect of an increase in population. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

Draw a labor supply curve and a labor demand curve. Label them LS0 and LD0. Draw a point the equilibrium quantity of labor and the equilibrium real wage rate. Label it 1. Draw and label a curve that shows the effect of an increase in labor productivity. Draw a point at the new equilibrium quantity of labor and the equilibrium real wage rate. Label it 2.

The graph shows the production function of an economy. Currently, the full-employment quantity of labor is 200 billion hours a year. Population increases and the new full-employment quantity of labor is 300 billion hours. Draw an arrow that shows the effect of this increase in population. Draw a point at the new value of full-employment and potential GDP. Label it B.

An increase in households' disposable income occurs. Draw a curve that shows the effect of this event. Draw a point at the new equilibrium quantity of loanable funds and the new equilibrium real interest rate.

The graph shows the private demand for loanable funds curve and the supply of loanable funds curve. Draw a curve that shows the effect on the loanable funds market when the government has a budget deficit. Label it C1. Draw a curve that shows the Ricardo-Barro effect on the loanable funds market. Label it C2. Draw a point at the new real interest rate and quantity of loanable funds.

The graph shows the loanable funds market when there is neither a government budget surplus nor a government budget deficit. Draw a point at the equilibrium quantity of loanable funds and the equilibrium real interest rate. Label it 1. Now suppose that the government has a budget deficit of $1 trillion. Draw a curve that shows the effect of this deficit in the loanable funds market. Label it. Draw a point at the new equilibrium real interest rate and quantity of saving. Label it 2. Draw a point to show investment when the government budget deficit is $1 trillion. Label it 3.

The graph shows the demand for and supply of potato chips. Draw a curve that shows the effect of a new dip that increases the quantity of potato chips that people want to buy by 40 million bags per week at each price. Label the curve 1. Draw a curve that shows the effect of a virus that destroys potato crops and decreases the quantity of potato chips produced by 20 million bags a week at each price. Label the curve 2. Draw a point at the new equilibrium price and quantity following both events.

The figure shows the demand for money curve in Epsilon. The quantity of money is $3.1 trillion. Draw the supply of money curve. Label it. Draw a point at the equilibrium in the money market.

Draw a demand for money curve. Label it MD0. Draw a demand for money curve that shows the effect of a decrease in real GDP. Label it MD1. Draw a demand for money curve that shows the effect of financial innovation that decreases the demand for money and that follows the decrease in real GDP. Label it MD2.

The figure shows the demand for money curve in Epsilon. Draw the supply of money curve if the Fed wants the interest rate to be 6 percent a year. Label it. Draw a point at the equilibrium in the money market.

Draw a demand for dollars curve. Label it D. Draw a supply of dollars curve. Label it S. Draw a point at the equilibrium quantity and equilibrium exchange rate. Draw an arrow between the D and S curves that indicates a price at which there is a surplus of dollars. Label it.

The graph shows the demand curve for U.S. dollars. The exchange rate is currently 100 yen per dollar. Over time, the exchange rate rises to 120 yen per dollar. Show the effect in the graph. Draw either a new demand curve or an arrow along the curve showing the direction of change.

The graph shows the supply curve of U.S. dollars. The exchange rate is currently 100 yen per dollar. Over time, the exchange rate rises to 120 yen per dollar. Show the effect in the graph. Draw either a new supply curve or an arrow along the curve showing the direction of change.

The graph shows the supply curve of U.S. dollars. Draw a new supply curve that shows the effect of a rise in the expected future exchange rate. Label it.

The graph shows the demand curve for U.S. dollars. Draw a new demand curve that shows the effect of a fall in the expected future exchange rate. Label it.

Draw a demand for dollars curve. Label it D. Draw a supply of dollars curve. Label it S. Draw a point at the equilibrium quantity and exchange rate. Draw an arrow between the D and S curves that indicates a price at which there is a shortage of dollars. Label it.

The graph shows the demand curve for U.S. dollars. Draw a new demand curve that shows the effect of an increase in the U.S. interest rate differential. Label it.

During Valentine's week, more people buy chocolates and chocolatiers offer their chocolates in special red boxes which cost more to produce than the everyday box. The graph shows the market for chocolates during an average week. Draw a curve to show the effect when more people buy chocolates during Valentine's week. Label it 1. Draw a curve to show the effect of chocolatiers offering their chocolates in special red boxes. Label it 2. Draw a point to show the new equilibrium price and new equilibrium quantity.

Draw the long-run aggregate supply curve when potential GDP is $13.0 trillion. Label it.

The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. Draw a new curve that shows the effect of a rise in the money wage rate. Label it.

The graph shows the economy in long-run equilibrium. Then the world economy expands and the demand for U.S.-produced goods increases. Draw a curve that shows: 1) the effect of increased demand for U.S.-produced goods. Label it 1. 2) the effect of a rising money wage rate that returns the economy to full employment. Label it 2. Draw a point at the new long-run equilibrium.

Draw an aggregate demand curve in an economy with an above full-employment equilibrium. Label it AD. Draw a point at the above full-employment equilibrium. Draw a horizontal arrow at the equilibrium price level that shows the output gap.

The graph shows an aggregate demand curve. Draw a curve that shows the effect on aggregate demand of an increase in expected future income. Label it.

Draw an aggregate demand curve in an economy with a below full-employment equilibrium. Label it AD. Draw a point at the below full-employment equilibrium. Draw a horizontal arrow at the equilibrium price level that shows the output gap.

The graph gives a long-run aggregate supply curve and a short-run aggregate supply curve. Draw an arrow along one of the curves that illustrates a rise in the price level when the money wage rate remains unchanged. Label it 1. Draw an arrow along one of the curves that illustrates a rise in the price level accompanied by the same percentage rise in the money wage rate. Label it 2.

The graph shows a business cycle. Draw points on the curve that show when the economy is at: 1) full employment. Label it 1. 2) a below full-employment equilibrium. Label it 2. 3) an above full-employment equilibrium. Label it 3.

disposable income

= consumption + savings

Real GDP per capita

= real GDP/population

According to the FBI Bank Crime Statistics, there were more than 4,000 bank robberies in the United States in 2015, an increase of 3.9 percent over 2014. The FBI claims that banks have made themselves easy targets by refusing to install clear acrylic partitions, called bandit barriers, that separate bank tellers from the public. According to a special agent with the FBI, "Bandit barriers are a great deterrent. We've talked to guys who rob banks, and as soon as they see a bandit barrier, they go find another bank." Despite this finding, many banks have been reluctant to install these barriers. Wouldn't banks have a strong incentive to install bandit barriers to deter robberies? Why, then, do so many banks not do so? A. Banks have no economic incentive to install the barriers. B. Banks are not interested in the safety of their customers and employees. C. Banks are not rational. D. Banks would not receive any benefits from installing the barriers.

An economy produces protein shakes. If more than the efficient quantity of protein shakes is produced _______. A.marginal cost exceeds marginal benefit B.it is not possible to be producing at a point on the PPF C.marginal cost equals marginal benefit D.marginal benefit exceeds marginal cost

Choose the statement that is correct. A.When an electric utility does not consider the cost of pollution that arises from electricity production, the result is overproduction. B.An external benefit results in overproduction. C.A good with an external benefit is a good from which everyone benefits and no one can be excluded. D.An electric utility creates an external benefit by burning coal.

Economic data is used A. to test models. B. only if all relevant data is available. C. to prove that a model is true. D. to take the place of an economic model.

Economics is the social science that studies the choices _______. A.that individuals comma businesses comma governments comma and entire societies make as they cope with scarcity B. made by individuals C.that we make when we trade with other countries D.made by bankers

How are economic resources allocated in a market economy? A. by the decisions of households and firms interacting in markets B. by the government C. by consumers acting alone D. by firms acting alone

Relative to a market economy, a centrally-planned economy would be expected to be A. better at neither productive efficiency nor allocative efficiency because the absence of market-imposed competition negates the need of firms to satisfy consumer wants or produce using the lowest-cost methods. B. better at productive efficiency but not allocative efficiency because costs can be controlled by the government but consumer tastes cannot. C. better at allocative efficiency but not productive efficiency because consumers can be forced to buy in government shops but firm managers can be wasteful because there is no profit motive. D. better at both productive efficiency and allocative efficiency because entrepreneurial greed doesn't exist there.

Scarcity is central to the study of economics because it implies that A. every choice involves an opportunity cost. B. economic agents are rational. C. society must make decisions at the margin. D. wants are unlimited.

T dash shirts and tank tops are substitutes. If the price of a Upper T dash shirt increases, how does the demand for tank tops change? If the price of a Upper T dash shirt increases, the demand for tank tops will _______. A.increase, and the demand curve for tank tops will shift rightward B.increase or decrease, but the demand for Upper T dash shirts will not change C.decrease, and the demand curve for tank tops will shift leftward D.not change, but there will be a movement along the demand curve for tank tops

Today, which of the following countries has a centrally planned economy? A. North Korea B. United States C. Canada D. Germany

Which of the following best describes scarcity? A. Unlimited wants exceed the limited resources available. B. Wants cannot be fulfilled and thus all goods must be rationed. C. Prices of goods are very high. D. Markets cannot properly allocate resources.

Which of the following is a correct statement about a mixed economy? A. In a mixed economy, most economic decisions are made in markets but the government plays a significant role in the allocation of resources. B. In a mixed economy, most economic decisions are made by the government but markets plays a significant role in the allocation of resources. C. In a mixed economy, all economic decisions are made in markets. D. In a mixed economy, the government makes all economic decisions.

Which of the following statements about the idea that people are rational is correct? A. The idea assumes that consumers and firms use all available information as they act to achieve their goals. B. The idea assumes that consumers and firms take into account the costs of their actions but ignore the benefits. C. The idea assumes that consumers and firms take into account the benefits of their actions but ignore the costs. D. The idea assumes that consumers and firms always make correct decisions.

Why are models based on assumptions? A. Because models have to be simplified to be useful. B. Because models are only concerned about questions of equity, not question of efficiency. C. Because models are not intended to analyze real-world events. D. Because models are very different from theories.

What can shift the demand curve for movie downloads rightward?

A 10 percent increase in people's income if movie downloads are a normal good.

Choose two correct statement: A. To describe preferences, economists use the concept of marginal benefit; B. 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; C. We measure the marginal benefit from a good or service by the least that people are willing to pay for an additional unit of it; D. We calculate marginal benefit from the slope of the PPF.

A and B

A choice on the margin is a choice that is made by comparing all the relevant ____ systematically and _____. Marginal cost is the ____ that arises from a one-unit _____ in an activity. Marginal benefit is the _____ that arises from a one-unit _____ in an activity.

A choice on the margin is a choice that is made by comparing all the relevant alternatives systematically and incrementally. Marginal cost is the opportunity cost that arises from a one-unit increase in an activity. Marginal benefit is the benefit that arises from a one-unit increase in an activity.

______ earns ______.

A coal deposit; rent

Surplus ; fall

A decrease in the demand for tank tops brings a ______ of tank tops at the original price and the market price will ______ .

______ earns ______.

A meteorologist; wages

what is a natural experiment

A natural experiment is a situation that arises in the ordinary course of economic life in which the one factor of interest is different and other things are equal (or similar).

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

Unattainable

A point that is off the PPF

Attainable

A point that is on the PPF

what is a rational choice?

A rational choice is one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice. Only the wants of the person making a choice are relevant to determine its rationality.

Choose the statement that is incorrect. A. A rational choice will turn out to have been the best choice after the event. This is the correct answer.B. Only the wants of the person making a choice are relevant to determine its rationality. C. Economists view the choices that people make as rational. D. A rational choice is one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice.

A rational choice will turn out to have been the best choice after the event.

what is a positive relationship? what is a negative relationship?

A relationship between two variables that move in the same direction is called a positive relationship or a direct relationship. A relationship between variables that move in opposite directions is called a negative relationship or an inverse relationship.

consumed in place of; consumed together with

A substitute is a good that is _____ another good, and a complement is a good that is _____ another good.

A tradeoff is an exchange- giving up one thing to get something else. Pam and Pat both give up a cruise to take the trip to Hawaii, and Pru gives up skiing. Pam, Pat, and Pru all face tradeoffs.

what is a "what" tradeoff?

A what tradeoff tells us that what goods and services get produced depends on choices made by each one of us, by our government, and by the businesses that produce the things we buy.

Which of the following is an example of absolute advantage?

A. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

The PPF shows a tradeoff because when Hillary's Hobby Factory produces more model cars, ______.

A. it decreases the quantity of toy trains that it produces

Economic growth is defined as the _____ . A. sustained expansion of production possibilities B. increase in wage rates C. recovery from recession D. overtaking of Canada by China

A. sustained expansion of production possibilities

technological change is _____ new goods and of _____ of producing goods and services. A. the development of; of better ways B. a change in the quantity supplied of; of better ways C. a decrease in demand for; an increase in cost D. an increase in demand for; a decrease in cost

A. the development of; of better ways

Firms are institutions that organize _____ of goods and services. A. the production B. the consumption C. exports D. imports

A. the production

Which of the following is money? A. Charlie's checking account deposit at the Bank of America. B. Jen's credit card. C. Ron's debit card. D. Paulo's stash of Bitcoin.

A. Charlie's checking account deposit at the Bank of America.

Canada devotes ______ of its resources to accumulating capital and the remainder to consumption. Hong Kong devotes ______ of its resources to accumulating capital and the remainder to consumption. A. one-fifth; one-third B. one-third; one-fifth C. one-half; one-quarter D. one-quarter; one-half

A. one-fifth; one-third

During a year, a firm's net investment is $6,400 and depreciation is $1,600. What is the firm's gross investment?

A. $8,000

The figure shows Felicia's PPF. Felicia currently produces 15 bags of chips and no candies. If Felicia decides to produce 1 bag of candies, her opportunity cost of the bag of candies is _______ of chips. A. 3 bags B. 1 bag C. 0 bags D. 1/3 of a bag

A. 3 bags

Which of the following is an example of absolute advantage?

A. Amy is smart and performs well in exams. B. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task. C. Charlie enjoys skiing while Ryan enjoys hiking. D.Nick has an advantage over others in the industry because he knows many software programs. It is B

The graph shows the production possibilities frontiers for India and the United States. The United States does not produce tea because _______. A. India has a comparative advantage in producing tea and the United States has a comparative advantage in other goods and services B. the United States has an absolute advantage in producing other goods and services C. India has an absolute advantage in producing tea D. India's labor force is better at labor-intensive work

A. India has a comparative advantage in producing tea and the United States has a comparative advantage in other goods and services

Which of the following is an example of comparative advantage?

A. Michael Jordan is an American basketball player. B. The United States produces less textile products and more electronic products. C.Angela makes better pastries than Sherrie. D. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes. It is D

Choose the option that is an example of government expenditure.

A. The purchase of telephone service for the Prime Minister's office

Choose the correct statement

A. We measure the change in production by comparing the value of real GDP in two different years.

Economics is _______. A. a social science B. a subject that tells countries what good they must trade C. a subject that teaches us how to eliminate scarcity D. a subject that tells government what they must do

A. a social science

Along this PPF, the quantities of ______. A. all goods other than pillows and quilts remain constant B. all goods other than pillows and quilts are increasing C. all goods other than pillows and quilts are decreasing D. pillows and quilts are either increasing or decreasing, so there is no scarcity

A. all goods other than pillows and quilts remain constant

A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity. A. alternatives; incrementally; opportunity cost; increase; benefit; increase B. prices; incrementally; opportunity cost; decrease; revenue; increase C. costs; incrementally; total cost; decrease; benefit; decrease D. profits; totally; total cost; increase; opportunity cost; decrease

A. alternatives; incrementally; opportunity cost; increase; benefit; increase

A market is an arrangement that brings _____ together and enables them to get information and do business with each other. A. buyers and sellers B. central banks and commercial banks C. sellers and entrepreneurs D. governments and producers

A. buyers and sellers

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology. A. can be produced and the combinations that cannot be produced B. can be produced and the prices paid for those C. we want to produce and what we want to consume D. we want to produce but cannot consume

A. can be produced and the combinations that cannot be produced

When a good is imported, _______.

A. consumers lose because they pay a higher price although they increase the quantity they consume B. consumers gain because they pay a lower price and increase the quantity they consume C. producers and consumers both gain D. producers gain because they receive a higher price and increase the quantity they produce It is B

In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon. Assume that there were no changes in average income, population, or any other influence on buying plans. Explain how the rise in the price of gasoline would affect a. The demand for gasoline. b. The quantity of gasoline demanded. Given the law of demand, you would expect the rise in the price of gasoline to ______ the quantity of gasoline demanded and ______ the demand for gasoline. A. decrease; not change B. decrease; decrease C. increase; decrease D. not change; decrease

A. decrease; not change

Complete the sentence. Real GDP

A. does not include a measure of household production or underground economic activity

A tradeoff is _______. A. giving up one thing to get something else B. always in the social interest C. the key to reconciling self-interest and social interest D. the benefit you receive from an increase in an activity

A. giving up one thing to get something else

What is the law of supply and how do we illustrate it? The law of supply states that other things remaining the same, the _______ the price of a good, the _______. A. higher; greater is the quantity supplied B. lower; greater is the quantity supplied C. higher; greater is the supply of the good D. higher; smaller is the quantity supplied A supply curve that illustrates the law of supply _______. A. shows that the quantity supplied increases as the price rises B. shows that the quantity supplied remains the same when the price falls C. slopes downward to a minimum and then slopes upward D. shows that the quantity supplied decreases as the price rises

A. higher; greater is the quantity supplied A. shows that the quantity supplied increases as the price rises

What is the law of demand and how do we illustrate it? The law of demand states that other things remaining the same, the _______ the price of a good, the _______. A. higher; smaller is the quantity demanded B. higher; greater is the quantity demanded C. lower; greater is demand D. lower; smaller is the quantity demanded A demand curve that illustrates the law of demand ______. A. slopes upward to a maximum comma and then slopes downward B. shows that the quantity demanded increases as the price falls C. shows that the quantity demanded decreases as the price falls D. is horizontal

A. higher; smaller is the quantity demanded B. shows that the quantity demanded increases as the price falls

Which of the following questions is a microeconomic question? A. how does HP decide what price to charge for a computer? B. what is the cause of inflation? C. does the united states benefit form international trade? D. can the congress bring prosperity by cutting tax rates?

A. how does HP decide what price to charge for a computer?

Factors of production are grouped into four categories, which are _______. A. land, labor, capital, and entrepreneurship B. capital, human capital, financial capital, and labor C. land, labor, capital, and human capital D. land, capital, human capital, and entrepreneurship

A. land, labor, capital, and entrepreneurship

Monday Island produces only tomatoes and bananas. Complete the following sentence. The marginal cost of a tomato is the number of bananas that ______ to get one more ______. A. must be forgone; tomato B. people are willing to forgo; tomato C. people are willing to forgo; banana D. must be forgone; banana

A. must be forgone; tomato

A rational choice is _______. A. one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice B. always the right choice C. best for the person making that choice in the long run but not in the short run D. best for the person making that choice in the short run but not in the long run

A. one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

When a good is exported, _______.

A. producers and consumers both gain B. consumers gain because they pay a lower price although they decrease the quantity they consume C. producers lose because they receive a lower price and decrease the quantity they produce D. consumers lose because they pay a higher price and decrease the quantity they consume It is D

A decrease in the supply of sports cars brings a ______ of sports cars at the original price and a ______ in their price. A. shortage; rise B. shortage; fall C. surplus; rise D. surplus; fall

A. shortage; rise

An increase in the demand for pasta together with a decrease in the supply of pasta brings a ______ of pasta at the original price and a ______ in its price. A. shortage; rise B. surplus; rise C. surplus; fall D. shortage; fall

A. shortage; rise

The marginal benefit curve you have drawn illustrates that the greater the quantity of yoga mats we have, _______. A. the fewer protein shakes people are willing to pay for an additional yoga mat B. the smaller the marginal cost of producing a yoga mat C. the more protein shakes people are willing to pay for an additional yoga mat D. the greater the opportunity cost of a yoga mat

A. the fewer protein shakes people are willing to pay for an additional yoga mat

Complete the following. In the market for sunscreen, the supply of sunscreen will increase if ______. A. the number of sunscreen manufacturers increases B. the future expected price of a sunscreen increases C. price of a sunscreen increases D. the price of UVA absorbing ingredients increases

A. the number of sunscreen manufacturers increases

Suppose the price of a bag of chips is 60 cents. To return to equilibrium, ______. A. the quantity demanded decreases and the quantity supplied increases B. demand decreases and supply increases C. the quantity demanded increases and the quantity supplied decreases D. demand increases and supply decreases

A. the quantity demanded decreases and the quantity supplied increases

Complete the statement. Allocative efficiency occurs when ______. A. we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal cost B. we are producing at a point on the PPF nbsp C. marginal cost is minimized D. we cannot produce more of any good without giving up some other good

A. we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal cost

Every day, we make many choices. We can't avoid having to make choices because ________. A. we don't have enough time to do all the things we'd like to do B. there is too much available C. we have too much time on our hands D. we keep changing out minds E. we can't find enough things to do to fill our day

A. we don't have enough time to do all the things we'd like to do

Read the news article, then answer the following questions. [Amazon Delays Opening of Cashier-Less Store to Work Out Kinks Amazon.com Inc. is delaying the public opening of its first cashier-less convenience store because of technical complications. Amazon Go was due to launch to the public by the end of the month, ... It is unclear when it will now open, as it works out kinks in the technology to automatically charge customers when they leave, instead of needing to have cash registers, checkouts and lines. The store in Amazon's hometown of Seattle uses cameras, sensors and algorithms to watch customers and track what they pick up, ... But Amazon has run into problems tracking more than about 20 people in the store at one time, ... The store will continue to need employees to help ensure the technology is accurately tracking purchases for the near future. ... Wall Street Journal, March 28, 2017] The news clip deals with the ______ questions. A. what and how B. how and when C. why and when D. what and why The news clip implies a tradeoff between ______. A. using traditional check-out methods and using cashier-less technology B. buying from Amazon and not buying from Amazon C. Amazon and its competitors D. having more than twenty people in the store and having less than twenty people in the store

A. what and how A. using traditional check-out methods and using cashier-less technology

The equilibrium price is ______. A. $2.50 per hamburger B. $2.50 times 2.5 million hamburgers C. 2.5 million hamburgers D. unknown because we don't know the number of hamburgers actually sold

A. $2.50 per hamburger

Leisure Island has 50 hours of labor a day that it can use to produce entertainment and good food. The table shows the maximum quantity of each good that Leisure Island can produce with different quantities of labor. 1. Can Leisure Island produce 4 shows and 14 meals a week? A. No, it cannot produce these quantities. B. Yes, it can produce these quantities 2. If Leisure Island produces 4 shows and 9 meals a week, is production efficient? A. No, it is not efficient B. Yes, it is efficient 3. If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff? A. No, it doesn't face a tradeoff. B. Yes, it faces a tradeoff. 4. Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week. The opportunity cost of producing 2 additional shows per week is ------- per week.

A. No, it cannot produce these quantities. A. No, it is not efficient B. Yes, it faces a tradeoff. 3 meals

An incentive is _______. A.a reward that encourages an action or a penalty that discourages an action B.always in the form of money C.an opportunity to gamble at Las Vegas D.a boost in every student's grade

A.a reward that encourages an action or a penalty that discourages

Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A. More Americans are satisfied with their standard of living than eight years ago B. WHO recommends tax of at least 20 % on sugary drinks C. The U.S. is borrowing less from China comma more from everybody else D. Why are incomes growing much faster in China and India than in the United States question mark Statement A involves a ______ issue. Statement B involves a ______ issue. Statement C involves a ______ issue. Statement D involves a ______ issue.

A: macro B: micro C: macro D: macro

Production efficiency occurs when we produce goods and services at the lowest possible cost.

Allocative efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people value _____ - it is not possible to produce more of a good or service without _____ some of another good that people value more highly

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people value most highly - it is not possible to produce more of a good or service without giving up some of another good that people value more highly

Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then _______.

Alpha consumes less than Beta today, but it will grow faster than Beta

Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then _______.

Alpha consumes more than Beta today, but it will grow slower than Beta

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

what is an economic experiment

An economic experiment puts people in a decision-making situation and varies the influence of one factor at a time to discover how they respond.

rise; an increase

An increase in the demand for ski trips brings a ______ in the price of a ski trip and ______ in the quantity of ski trips supplied.

decrease; increase

An increase in the price of soap, a complement in production of palm oil, will ______ the equilibrium price of palm oil and ______ the equilibrium quantity of palm oil.

Surplus; Fall

An increase in the supply of rice brings a ______ of rice at the original price and a ______ in its price.

______ earns ______. Land earns rent. Labor earns wages. Capital earns interest. Entrepreneurship earns profit.

An oil deposit is an example of landland, which earns rentrent.

At a price of $1 bottle, we plan to sell 2,000 bottles per day.

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?

normative; cannot

Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should not be increased. nothing 2. Hydrogen is a cleaner fuel than gasoline. nothing Statement 1 is a ______ statement because it ______ be tested.

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?

At a price of $1 bottle, we plan to sell 2,000 bottles per day.

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?

At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.

______ 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

A decrease in tuition fees will decrease your college's total revenue if the price elasticity of demand for college education is ______. A.negative B.greater than zero and less than 1 C.greater than 1 D.equal to 1

An increase in the demand for pizza brings a ______ in the price of pizza and ______ in the quantity of pizza supplied. A.rise; a decrease B.rise; an increase C.fall; an increase D.fall; a decrease

Economists assume that people are rational in the sense that A. they do not respond to economic incentives. B. they use all available information as they take actions intended to achieve their goals. C. they make decisions based on total, rather than marginal, variables. D. they generally make the correct choices.

If the demand for laptops is price inelastic, the quantity of laptops sold will ______ and total revenue will ______. A.increase; rise B.increase; fall C.decrease; fall D.decrease; rise

In a market system, how does society decide what goods and services will be produced? A. Firms alone determine what goods and services will be produced. B. Consumers, firms, and the government determine what goods and services will be produced by the choices they make. C. The government decides what goods and services will be produced. D. What goods and services will be produced is determined by a vote of consumers.

In a market system, how does society decide who will receive the goods and services produced? A. Consumers determine who receives the goods and services produced. B. Who receives the goods and services produced depends largely on how income is distributed. C. Firms determine who receives the goods and services produced. D. The government determines the goods and services produced.

In a market system, what determines how goods and services will be produced? A. Consumers determine how goods and services will be produced. B. Firms determine how goods and services will be produced. C. Consumers, firms, and the government determine together how goods and services will be produced. D. The government determines how goods and services will be produced.

Price elasticity of demand _______. A.is equal to the percentage change in price divided by the percentage change in quantity demanded B.and the slope of the demand curve are two different concepts C.is a measure of the responsiveness of the quantity demanded of a good to a change in income, when all other influences on buyers' plans remain the same D.is measured in dollars

Price regulations that put a cap on the rent a landlord is permitted to charge lead to ______. A monopoly leads to ______. A.overproduction; underproduction B.underproduction; underproduction C.underproduction; overproduction D.overproduction; overproduction

Taxes lead to ______ and subsidies lead to ______. A.overproduction; overproduction B.underproduction; overproduction C.underproduction; underproduction D.overproduction; underproduction

Which of the following statements about an economic variable is correct? A. An economic variable is always measured in dollars. B. An economic variable is something measurable that can have different values. C. An economic variable must always be a positive number. D. An economic variable must either be the price of a good or service or the quantity of a good or service.

Social institutions such as firms, markets, property rights, and money _______. A. give comparative advantage in all goods and services to advanced economies B. are necessary to make decentralized coordination work C. were collectively unknown until the 20th century D. make decentralized coordination more complicated than it would be under central

B. are necessary to make decentralized coordination work

The flows in the market economy that go from firms to households are _______. The flows in the market economy that go from households to firms are _______. A. all flowing through factor markets; all flowing through goods markets B. the real flows of goods and services and the income flows of wages, rent, interest, and profit; the real flows of labor, land, capital, and entrepreneurship and the flow of expenditure on goods and services C. the income flows of wages, rent, interest, and profit and the flow of expenditure on goods and services; the real flows of goods and services and the real flows of labor, land, capital, and entrepreneurship D. the real flows of labor comma land comma capital comma and entrepreneurship and the flow of expenditure on goods and services; the real flows of goods and services and the income flows of wages comma rent comma interest comma and profit

B. the real flows of goods and services and the income flows of wages, rent, interest, and profit; the real flows of labor, land, capital, and entrepreneurship and the flow of expenditure on goods and services

The demand curve is P= 700 - 10Qp. The supply curve is P= 500 + 5Qs At market equilibrium, the equilibrium quantity is and the equilibrium price is

B. 13.3; 566.67

Both Mia and Mario produce only the item in which they have a comparative advantage. Then they trade one pasta for one pizza. Before specialization and trade started, Mia and Mario were each producing 4 dishes of pasta and 4 pizzas an hour. The total gains from trade are ______ dishes of pasta and ______ pizzas an hour. A. 12, 4 B. 4, 4 C. 4, 12 D. 12, 12

B. 4, 4

Complete the following sentences. 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.

B. A final; An intermediate

Which of the following pairs does not match? A. Entrepreneurship; profit B. Land; wages C. Capital; interest D. Labor; wages

B. Land; wages

Which of the following illustrates scarcity? A. Mary loves watching movies B. Megan wants to buy a CD that costs $25 but has only $10 to spend. C. Ron will travel to New York City for Thanksgiving D. I got a new dress from my mother

B. Megan wants to buy a CD that costs $25 but has only $10 to spend

Choose the correct statement,

B. Nominal GDP is the value of the final goods and services produced in a given year valued at the prices of that year.

Which of the following is an example of entrepreneurship? A. facebook is a social networking site B. Sam Walton created the multinational retail corporation bran Walmart in 1962 C. industrial output in China is increasing D. Honda Civic and Toyota Corolla are the best-selling compact cars in North America

B. Sam Walton created the multinational retail corporation bran Walmart in 1962

Choose the correct statements about competitive markets. 1. A single buyer in a competitive market cannot influence the price. 2. A competitive market has many buyers. 3. A competitive market is a market for services but not for goods. 4. A competitive market must be a global market.

B. Statements 1 and 2 are correct

Choose the statement about the Lucas wedge that is correct.

B. The Lucas wedge accumulated to $790,000 per person by 2016.

______ is an example of ______. A. Upper A police officer; entrepreneurship B. Upper A hospital administrator; labor C. An interstate highway; land D. The Florida Everglades; capital

B. Upper A hospital administrator; labor

Complete the following statement. Specialization and the gains from trade make the economy PPF outward bowed because _______. A. as more of a good is produced, people are willing to pay less for each additional unit of the good B. a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs C. all producers have bowed-out PPFs, and the economy PPF is the horizontal sum of the individual PPFs D. a good is initially produced by producers with higher opportunity costs and eventually produced by producers with lower opportunity costs

B. a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs

In a low-income country, _________. As a country invests in capital and uses more advanced technologies _______. A. tourism accounts for the largest percentage of total production; manufacturing becomes a greater percentage of total production and tourism continues to grow B. agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks C. manufacturing accounts for a large percentage of total production; the country becomes self-sufficient in food production D. agriculture accounts for a large percentage of total production; agriculture becomes an even larger percentage of total production but some manufacturing occurs In a high-income country like the United States _______. A. technological advances increase agricultural and industrial productivity, so agriculture and industry are a larger percentage of total production than services B. agricultural production, industrial production, and services are equal percentages of total production C. technological advances increase jobs in manufacturing and manufacturing is an increasing percentage of total production D. technological advances release labor from industrial production and move the labor into service production

B. agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks D. technological advances release labor from industrial production and move the labor into service production

The effect of the new dip on the market for potato chips is _______. A. a decrease in the supply of potato chips and an increase in the quantity of potato chips demanded B. an increase in demand and an increase in the quantity of potato chips supplied C. an increase in the supply of potato chips D. an increase in demand and an increase in the supply of potato chips

B. an increase in demand and an increase in the quantity of potato chips supplied

The figure shows the production possibilities frontier for a firm that produces pet food. Complete the following sentences. Point A is ______ and point B is ______. A. attainable; attainable B. attainable; unattainable C. unattainable; attainable D. unattainable; unattainable This PPF ______ illustrate scarcity because ______. A. does not; there is sufficient dog food and cat food produced to feed everyone's pet B. does not; the firm can produce any quantity it wants if it is willing to pay a high enough price C. 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 D. does; because the firm can attain the points outside the frontier but not inside the frontier

B. attainable; unattainable D. does; because the firm can attain the points outside the frontier but not inside the frontier

A power generating plant is an example of the factor of production _________. A. human capital B. capital C. labor D. service

B. capital

Complete the following sentence. Upper A decrease in the price of bread, a substitute in production of cakes, will ______ the equilibrium price of cakes and ______ the equilibrium quantity of cakes. A. increase; increase B. decrease; increase C. decrease; decrease D. increase; decrease

B. decrease; increase

Complete the sentences. The goods and services that we sell to people in other countries are The goods and services that we buy from people in other countries are

B. exports; imports; A. called net exports

When a surplus arises, the price ______ to its equilibrium, which _______. A. rises; decreases demand and increases supply B. falls; increases the quantity demanded and decreases the quantity supplied C. rises; decreases the quantity demanded and increases the quantity supplied D. falls; increases demand and decreases supply

B. falls; increases the quantity demanded and decreases the quantity supplied

Which of the following are included in the expenditure approach to calculating GDP?

B. government expenditure, investment; net exports of goods and services

Which of the following are included in the expenditure approach to calculating GDP? value

B. government expenditure; investment; net exports of goods and services

As the average income in China continues to increase, explain how the following will change: a. The demand for beef b. The demand for rice

B. increase if beef is a normal good; decrease if rice is an inferior good

complete the following statement. Failure to specialize and reap the games from trade is _______ because _______. A. efficient; it leads to self-sufficiency B. inefficient; production is at a point inside the economy's PPF C. inefficient; production occurs on the PPF but consumption occurs inside the PPF D. inefficient; resources are not fully employed

B. inefficient; production is at a point inside the economy's PPF

The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded. A. other things remaining the same; lower B. other things remaining the same; higher C. even when other factors change; higher D. even when other factors change; lower

B. other things remaining the same; higher

Complete the sentence. Aggregate expenditure in Canada is equal to consumption expenditure plus investment

B. plus government expenditure plus net exports

Zach is an engineering student who is considering taking an extra course in Spanish. An incentive that might encourage him to take the Spanish course is _______. A. an increase in Spanish teachers' wages B. softer grading in Spanish C. an increase in the salaries fo engineering graduates D. an increase in tuition

B. softer grading in Spanish

Now suppose that the price is 80 cents a pack. Describe the situation in the gum market and explain how the price adjusts. If the price is 80 cents a pack, there is a ______ of gum, so the price of a pack of gum ______. A. surplus; rises B. surplus; falls C. shortage; falls D. shortage; rises As the market moves toward the equilibrium price, the quantity demanded _______ and the quantity supplied _______. A. increases; increases B. decreases; decreases C. decreases; increases D. increases; decreases

B. surplus; falls D. increases; decreases

Which of the following topics is studied in macroeconomics? A. all aspects of scarcity B. the national economy and the global economy C. big businesses D. the choices that individuals make

B. the national economy and the global economy

Along the supply curve, _______. A. the quantity supplied increases as the price rises because the expected future price also rises B. the price changes but all other influences on producers' planned sales remain the same C. the quantity supplied increases as the price rises because the prices of substitutes in production also rise D. the quantity supplied increases as the price rises because technology advances

B. the price changes but all other influences on producers' planned sales remain the same

Read the news clip, then answer the following question. When Kanye West gave away tickets, what was free and what was scarce? [Kanye West Offers Free Concert Tickets Kanye West has teamed with Los Angeles inner-city schools to offer free passes for students. Source: consequenceofsound.net, November 27, 2016] A. the publicity that Kanye receives for giving the concert is not free because he spent many hours in rehearsal preparing for the concert B. the seats available for the concert are scare because there are only a certain number available C. the time that a student spends in line to obtain a pass is free because students don't have jobs D. the time that reporters use to attend and report on the concert is free because attending a concert doesn't feel like work.

B. the seats available for the concert are scare because there are only a certain number available

Rent is the income paid for the use of _____. Wages are income paid for the services of _____. Profit (or loss) is the _____ earned by an entrepreneur for running a business. Interest is the income paid for the use of _____. A. goods and services; capital; rent; loans B. land; labor; income; capital C. labor; land; capital; capital D. labor; land; income; capital

B. land; labor; income; capital

People make rational choices by comparing _______. A. the firms that make two similar goods B. the countries in which a good is produced C. whether a purchase should be made during an economic expansion or an economic recession D. benefits and costs

Benefits and costs

Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds H Salt's opportunity cost of preparing lobster, then all the following are true except ______. If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.

Big Lobster has a comparative advantage in lobster divergent opportunity cost

Explain how the following headlines concern self-interest and the social interest: 1. Business Depot, a U.S office supply store, is opening in Europe, and McDonalds is expanding in India. 2. Cigarette packs must carry a health warning.

Business Depot and McDonalds make decisions in their _self-interest_ and by serving the self-interest of customers _contribute to the social interest._ Health warnings are in the _social interest_, but people decide whether to heed them in their _self-interest_.

A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity. A.profits; totally; total cost; increase; opportunity cost; decrease B.prices; incrementally; opportunity cost; decrease; revenue; increase C.alternatives; incrementally; opportunity cost; increase; benefit; increase D.costs; incrementally; total cost; decrease; benefit; decrease

A decrease in the price of fish fillets, a complement in production of fish oil, will ______ the equilibrium price of fish oil and ______ the equilibrium quantity of fish oil. A.increase; increase B.decrease; decrease C.increase; decrease D.decrease; increase

A laptop is a normal good. If the price of a laptop rises, you predict that the demand for laptops _______. A.might increase comma decrease comma or remain unchanged B.will decrease C.will remain unchanged D.will increase

Choose the correct statement: A. Marginal benefit is the highest-valued alternative forgone; B. The more we have of any good, the more were willing to pay for an additional unit; C. Decreasing marginal benefit is a universal feature of people's preference; D. The marginal benefit curve illustrates decreasing opportunity cost.

Productive efficiency means that A. every good or service is distributed fairly. B. every good or service is produced up to the point where marginal benefit is equal to marginal cost. C. a good or service is produced at the lowest possible cost. D. a good or service is produced as quickly as possible.

When does productive efficiency occur? A. Productive efficiency occurs when an economy achieves equity. B. Productive efficiency occurs when an economy no longer relies on voluntary exchange. C. Productive efficiency occurs when a good or service is produced at the lowest possible cost. D. Productive efficiency occurs when production is in accordance with consumer preferences.

Which statement is correct: A. What we do in pursuit of our self-interest is independent of the social interest; B. Social interest and self-interest can come into conflict; C. Choices that are the best for more than one person are said to be in the social interest; D. You make choices based on what you think is best for society as a whole

Which statement that is incorrect: A. For a given goal, economics compares the marginal benefit from achieving the goal with its marginal cost to find the best use of the available resources; B. All the policy questions involves a blend of positive and normative questions; C. Governments can make the better decisions by using the tools of economic, but businesses require the tools of business administration, not economic; D. Economic can't help with the normative part of a policy goal.

Capital accumulation is the _____, including _____ capital. A. development of new goods; financial B. increase in firms' profits; financial C. growth of capital resources; human D. growth of real GDP; physical

C Capital accumulation is the growth of capital resources, including human capital.

The opportunity cost of economic growth _______. A. is capital consumption= B. is zero C. is fewer consumption goods today D. is human capital

C To expand production possibilities in the future, a nation must devote fewer resources to producing consumption goods and some resources to accumulating capital and developing technologies. And the faster we make our production grow, the greater is the opportunity cost of economic growth.

income approach/expenditures approach

C + I + G + (X - M) C = consumption expenditures I = investment spending G = government spending X = exports M = imports

Marginal benefit from food crops _______. A. equals the marginal cost of food crops B. increases as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day C. cannot be calculated from the table because marginal benefit is unrelated to production possibilities D. remains constant as the quantity of food crops increases from 1 tonne a day to 2 tonnes a day

C. cannot be calculated from the table because marginal benefit is unrelated to production possibilities

The main functions of markets include _______. A. building places for business transactions comma such as shopping malls B. promoting the social interest comma but not the self dash interest C. enabling buyers and sellers to get information about each other D. selling goods but not factors of production

C. enabling buyers and sellers to get information about each other [ie: do business]

Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts. A. land B. environmental factors C. factors of production D. capital

C. factors of production

For 50 years, Cuba has had a centrally planned economy in which government makes the big decisions on how resources will be allocated. We would expect Cuba's production possibilities (per person) to be smaller than those of the United States because Cuba _______. A. is a smaller country than the United States B. specializes in capital goods and imports all of its consumption goods C. produces a greater proportion of consumption goods than capital goods, so its PPF does not shift outward as quickly as the PPF in the United States D. does not have a comparative advantage in any goods compared to the United States _______ is the social institution that helps the U.S. economy achieve allocative efficiency that Cuba might lack. A. Property rights B. A rightward-shifting PPF C. Markets D. Money

C. produces a greater proportion of consumption goods than capital goods, so its PPF does not shift outward as quickly as the PPF in the United States & A. Property rights

Which of the following is an example of comparative advantage? A. Angela makes better pastries than Sherrie. B. The United States produces less textile products and more electronic products. C. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes. D. Michael Jordan is an American basketball player. Which of the following is an example of absolute advantage? A. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task. B. Amy is smart and performs well in exams. C. Charlie enjoys skiing while Ryan enjoys hiking. D. Nick has an advantage over others in the industry because he knows many software programs.

C. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes. A. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

_____, is an example of a choice in the self-interest. _____, is an example of a choice in the social interest. A. It is too cold in North Dakota; Louisiana suffered from Hurricane Katrina B. Texas has a very high per capita GDP; We cancelled our trip to India because of the devastating floods C. I buy pizza for lunch; I am collecting funds to help the flood victims D. I go home on Thanksgiving; I would like to buy a new cellphone

C. I buy pizza for lunch; I am collecting funds to help the flood victims

Which of the following news headlines does not deal with scarcity? A. the cost of going green B. home health aides: minimum wage hikes could deepen shortage C. Netflix stock soars to new high D. saving coral reefs requires war on global warming

C. Netflix stock soars to new high

Which of the following is an example of entrepreneurship? A. Honda Civic and Toyota Corolla are the best-selling compact cars in North America. B. Facebook is a social networking site. C. Sam Walton created the multinational retail corporation brand Walmart in 1962. D. Industrial output in China is increasing.

C. Sam Walton created the multinational retail corporation brand Walmart in 1962.

Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them? A. The opportunity cost for Pam and Pat is the airfare to Hawaii minus the cost of a cruise and for Pru, it's the airfare minus the cost of a ski trip. B. The opportunity cost for each of them is the airfare to Hawaii minus the cost of a cruise. C. The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing. D. The opportunity cost for each of them is the airfare to Hawaii.

C. The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.

Give an example of Canadian consumption expenditure. is an example of Canadian consumption expenditure.

C. Your purchase of a coffee from Tim Hortons

What conditions must be satisfied if resources are used efficiently? Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______. A. cost of; cost of an eraser B. cost of; benefit from an eraser C. benefit from; cost of a pencil D. benefit from; benefit from an eraser

C. benefit from; cost of a pencil

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else. A. cannot; more B. cannot; equal C. cannot; less D. can; less

C. cannot; less

Complete the sentence. To make comparisons of real GDP between two countries we must

C. convert the real GDP of one country into the same currency units as the real GDP of the other country, and use the same prices to value the goods and services in the countries being compared

What is a typical business cycle sequence? A typical business cycle can be described by the sequence

C. expansion, peak, recession, trough

What is the law of demand and how do we illustrate it? The law of demand states that other things remaining the same, the the price of a good, the A demand curve that illustrates the law of demand

C. higher; smaller is the quantity demanded OD. shows that the quantity demanded decreases as the price falls

Why does economic growth destroy and create jobs? As a country experiences economic growth, investment in capital and advances in technology _________. A. increase production in services but decrease service jobs. Jobs are created in the agricultural industry but many American workers are unwilling to do farm work and the jobs are given to immigrants B. decrease production in services but increase service jobs. Labor moves from industrial production into the service industry but the move is slow because many workers lack the necessary education C. increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate D. increase industrial production and increase industrial jobs. Labor moves from the service industry and the agricultural industry into industrial production

C. increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate

1. "Fracking" _________. A. decreases U.S. production possibilities B. has an undetermined effect on U.S. production possibilities C. increases U.S. production possibilities D. has no effect on U.S. production possibilities 2. Advances in technologies for producing other goods and services _______. A. have no effect on U.S. production possibilities B. decrease U.S. production possibilities C. have an undetermined effect on U.S. production possibilities D. increase U.S. production possibilities 3. Assume that the U.S. PPF measures oil and gas production on the x-axis and production of other goods and services on the y-axis. If fracking" is the only technological advance, _________. A. the U.S. PPF rotates outward, increasing the x-axis intercept with no change in the y-axis intercept B. the U.S. PPF rotates outward, increasing the y-axis intercept with no change in the x-axis intercept C. the U.S. PPF shifts outward, increasing the x-axis intercept and the y-axis intercept D. the U.S. PPF does not change 4. If "fracking" had been the only technological advance, the opportunity cost of producing oil and gas would have been _________. A. higher than it actually was B. the same as it actually was C. equal to the opportunity cost of producing other goods and services D. lower than it actually was

C. increases U.S. production possibilities D. increase U.S. production possibilities A. the U.S. PPF rotates outward, increasing the x-axis intercept with no change in the y-axis intercept D. lower than it actually was

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 pair of blue jeans ______. A. does not change. Resources are equally productive in all activities B. increases. And the opportunity cost of producing a winter coat also increases C. increases. Resources are not equally productive in all activities D. decreases. Resources are not equally productive in all activities

C. increases. Resources are not equally productive in all activities

Sports cars and gasoline are complements. If the price of a sports car decreases, how does the demand for gasoline change? If the price of a sports car decreases, the demand for gasoline will _______. A. not change, but there will be a movement along the demand curve for gasoline B. decrease, and the demand curve for gasoline will shift leftward C. increase, and the demand curve for gasoline will shift rightward D. increase or decrease, but the demand for sports cars will not change

C. increase, and the demand curve for gasoline will shift rightward

The resources that are used to produce goods and services - _____ are factors of production. A. land, labor, stocks and bonds B. labor and capital C. land, labor, capital, and entrepreneurship D. physical and financial capital

C. land, labor, capital, and entrepreneurship

Maria graduates from college and her income increases by $35 comma 000 a year. Nothing else changes. Maria decreases the quantity of pasta and chocolate chip cookies that she buys and increases the quantity of books that she buys. For Maria, _______. A. pasta and chocolate chip cookies have become complements B. books and chocolate chip cookies are normal goods C. pasta and chocolate chip cookies are inferior goods D. pasta and books have become substitutes

C. pasta and chocolate chip cookies are inferior goods

The production possibilities frontier is the boundary between those combinations of goods and services that can be _____ and those that ______. A. consumed; cannot be consumed B. purchased; can be consumed C. produced; cannot be produced D. produced; can be consumed

C. produced; cannot be produced

An increase in the demand for ramen noodles brings a ______ in the price of ramen noodles and ______ in the quantity of ramen noodles supplied. A. fall; a decrease B. fall; an increase C. rise; an increase D. rise; a decrease

C. rise; an increase

_____ are examples of goods and _____ are examples of services. A. weather forecasts; interest rates B. donations to flood victims; football games C. shoes; haircuts D. haircuts; shoes

C. shoes; haircuts

Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them. A. set of personal opinions about; cope with scarcity B. set of personal opinions about; settle disgreements C. social science that studies; cope with scarcity D. social science that studies; settle disagreements

C. social science that studies; cope with scarcity

Complete the sentence. Vhen GDP per person in China in 2016 is valued at GDP per person in the United States is times that in China.

C. the market exchange rate; 6.3

Why does demand not change when the price of a good changes with no change in the other influences on buying plans? Consider the demand for onions. The demand for onions does not change when a change in _______ occurs. A. the price of dried onion left parenthesis dried onion is a substitute for onions right parenthesis B. the price of tomatoes (tomatoes are a complement of onions) C. the price of onions D. the population An increase in the price of onions _______. A. decreases the demand for onions and shifts the demand curve for onions leftward B. increases the quantity of onions demanded and results in a movement down along the demand curve for onions C. decreases the quantity of onions demanded and results in a movement up along the demand curve for onions D. increases the demand for onions and shifts the demand curve for onions rightward

C. the price of onions C. decreases the quantity of onions demanded and results in a movement up along the demand curve for onions

Firms are institutions that organise _____ of goods and services. A. imports B. exports C. the production D. the consumption

C. the production

The graph shows a production possibilities frontier. Complete the following sentence. Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ . A. the production of y also increases B. the production of y decreases and the value of the y forgone is worth less than the additional x produced C. we are giving up the minimum amount of y possible to increase the production of x D. the production of y remains unchanged

C. we are giving up the minimum amount of y possible to increase the production of x

The what, how, and for whom questions in economics are questions about ______. A. what are the factors of production, how do we pay the factors of production, and who supplies the factors of production B. what goods and services do we produce in the United States and what goods and services do we buy from other countries, how do we ship goods and services into the United States from abroad, and who benefits from shipping goods into the United States C. 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 D. what incomes do we pay the people who produce the goods and services we consume, how do firms generate enough income to pay their employees, and who wants the goods and services that are produced

C. 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

The _____ that people devote to produce goods and services is labor. A. time and money B. time C. work time, and work effort D. money and consumption goods and services

C. work time, and work effort

What is Canadian gross domestic product? Canadian gross domestic product is the market value of all the produced in a given time period.

CB. final goods and services; within Canada

Complete the sentence. When GDP per person in China in 2016 is valued at GDP per person in the United States is times that in China.

CC. the market exchange rate; 6.3

Inflation rate equation

CPI (this year) - CPI (last year)/ CPI (last year) x 100

positive statement

Can be supported by facts

Which of the following pairs does not match? A. Labour; wages B. Capital; profit C. Land; rent D. Entrepreneurship; profit

Capital does not earn profit.

In what type of economy does the government decide how most economic resources will be allocated?

Centrally planned economy

Choose the statement that is incorrect. A. Choices that are the best for society as a whole are said to be in the social interest. B. Choices that are the best for the individual who makes them are choices made in the pursuit of self-interest. C. The social interest has two dimensions: efficiency and equity. D. Choices that are made in the self-interest cannot benefit the social interest. E. Choices made in your self-interest are the best at the time you make them but may not turn out to be in your self-interest later.

Choice D. [[ is incorrect.]] "Choices that are made in the self-interest cannot benefit the social interest.."

Claire and Doug are farmers who produce beef and corn. Use the question facts to complete the statement. To maximize their total output of beef and corn _______.

Claire specializes in beef and Doug specializes in corn

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.

an inferior good

Complete the following sentence. If, as Stephen's income increases, his demand for hamburgers decreases, then for Stephen, hamburgers are _______.

A change in the expected future price of laptops changes the supply of laptops.

Consider the influences on selling plans, and whether the influence changes supply.

Substitutes

Consumed in place of each other

Complements

Consumed together

Allocative efficiency means that A. a good or service is produced as quickly as possible. B. every good or service is distributed fairly. C. a good or service is produced at the lowest possible cost. D. every good or service is produced up to the point where marginal benefit is equal to marginal cost.

Consider the following statement: "The problem with economics is that it assumes that consumers and firms always make the correct decisions. But we know that everyone makes mistakes." What is the most correct response to this statement? A.Economics does assume that consumers and firms always make the correct decisions. B. Economics is a proven field of study, and it has already solved this problem. C. Economics has a lot of problems such as those that caused the Great Recession. D. Economics assumes that consumers and firms are rational, not that they always make the right decisions.

Economists use models A. to prove that theories are true. B. to disprove economic data. C. to describe the real world exactly. D. to answer questions and analyze issues.

Human capital _____ that people obtain from education, on-the-job training, and work experience. _____ that have been produced in the past and that businesses now use to produce goods and services is capital. A.are inputs; Natural resources and other goods B.are productive resources; Inputs and outputs C.are goods and services; Inputs D.is the knowledge and skill; Tools, instruments, machines, buildings, and other items

If the price of a smartphone rises, with all other influences on buying plans remaining the same, in the market forsmartphones _______. A.the demand for smartphones decreases B.the quantity of smartphones demanded increases C.the demand for smartphones increases D.the quantity of smartphones demanded decreases

Microsoft's marginal cost of the 100th copy of Microsoft Window 8 is A. The maximum amount that Microsoft is willing to pay to produce the 100th copy of Window 8; B. the maximum amount that someone is willing to pay Microsoft to obtain the coding that supports Window; C. the opportunity cost of producing 100 copies of Windows 8; D. calculated as the slope of the PPF at the point where the 100th copy of Window 8 is produced.

The three economic questions that every society must answer are A. What economic system will be used, how will it be implemented, and who will make market decisions? B. What kind of government will the society have, how will it be run, and who will run it? C. What are the prices of goods, how are they determined, and who will pay for them? D. What goods will be produced, how will they be produced, and who will receive the goods?

When a shortage occurs in the market, ______. A.the price falls to return to the competitive equilibrium B.marginal social benefit is less than marginal social cost C.consumer surplus is maximized D.marginal social benefit exceeds marginal social cost

When does allocative efficiency occur? A. Allocative efficiency occurs when an economy achieves equity. B. Allocative efficiency occurs when a good or service is produced at the lowest possible cost. C. Allocative efficiency occurs when an economy no longer relies on voluntary exchange. D. Allocative efficiency occurs when production is in accordance with consumer preferences.

When the percentage change in the quantity demanded equals the percentage change in price, the demand curve is _______. A.curved away from the origin B.a vertical line C.a horizontal line D.curved toward the origin

Which of the following would cause a production possibilities frontier to shift outward? Select one: a. an increase in the production of consumption goods b. a decision to fully utilize unemployed resources c. bad weather d. an increase in the stock of capital e. a decrease in the population

D The correct answer is: an increase in the stock of capital

Which of the following news headlines does not deal with scarcity? A. Applicants overwhelm Canada's universities B. Globalization's Winners and Losers C. Bombardier announces 2 comma 000 job cuts in Canada D. Expect more extreme and unusual weather

D. Expect more extreme and unusual weather

A market is an arrangement that brings _____ together and enables them to get information and do business with each other. A. governments and producers B. central banks and commercial banks C. sellers and entrepreneurs D. buyers and sellers

D. buyers and sellers

The money price of a can of shave gel is $2.50, and the relative price of a can of shave gel in terms of bananas is 5.00 pounds of bananas per can of shave gel. What is the money price of a pound of bananas? The money price of a pound of bananas is _______. A. the opportunity cost of a pound of bananas B. $2.50 C. the opportunity cost of a can of shave gel D. $0.50

D. $0.50

Explain why a relative price is an opportunity cost. The money price of a pack of frozen burritos is $0.50 and the money price of a can of shave gel is $1.50. The opportunity cost of a can of shave gel is _______. A. $1.50, the price of a can of shave gel B. $0.50, the money price of a pack of frozen burritos C. 0.33 cans of shave gel D. 3.00 packs of frozen burritos, which is the relative price of a can of shave gel The relative price of a can of shave gel is an opportunity cost because ______. A. the relative price tells us how many packs of frozen burritos we must give up to get a can of shave gel B. it is expressed as a money price C. the relative price tells us how many cans of shave gel we must give up to get a pack of frozen burritos D. it is constant

D. 3.00 packs of frozen burritos, which is the relative price of a can of shave gel A. the relative price tells us how many packs of frozen burritos we must give up to get a can of shave gel

Choose the correct statement. A. Entrepreneurship decreases over time. nothing B. Entrepreneurship is not a factor of production. C. Entrepreneurship includes the tools and instruments that we work with. D. Entrepreneurs make business decisions.

D. Entrepreneurs make business decisions.

Choose the statement that is incorrect. A. To live off campus instead of on campus is a rational choice if the benefit from living in residence near the library is less than the cost of living with all-night parties in residence. B. To quit college and train to become a plumber is a rational choice if the benefit received from working with your hands exceeds the cost of spending hours and hours trying to learn economics. C. To spend the weekend at home with your family is a rational choice if the benefit from your mother's cooking exceeds the cost of traveling home. D. It is never a rational choice to decide to enter the labor force immediately following high school.

D. It is never a rational choice to decide to enter the labor force immediately following high school.

When production is efficient, ______. A. there is no tradeoff between pizza and pasta B. some resources are unused or misallocated C. Mario's can produce more pasta without producing less pizza D. Mario's can produce more pasta only by producing less pizza

D. Mario's can produce more pasta only by producing less pizza

Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise but does not want to go skiing. Who faces a tradeoff? A. Pam and Pat face a tradeoff but Pru does not face a tradeoff B. Pat and Pru face a tradeoff but Pam does not face a tradeoff C. Pam and Pru face a tradeoff but Pat does not face a tradeoff D. Pam, Pat, and Pru face a tradeoff.

D. Pam, Pat, and Pru face a tradeoff.

Which of the following illustrates an efficient outcome? A. Ted cuts the price of his sausages and his profit decreases. B. Ted pays his workers a higher wage and his profit takes a dive. C. Ted pays $10,000 for a new meat slicer that operates at double the speed of his old one. D. Ted cuts the price of his sausages and his profit increases.

D. Ted cuts the price of his sausages and his profit increases.

Choose the correct statement. A. The opportunity cost of an activity is constant, regardless of the time of day at which you pursue the activity. B. The opportunity cost of doing more of an activity is the opportunity cost of the activity. C. The opportunity cost of an activity you do not enjoy is zero. D. The opportunity cost of something is the highest-valued alternative that must be given up to get it.

D. The opportunity cost of something is the highest-valued alternative that must be given up to get it.

Rational choice is a choice that uses the available resources to _____ of the person making the choice. A. maximize the benefit B. increase the marginal benefit C. minimize the opportunity cost D. best achieve the objective

D. best achieve the objective

The night before an economics test, you decide to watch television instead of studying for your test. You get 60 percent on your test compared with the 75 percent that you normally score. You ______, and the opportunity cost of your evening watching television was ______. A. faced a tradeoff between a higher test score and an evening watching television; the mark of 60 percent on your exam B. did not face a tradeoff because your roommates agreed you should watch television and not study; zero C. did not face a tradeoff because you made the best choice; zero D. faced a tradeoff between a higher test score and an evening watching television; the 15 percent fall in your grade

D. faced a tradeoff between a higher test score and an evening watching television; the 15 percent fall in your grade

For each news item below, indicate whether it involves a what, how, or for whom question. "Health dash care professionals and drug companies say Medicaid drug rebates should be available to everyone in need" involves a ______ question. "Wal dash Mart to carry 'morning dash after' contraception" involves a ______ question. A. what; how B. what; what C. for whom; how D. for whom; what "Fiber replaces aluminum in airplanes" involves a _______ question. A. for whom B. how C. what

D. for whom; what B. how

Land is the _____ that we use to produce goods and services. A. tool B. financial capital C. good D. gifts of nature or natural resources

D. gifts of nature or natural resources

Complete the following statements. The opportunity cost of producing a cake is ______ at point A than at point B. The opportunity cost of producing a loaf of bread is ______ at point B than at point A. A. greater; less B. less; greater C. less; less D. greater; greater

D. greater; greater

Complete the sentence. The market for gasoline is a competitive market _______. A. if many people buy gasoline comma but only a few firms sell gasoline B. if few people buy gasoline comma so sellers can hold out for a high price C. only if the buyers and sellers of gasoline are spread around the world and never meet D. if many people buy and many firms sell gasoline, so no single buyer or seller can influence the price

D. if many people buy and many firms sell gasoline, so no single buyer or seller can influence the price

Ann currently produces at point A in the figure. Complete the following sentence. If Ann moves from point A to point C, her opportunity cost of a modem _______. A. remains the same B. is zero C. decreases D. increases

D. increases

Human capital _____ that people obtain from education, on-the-job training, and work experience. _____ that have been produced in the past and that businesses now use to produce goods and services is capital. A. are goods and services; inputs B. are inputs; natural resources and other goods C. are productive resources; inputs and outputs D. is the knowledge and skill; Tools, instruments, machines, buildings, and other items

D. is the knowledge and skill; Tools, instruments, machines, buildings, and other items

an increase in the demand for pasta and an increase in the supply of pasta occur together. What is the effect on the price and quantity of pasta? An increase in the demand for pasta together with an increase in the supply of pasta ______ create a surplus or a shortage of pasta at the original price. The equilibrium price of pasta ______. A. might; will rise B. will not; will not change C. will not; will fall D. might; might fall, rise, or not change The equilibrium quantity of pasta _______. A. decreases B. increases if the price rises and decreases if the price falls C. increases or decreases but we don't know for sure D. increases

D. might; might fall, rise, or not change D. increases

Which of the following are included in the income approach to calculating GDP?

D. rental income; depreciation; net income

When a shortage arises, the price ______ to its equilibrium, which _______. A. rises; decreases demand and increases supply B. falls; increases demand and decreases supply C. falls; increases the quantity demanded and decreases the quantity supplied D. rises; decreases the quantity demanded and increases the quantity supplied

D. rises; decreases the quantity demanded and increases the quantity supplied

What is the fundamental fact of life from which all economic problems arise? A. wars create poverty B. it is unfair that poor people face scarcity but rich people do not face scarcity C. the poor are getting poorer and the rich are getting richer D. society faces scarcity

D. society faces scarcity

Complete the following sentence. If, as the price of orange juice increases, the quantity of grapefruit juice that people buy increases, then orange juice and grapefruit juice are D.

D. substitutes

The virus decreases the _______. A. supply of potato chips and decreases the demand for potato chips B. supply of potato chips and decreases the quantity of potato chips supplied C. demand for potato chips because the price of potato chips rises D. supply of potato chips and decreases the quantity of potato chips demanded

D. supply of potato chips and decreases the quantity of potato chips demanded

When an event occurs that changes the demand for coffee makers, _______ if demand increases and ______ if demand decreases. A. a movement up along the demand curve occurs; a movement down along the demand curve occurs B. the demand curve shifts leftward; the demand curve shifts rightward C. a movement down along the demand curve occurs; a movement up along the demand curve occurs D. the demand curve shifts rightward; the demand curve shifts leftward

D. the demand curve shifts rightward; the demand curve shifts leftward

The opportunity cost of the Rio Olympics is _______. [Cost of Rio Olympics Brazilian federal, state, and local governments spent R$2.8 billion and private sponsors spend R$4.2 billion on 17 new Olympic facilities, 10 of which will be used for sporting events after the Olympics. Source: Financial Times, August 6, 2016] A. the goods and services that would have been purchased with the R$2.8 billion if the Brazilian government would have spent this money anyway to give Brazilian athletes a place to train B. the goods and services that would have been purchased with R$4.2 billion. Government expenditure is never included in opportunity cost C. R$7.0 billion D. the goods and services that would have been purchased with R$7.0 billion if the facilities were not built unless Rio hosted the Olympics

D. the goods and services that would have been purchased with R$7.0 billion if the facilities were not built unless Rio hosted the Olympics

Choose the correct statement. A. The opportunity cost of an activity is constant, regardless of the time of day at which you pursue the activity. B. The opportunity cost of something is the highest-valued alternative that must be given up to get it. C. The opportunity cost of an activity you do not enjoy is zero. D. The opportunity cost of doing more of an activity is the opportunity cost of the activity.

Every choice has a cost and that cost is the opportunity cost. Opportunity cost of something is the highest-valued alternative that must be given up to get it.

we don't have enough time to do all the things we'd like to do

Every day, we make many choices. We can't avoid having to make choices because ______

Gustavo graduates from college and his income increases by $30000. Nothing else chages. Gustavo decreases the quantity of ramen noodels and chocolate chip cookies that he buys and increase the quantity of classical CDs he buys

For Gustavo, classical music CDs are normal goods

Comparing the data for the fourth quarter of 2017 with that for the second of 2012 in Table 21.1, how has GDP changed?

GDP has increased

GDP

Gross Domestic Product: The market value of all final f=goods and services produced in a country in a given time period

Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds Upper H Salt's opportunity cost of preparing lobster, then ______ If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.

H Salt has a comparative advantage in preparing lobster divergent opportunity cost

Economics studies choices that arise from one fact. What is that fact?

Human wants exceed the resources available to satisfy them.

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

Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. II People are buying less chicken because the price of chicken has increased. III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased.

I is a change in demand and II and III are changes in the quantity demanded.

Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply?

If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers

Real flows are the flow of

Incomes from firms to households and the flow of expenditure on goods and services from households to firms.

positive; positive

Indicate whether each of the following news items is a positive or a normative statement. 1. The PlayStation has a larger range of games than the XBox. 2. Higher income taxes will lead to a decrease in work hours. 3. An increase in the gas tax will decrease urban air pollution. 4. Music downloads have decreased CD sales. Statement 1 is a ______ statement, and statement 2 is a ______ statement.

farmers planned to decrease the quantity of corn supplied in 2017. This fact illustrates the law of supply.

In 2016, the price of corn fell and some corn farmers will switch from growing corn in 2017 to growing soybeans. Does this fact illustrate the law of demand or the law of supply? As the price of corn fell in 2016, _________.

The opportunity cost of economic growth

Is fewer consumption goods today

Resource use is efficient when

It is not possible to make someone better off without making someone else worse off.

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.

______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

Jane; Martha

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

Read the news clip, then answer the following questions. The components of the 787 Dreamliner that Boeing produces in Japan are part of ______ GDP. The aircraft that are assembled in the United States and sold to All Nippon Airways are part of ______ GDP. The purchase of the 787 Dreamliner by ANA is recorded as an ______ in Japan's GDP and as an ______ in U.S. GDP.

Japans;US import;export

Which of the following is an example of money price?

Joe paid $15 to buy a pizza box from McDonald's.

Martha can produce 50 quilts or 200 batches of chocolate chip cookies in a month. Jane can produce 10 quilts or 5 batches of chocolate chip cookies in a month. ________ has an absolute advantage in both goods.

Martha

Martha can produce 70 quilts or 140 batches of chocolate chip cookies in a month. Jane can produce 8 quilts or 24 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.

Martha Jane

Which items involve a microeconomic issue and which involve a macroeconomic issue? A. Inflation rate cools to 2 percentInflation rate cools to 2 percent B. WHO recommends tax of at least 20 % on sugary drinksWHO recommends tax of at least 20% on sugary drinks C. Will a cut in the income tax rate encourage people to work longer hours question mark Will a cut in the income tax rate encourage people to work longer hours? D. An increase in the number of police on inner dash city streets will reduce the crime rateAn increase in the number of police on inner-city streets will reduce the crime rate

Microeconomics is the study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments. Macroeconomics is the study of the performance of the national economy and the global economy. A- macro B- Micro C- micro D- micro

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.

Money Markets Firms Property rights

No No

Leisure Island has 50 hours of labor a day that it can use to produce entertainment and good food. The table shows the maximum quantity of each good that Leisure Island can produce with different quantities of labor. 1. Can Leisure Island produce 4 shows and 14 meals a week? 2. If Leisure Island produces 4 shows and 9 meals a week, is production efficient? 3. If Leisure Island produces 8 shows and 5 meals a week, do the people of Leisure Island face a tradeoff? 4. Suppose that Leisure Island produces 4 shows and 12 meals a week. Calculate the opportunity cost of producing 2 additional shows a week? The opportunity cost of producing 2 additional shows per week is nothing ▼ meals hours of labor per week.

No No Yes 3 meals

Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?

North Korea

changes; microeconomic

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ______. The operators' decision is a _______ decision.

what is an opportunity cost? is it a ratio?

Opportunity cost is a ratio. It 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 production possibilities frontier.

(state whether the PPF shifts or not, and explain why.) New driverless car technology is available for consumer purchase Capital machinery that was produced in a previous period lies unused An earthquake splits the 5- freeway The U.S. Government decides to seize all private property in order to expand nuclear missile testing sites A sudden influx of working-age immigrants floods into the US

Outward Shift ; better technology No Shift ; resources are simply unused so the capacity to produce has not changed Inward Shift ; fewer resources Inward Shift ; poorer rules of the game Outward Shift ; increase in resources

An example of microeconomics

People prefer buying iPhones over Nokia phones

percentage change in quantity demanded; percentage change in price

Price elasticity of demand is equal to the ______ divided by the ______.

Harry produce3 balloon rides and 5 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Thus, Harry is _____ his production possibilities frontier.

Producing inside.

Production efficiency (PE)

Production efficiency is a situation in which the economy is getting all that it can from its resources and cannot produce more of one good or service without producing less of something else.

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.

Production efficiency is a situation in which the economy is getting all that it can from its resources and cannot produce more of one good or service without producing less of something else.

ppf

Production possibility Frontier: a graphical representation of possible combination of two goods with constant resources and technology

opportunity cost

Quantity given up / Quantity gained

Rational choice is a choice that uses the available resources to _____ of the person making the choice. A. maximize the benefit B. best achieve the objective C. minimize the opportunity cost D. increase the marginal benefit

Rational choice is a choice that uses the available resources to best achieve the objective of the person making the choice. so B is correct.

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 statement. O

Real GDP per person is real GDP divided by the population.

The marginal cost curve is upward sloping because

Resources are not all equally productive in all activities.

Which of the following is an example of consumption goods and services?

Ron bought a Nissan Altima last summer.

Every week, Sally plays tennis for three hours, and her grade on each math test is 90 percent. Last week, after playing for three hours, Sally considered playing for another hour. She decided to play for another hour and cut her study time by one hour. But last week, her math grade fell to 70 percent. Did Sally make her decision on the margin?

Sally made her decision at the margin because she considered the benefit and cost of one additional hour of tennis.

Which of the following is an example of entrepreneurship?

Sam Walton created the multinational retail corporation brand Walmart in 1962.

All of the following are consequences of scarcity faced by people in Canada except deciding _______. A. whether to sleep after attending an all dash night party or to attend your Economics lecturewhether to sleep after attending an all-night party or to attend your Economics lecture B. whether to use the money you've saved to pay your tuition or to buy a new carwhether to use the money you've saved to pay your tuition or to buy a new car C. whether a tomato is a fruit or a vegetablewhether a tomato is a fruit or a vegetable D. how to study for both an economics exam and a chemistry exam that take place on the same dayhow to study for both an economics exam and a chemistry exam that take place on the same day

Scarcity is our inability to satisfy all our wants. Deciding whether a tomato is a fruit or a vegetablewhether a tomato is a fruit or a vegetable is not a consequence of scarcity.

Which of the following news headlines does not deal with scarcity? A.Failure to deal with aging population could hurt economyFailure to deal with aging population could hurt economy B.Building more housing in urban centres decreases green spaceBuilding more housing in urban centres decreases green space C.Is going green worth the cost question mark Is going green worth the cost? D. Your passport. Don't leave home without itYour passport. Don't leave home without it

Scarcity is our inability to satisfy all our wants. Your passport. Don't leave home without itYour passport. Don't leave home without it does not deal with scarcity.

Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizza or 40 tacos.

Scott has a comparative advantage at producing tacos

Choose the option that is an example of government expenditure.

Secret service protection for the President

Choose the correct statements. a. The opportunity cost of an action is the highest dash valued alternative forgone. nothing nothing b. Opportunity cost is a ratio. nothing nothing c. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF . nothing d. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis and the opportunity cost of producing an additional good measured on the y dash axis.

Statements a and b are correct

Choose the correct statements. a. 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 b. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantityOpportunity cost of a good is the increase in the quantity produced of one good divided by the decrease 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. 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 d. The opportunity cost of producing more x comma illustrated as a movement between two points on the PPF is equal toThe opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y comma illustrated as a movement between the same two points in the inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction.

Statements a and d 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 and the opportunity cost of producing an additional good measured on the y dash axis. nothing b. Opportunity cost is a ratio. nothing nothing c. Opportunity 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 . nothing d. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. nothing nothing A. Statements c and d are correct. B. Statements a and d are correct. C. Statements a and c are correct. D. Statements b and c are correct.

Statements b and c 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.

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 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 nothing c. The opportunity cost of producing more x comma illustrated as a movement between two points on the PPF is equal toThe opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y comma illustrated as a movement between the same two points in thethe inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction. opposite direction. d. 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

Statements c and d are correct.

Which of the following illustrates an efficient outcome?

Ted cuts the price of his sausages and his profit increases.

Which one of the following news headlines definitely concerns the social interest? A. Starbucks Expands in China B. Upper E Coli Test Results Must be Posted on Beaches C. 'Survivor' Renewed for Season 35 D. McDonald's Moves into Online Ordering

The decision that e coli test results must be posted on beachese coli test results must be posted on beaches is not made by any one firm and so does not reflect anyone's self-interest.

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogsin the parks at no charge. This statement means that the incentive toexercise dogs at the dog park ______. The operators'decision is a _______ decision.

The incentive changes because when dog parks are freewhen dog parks are free peoplepeople might spend more time exercising their dogs.spend more time exercising their dogs. This decision is a microeconomic decision. Microeconomics is the study of the choices that individuals and businesses make, the way these choices interact in markets, and the influence of governments.

The marginal benefit curve is a curve that shows the relationship between the marginal benefit from a good and the quantity (produced or consumed?) of that good

The marginal benefit curve is a curve that shows the relationship between the marginal benefit from a good and the quantity consumed of that good

Kate plays piano for an hour, econ grade 90%. Last week she decided to play for an additional hour which cut her study time by an hour, econ grade 85%. Marginal benefit and marginal cost of the first hour of playing the piano?

The marginal benefit from the first hour of playing the piano exceeded its marginal cost.

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, SallySally plays the pianoplays the piano for threethree hourshours, and herher grade on each FrenchFrench test is 8585 percent. Last week, after playing pianoplaying piano for threethree hourshours, SallySally considered playingplaying for another hour. SheShe decided to playplay for another hour and cut herher study time by one hour. But last week, herher FrenchFrench grade fell to 8080 percent. Given that SallySally spent a fourthfourth hour playing pianoplaying piano, what can you conclude about the marginal benefit and marginal cost of the thirdthird hour of playing pianoplaying piano?

The marginal benefit of the first hour of playing guitar exceeded its marginal cost.

Every week, KateKate plays tennis for three hours, and her grade on each psych test is 90 percent. Last week, after playing tennisplaying tennis for threethree hourshours, KateKate considered playingplaying for another hour. She decided to play for another hour and cut her study time by one hour. But last week, her psych grade fell to 70 percent. Given that KateKate spent a fourth hour playing tennis, what can you conclude about the marginal benefit and marginal cost of the third hour of playing tennis?

The marginal benefit of the third hour of playing tennis exceeded its marginal cost.

Marginal cost of a good is _______. A. decreasing as more of a good is produced B. the benefit received from consuming one more unit of it C. dependent on a person's preferences for the good D. the opportunity cost of producing one more unit of it

The marginal cost of a good is the opportunity cost of producing one more unit of the good. We calculate marginal cost from the slope of the PPF.

The marginal cost of a good or service is the opportunity cost of ______ one more unit of it.

The marginal cost of a good or service is the opportunity cost of producing one more unit of it.

The table gives the demand and supply schedules for movie downloads. Suppose that demand increases by 50 downloads a day and supply decreases by 100 downloads a day. What is the new equilibrium price of a movie download and what is the new equilibrium quantity of movie downloads?

The new equilibrium price is $6.00 per download. The new equilibrium quantity is 650 downloads per day.

For each news item below, indicate whether it involves a what, how, or for whom question. "Today most stores use computers to keep their inventory records" involves a ______ question. "Oscar stars' swag bags may be taxable" involves a ______ question.

The news item "Today comma most stores use computers to keep their inventory recordsToday, most stores use computers to keep their inventory records" involves a how question. The how is using computers. The news item "Oscar stars' swag dash bags may be taxable" involves a for whom question. The for whom is the Oscar stars.

Which of the following statements by Tom demonstrates that his buying plans obey the law of demand?

The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many.

The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.

Brazil produces ethanol from sugar at a cost of $0.83 per gallon. The United States produces ethanol from corn at a cost of $1.14 per gallon. Sugar grown on one acre of land produces twice the quantity of ethanol as the corn grown on an acre. The United States imports 5 percent of its ethanol consumption and produces the rest itself. Since 2003, U.S. ethanol production has more than doubled and U.S. corn production has increased by 45 percent.

The opportunity cost of producing ethanol has increased since 2003.

Which of the following is the opportunity cost of attending a ball game?

The opportunity cost of something is the best thing you must give up to get it. So the opportunity cost of attending a ball game is the things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

Choose the correct statement. A. The opportunity cost of an activity you do not enjoy is zero. B. The opportunity cost of doing more of an activity is the opportunity cost of the activity. C. The opportunity cost of an activity is constant, regardless of the time of day at which you pursue the activity. D. The opportunity cost of something is the highest-valued alternative that must be given up to get it. Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them? A. The opportunity cost for Pam and Pat is the airfare to Hawaii minus the cost of a cruise and for Pru, it's the airfare minus the cost of a ski trip. B. The opportunity cost for each of them is the airfare to Hawaii. C. The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing. D. The opportunity cost for each of them is the airfare to Hawaii minus the cost of a cruise.

The opportunity cost of something is the highest-valued alternative that must be given up to get it. The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing.

In the market for skim milk, the price of a carton of skim milk falls. Explain the effect of this event on the quantity of skim milk supplied and on the supply of skim milk

The quantity of skim milk supplied decreases and the supply of skim milk is unchanged

Which of the following is a microeconomic topic? a. The reasons for a decline in average prices. b. The reasons why total employment decreases. c. The effect of the government budget deficit on inflation. d. The reasons why Kathy buys less orange juice.

The reasons why Kathy buys less orange juice.

The slope of a relationship is the change in the value of the variable measured on the ___- divided by the change in the value of the variable measured on the ______.

The slope of a relationship is the change in the value of the variable measured on the y-axis divided by the change in the value of the variable measured on the x-axis.

Economics

The social science that deals w/ how individuals, households, firms, and governments make choices under conditions of scarcity

Which of these is a macroeconomic study?

The study of how fast prices in general are rising.

Which of the following is the opportunity cost of attending a ball game

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time

Mitsubishi Heavy Industries makes the wings of the new Boeing 787 Dreamliner in Japan. Toyota assembles cars for the U.S. market in Kentucky. Choose the statement that is incorrect.

The wings appear as imports in U.S. GDP. If any parts for the cars come from Japan, they are recorded as a positive entry in calculating U.S. GDP

Law of demand

There is a negative or inverse relationship between price and quantity demand

Law of supply

There is a positive relationship between price and quantity supplied

To disentangle cause and effect, economists use economic models and use _______ to test the predictions of those models. A. positive statements and normative statements B. the what, how, and for whom questions C. individuals, businesses, and governments D. natural experiments, statistical investigations, and perform economic experiments

To disentangle cause and effect, economists use economic models and look for natural experiments, conduct statistical investigations, and perform economic experiments to test the predictions of those models.

You can spend the weekend at universityspend the weekend at university or you can go homego home. Do you have an incentive to spend the weekend at university? You have an incentive to spend the weekend at university if ______. A.no tradeoff occurs by spending the weekend at university B.the marginal benefit of going home is less than the marginal benefit of spending the weekend at university C. the marginal benefit of spending the weekend at university is greater than the marginal cost of spending the weekend at university D. the marginal benefit of spending the weekend at university is greater than the marginal cost of going home

To make your decision, you compare the marginal benefit from spending the weekend at university with its marginal cost. If the marginal benefit exceeds the marginal cost, you choose to spend the weekend at university. correct answer C

Which of the following is an example of absolute advantage

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

Economic growth comes from _______. A. people being willing to increase their skills which makes economic growth free B. producing more goods than people want to consume C. capital accumulation and the avoidance of opportunity cost D. capital accumulation and technological advance

Two key factors influence economic growth: technological change and capital accumulation. Technological change is the development of new goods and of better ways of producing existing goods and services. Capital accumulation is the growth of capital resources, which includes human capital.

Macroeconomics focuses on which of the following topics?

Unemployment, inflation, growth, and trade

Which of the following illustrates goods markets? Which of the following illustrates factor markets?

Walmart sells potatoes at $2.14 a pound. Ann bought a new condo for $200,000.

Best illustrates your marginal benefit from studying

What you are willing to give up to study for one additional hour

a how; a what

When Starbucks decides to produce coffee by using more labour and less capital, it is answering ______ question. When Gap decides to produce athletic wear rather than business suits, it is answering ______ question.

A. increases the supply of logs B. Decreases the supply of plywood

When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. a. Explain how a rise in the price of sawdust influences the supply of logs. b. Explain how a rise in the price of sawdust influences the supply of plywood.

Economic growth ______ overcome scarcity because ______. A. does; with economic growth the PPF rotates outward and eventually becomes a horizontal line B. does not; we can produce more goods and services but it is still impossible to satisfy all our wants C. does; we will eventually reach the point where we have too much D. does not; economic growth requires capital accumulation and technological change

When economic growth occurs, production possibilities expand. But scarcity still exists. Scarcity is our inability to satisfy all our wants. Even though we have more goods and services, it is never possible to satisfy all our wants.

a for whom

Whether Gap gets a larger profit or its workers get higher wages is _______ question.

I will study for my exam instead of going to the movie tonight.

Which of the following illustrates a tradeoff?

Identify which of the following questions is NOT a microeconomic question.

Why is international trade increasing?

Soybeans and corn can be grown with the same resources, so they are substitutes in production.

Why would a corn farmer grow soybeans?

In March 2017, the money price of a litre of milk was $2.33 and the money price of a litre of gasoline was $1.08. Calculate the relative price of a litre of gasoline in terms of milk The relative price of a litre of gasoline in terms of milk is

YA. 0.46 litres of milk

what are the two ways to calculate the slope of a curve

You can calculate the slope at a point, or you can calculate the slope across an arc of the curve.

Which of the following news headlines does not illustrate the potential for conflict between self-interest and the social interest? A. Arctic heating up at twice as fast as rest of globe University coaches are cashing in C. Humans make rainforest more flammable D. California's drought is part of a much bigger water crisis

You make choices that are in your self-interest- choices that you think are best for you. "University coaches are cashing in" is a headline that shows a choice made in the self-interest. This headline does not illustrate the conflict between self-interest and social interest.

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 comma 00012,000 for the summer. The cost of tuition is $3 comma 0003,000 and textbooks cost $200200. You live with your family, which covers your living expenses of $1 comma 2001,200. What is your opportunity cost of going to school this summer?

Your opportunity cost of going to summer school is $15200.

______ is an example of U.S. consumption expenditure.

Your purchase of a flight on American Airlines

Hassan plays piano for two hours, French test grade 90. Last week he decided to play for an additional hour which cut his study time by one hour. French grade 80. Opportunity cost of the third hour?

a 10% point drop in his French grade

All of the following will change the demand for DVD players except _______.

a change in the price of a DVD player

All of the following will change the demand for the onions except _______.

a change in the price of onions

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

what would decreases the supply of popcorn?

a decrease in the number of popcorn producers

Classify each of the following items as a final good or service or an intermediate good or service and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services: Item 1. The purchase of new computers for the office of Secretary of StateThe purchase of new computers for the office of Secretary of State Item 2. New kitchen equipment bought by Burger KingNew kitchen equipment bought by Burger King Item 3. Banking services bought by a studentBanking services bought by a student Item 4. Jet engines bought by Boeing item 1 is and item 2 is item 3 is and item 4 is

a final good which is gov expenditure; a final good that is investment a final good that is consumption expenditure and an intermediate good

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

A diamond purchased by Harry to give to Sally is an example of ______ good. Lumber purchased by the Table and Chair Manufacturing Company is an example of ______ good.

a final; an intermediate

Comparative advantage is defined as a situation in which one person can produce

a good for a lower opportunity cost than another person

Specialization and the gains from trade make the economy PPF outward bowed because _______.

a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs

Inferior

a good that decreases in demand when consumer income rises

what is a scatter diagram

a graph that plots the value of one variable against the value of another variable for a number of different values of each variable. Such a graph reveals whether a relationship exists between two variables and describes their relationship

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

Nominal GDP is ______. Real GDP is ______.

a 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

When people's incomes increase, the demand for a good increases. The good is called

a normal good.

If a firm is productively and allocatively efficient, it earns ▼ a profit a corporate charter ; if it is not, it ▼ gets a government bailout suffers a loss .

a profit, suffers a loss

An incentive is _______.

a reward that encourages an action or a penalty that discourages an action

An incentive is _______. A. available to individuals and businesses but not to governments B. a reward that encourages an action or a penalty that discourages an action C. a boost in every student's grade D. a reward that encourages an action but not a penalty that discourages an action

a reward that encourages an action or a penalty that discourages an action

The graph illustrates the market for tea. The market equilibrium is at point A. After one or more changes, the market equilibrium moves to point B. You predict that the market for tea was most likely influenced by _______.

a rise in household income and a rise in the number of plantations

In the market for jeans, which of the following events increases the demand for a pair of jeans?

a rise in the price of a denim skirt (a substitute for jeans)

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

The table shows the demand schedule and supply schedule in the market for ricerice. If the price of rice is $1.40 a pound, there is ______ and the price of rice will ______.

a shortage of rice;rise

Factors of production

a ski jump in Utah; an orange grove in Florida; An oil rig in the Gulf of Mexico

Economics

a social science that studies choices

Economics is

a social science, subject that studies choices, and a subject that arises because we want more than we can get

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

Economics is all of the following except _______. A. a subject that arises because we want more than we can get B. a subject that studies choices C. a subject that tells countries what goods they must trade D. a social science

a subject that tells countries what goods they must trade

When a gym club chooses to spend more on cardio equipment cardio equipment and less on free weights, it choice illustrates _______.

a trade off

The relationship between two variable that are unrelated can be shown by

a vertical line

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.

How does economic growth change the patterns of production? In a low-income country, _________. As a country invests in capital and uses more advanced technologies _______.

agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks

Along this PPF, the quantities of ______.

all goods other than pillows and quilts remain constant

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

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 choice on the *margin* is a choice that is made by comparing all the relevant _____ systematically and _____. *Marginal cost* is the _____ that arises from one unit _____ in an activity. *Marginal benefit* is the _____ that arises from one unit _____ in an activity.

alternatives; incrementally; opportunity cost; increase; benefit; increase

Gross investment

amount spent on new capital during the current year (net investment + depreciation)

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

In 2017, Q4, the U.S. economy was in ______ because real GDP ______.

an expansion; did not decrease for two successive quarters

Zach is a math student who is considering taking an extra course in French. An incentive that might encourage him to take the French course is _______. A. a decrease in the GPA of students who take Frencha decrease in the GPA of students who take French B. an increase in tuitionan increase in tuition C. tougher grading in mathtougher grading in math D. an increase in the salaries of math graduatesan increase in the salaries of math graduates

an incentive is a reward that encourages an action or a penalty that discourages one. The tougher grading in math might be a disincentive for taking an extra course in math and an incentive for taking an extra course in French.

Flour purchased by Chef Bondi to make pizza dough is an example of ______ good. The waste basket you bought when you moved into residence is an example of ______ good.

an intermediate; a final

The equilibrium quantity

and equilibrium price are determined at the intersection of the supply curve and the demand curve

When Delta Airlines encourages flyers to book their trips online versus making phone reservations, it is a. answering the what question. b. facing natural resource depletion. c. making a choice in the social interest only. d. answering the how question.

answering the how question.

productive efficiency

any point along the ppf curve

The graph shows Brazil's PPF for ethanol and food crops. Brazil faces ______ opportunity cost of a barrel of ethanol, which is shown by the _____________ of the PPF.

an increasing; bowed-out shape

Which of the following news headlines does not deal with scarcity?

apple is earning a record profit

Social institutions such as firms, markets, property rights, and money _______.

are required for society to enjoy the benefits of specialization/trade

The study of economics

arises from the fact that our wants exceed available resources

The figure shows the production possibilities frontier for a firm that produces pet food. Point A is ______ and point B is ______.

attainable; unattainable

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;un does; the firm cannot produce

We achieve production efficiency if we cannot ____more of one good without producing ____of some other good

produce; less

Law of Supply

producers offer more of a good as its price increases and less as its price falls

produces a greater proportion of consumption goods than capital goods, so its PPF does not shift outward as quickly as the PPF in the United States Property rights

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

Harry produces 7 balloon rides and 2 boat rides an hour. Harry could 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

------ efficiency occurs when we produce goods and services at the lowest possible cost. -------efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit. All points on the PPF are points of ______ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency. A. allocative; allocative B. allocative; production C. production; allocative

production Allocative production; allocative

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

Simple vs better

production possibilities diagram

All points on the PPF are points of ______ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

production; allocative

When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

production;allocative

_______ efficiency occurs when we produce goods and services at the lowest possible cost. _______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit

production;allocative

The income earned by Howard Schultz comma head of Starbucks is called _______.

profit

bond

promise to repay w/ interest

stock

purchasing part of a company

A demand curve shows the relation between the _____ and _____ when all other influences on buying plans remain the same.

quantity demanded of a good; its price

A shortage is the amount by which the ----------- exceeds the -----------. quantity demanded?quantity supplied?

quantity demanded, quantity supplied

A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.

quantity supplied of a good; its price

In the United States, GDP is typically measured

quarterly

In the United States, GDP is typically measured

quarterly.

Which of the following is an example of consumption expenditure?

rachel buying a tv

An increase in demand combined with no change in supply

raises the equilibrium price

hyper inflation

rapid increase in the inflation rate

real GDP growth rate equation

real GDP (this year) - real GDP (last year)/ real GDP (last year) x 100

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.

comparative advantage

refers to a country's ability to produce a particular good with a lower opportunity cost than another country

Standard of living

refers to the level of wealth, comfort, material goods and necessities available to a certain socioeconomic class in a certain geographic area

The opportunity cost of a good is the same as its

relative price.

The graph shows the marginal cost curve of hot tubs. What is the marginal cost of producing the 1 millionth hot tub? The marginal cost of producing the 1 millionth hot tub is 3 swimming pools.

resources are not all equally productive in all activities

Structural

retrain, relocate

The statement that "demand increases" means that there is a

rightward shift of the demand curve.

An advance in techonology lowers the price of a laptop. If the demand for laptops is price inelastic, laptop sales will ___ and total rev will ____

rise; fall

Suppose that the world price of steel is $100 a ton, India does not trade internationally, and the equilibrium price of steel in India is $60 a ton. Suppose that India now begins to trade internationally. The price of steel in India ______. The quantity of steel produced in India ______. The quantity of steel bought by India ______. India ______ steel.

rises increases decreases exports

When the increase in demand is less than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.

rises; decreases

When a shortage arises, the price ______ to its equilibrium, which _______.

rises; decreases the quantity demanded and increases the quantity supplied

When the increase in demand is greater than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.

rises; increases;

When the increase in demand equals the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.

rises; remains unchanged

Producers of printers expect the population to increase and the number of firms producing and selling printers to decrease. You predict that the price of a printer will ______ and the quantity of printers bought will ______.

rise; increase, decrease or remain the same

When floods wiped out the banana crop in Central america, the equilibrium price of bananas ___ and the equalibrium quantity of bananas ___

rose; decreased

In 1998, the price of a barrel of oil was $20. In 2012, the price of a barrel of oil was $106. In 1998, the price of a loaf of bread was $0.86. In 2012, the price of a loaf of bread was $2.32. Between 1998 and 2012, the relative price of a barrel of oil with respect to a loaf of bread _______ and the relative price of a loaf of bread with respect to a barrel of oil _______.

rose;fell

Funds that finance investment

savings, govt budget surplus, and borrowing from the rest of the world

Economics is the study of choice under conditions of:

scarcity

markets that were in surplus, had to discount to get rid of

secondary markets

A decrease in the price of a raw material of production. The price of a complement in production falls. The price of a good rises and other influences stay the same. The price of a good is expected to rise in the future. The number of suppliers of a good increases. Advances in technology lower the cost of producing existing products. The weather that year is particularly perfect for agriculture.

shift right shift left movement up shift left shift right shift right shift right

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 suddenly finds high grades in economics easier to attain. Harry's PPF ______, and his MB curve ______. Harry's efficient time allocation

shifts outward; does not change increases

The demand for New Balance shoes is more elastic than the demand for

shoes in general

If the price of a good A is below its equilibrium price, there will be a .......... of that good and the price will .......... . a. surplus/rise b. shortage/fall c. shortage/rise d. surplus/fall

shortage/rise

The table sets out the demand and supply schedules for roses on a normal weekend. 1. If the price of a rose is $6, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $6, there is a _____ of roses and the price of a rose_____.

shortage; rises

A demand curve that illustrates the law of demand ______.

shows that the quantity demanded increases as the price falls

A supply curve that illustrates the law of supply _______.

shows that the quantity supplied decreases as the price falls

A supply curve that illustrates the law of supply _______.

shows that the quantity supplied decreses as the price falls

makes assumptions about land, labor, and capital

simple production possibilities diagram

*Economics* is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.

social science that studies; cope with scarcity

Zach is a biochemistry student who is considering taking an extra course in Spanish. An incentive that might encourage him to take the Spanish course is _______.

softer grading in spanish

Choose the correct statements. 1. 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. 2. The marginal benefit from a good or service is the benefit received from consuming one more unit of it. nothing 3. Marginal benefit of a good is the opportunity cost of producing one more unit of it. 4. We measure the marginal benefit from a good or service by the least that people are willing to pay for an additional unit of it

statements 1 and 2

Choose the correct statements about competitive markets. 1. Competitive markets exist for goods comma services comma money comma factors of production comma and inputs. 2. A single buyer in a competitive market cannot influence the price. 3. In a competitive market, prices are eventually driven down to zero. 4. A competitive market is a market for goods but not for services.

statements 1 and 2 are correct

Which of the following statements are normative? 1. The U.S. government should cut its importsThe U.S. government should cut its imports 2. Air travel has increased since September 11Air travel has increased since September 11 3. Most household production is done by womenMost household production is done by women 4. We ought to have a cure for cancerWe ought to have a cure for cancer

statements 1 and 4 are normative

taste and preference income prices of related goods

steps of determining demand

normative statement

subjective or opinion based

If a producer can use resources to produce either good A or good B, then A and B are

substitutes in production.

Coal and oil are ______. A skateboard and an iPod are ______.

substitutes; complements

Pasta and pizza are ______. A video game and a laptop are ______.

substitutes; complements

When the price of a resource used in production rises, ____and the price___.

supply decreases; rises

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

supply increases, and price falls

sellers increase and decrease the quantity they are willing to sell based on their cost

supply side economics

A decrease in the demand for chocolate chip cookies brings a ___ of chocolate chip cookies at the original price, and the price of a pack of chocolate chip cookie will

surplus; fall

A decrease in the demand for chocolate with no change in the supply of chocolate will create a ____ of chocolate today's price, but gradually the price will _____.

surplus; fall

If the price of a rose is $9, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $9, there is a _____ of roses and the price of a rose _____. What is the market equilibrium? At the market equilibrium, the price of a rose is ______ and _____ roses per week are bought and sold.

surplus; falls 7;100

Economic growth is defined as the _____ .

sustained expansion of production possibilities

The role of the entrepreneur always involves:

taking risks

In a high-income country like the United States _______.

technological advances release labor from industrial production and move the labor into service production

A supply curve _______.

tells us the lowest price at which someone is willing to sell or is a minimum-supply-price curve

A demand curve _______.

tells us the maximum that someone is willing to pay for an additional unit of a good or service

Choose the definition that gives the best overview of economics. Economics is the social science that studies the choices _______. A. made by bankers B. that we make when we trade in markets C. made by households D. that we make as we cope with scarcity

that we make as we cope with scarcity

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

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

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 quantity demanded of a good or service is ______.

the amount that consumers plan to buy during a given time period at a particular price

The quantity supplied of a good or service is ______.

the amt producers plan to sell during a given time period

People are willing to give up 11 tacos per pizza if only 1 pizza is available; 6 tacos per pizza if 3 pizzas are available; and 2 tacos per pizza if 5 pizzas are available. Draw three points on the marginal benefit curve for pizza. Draw the marginal benefit curve for pizza through the points. Label the curve.

the basic reason why marginal benefit decreases as we consume more of a good is that we like variety

allocative efficiency

the best point (the point on the middle of the curve)

net investment

the change in the value of capital from the beginning of the year to the end year

Economics is the social science that studies

the choices made to cope with scarcity, how incentive influence those choices, and how the choices are coordinated

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

Aggregate income earned is equal to the total amount paid for ______ to produce final goods and services. Aggregate expenditure is equal to ______.

the factors of production used; C + I + G + (Xminus−M)

The opportunity cost of any action is

the highest −valued alternative given up.

The opportunity cost of any action is

the highest−valued alternative given up.

Factors of production are

the inputs used to produce goods and services.

Which of the following is correct? Factors of production are

the inputs used to produce goods and services.

the inverse of the opportunity cost of producing an additional barrel of ethanol

You can spend the evening studying or you can go to see a movie You have an incentive to spend the evening studying if ______.

the marginal benefit of spending the evening studying is greater than the marginal cost of spending the evening studying

You can spend the evening studying or you can go to see a movie. You have an incentive to spend the evening studying if ______. A. the marginal benefit of going to see a movie is less than the marginal benefit of spending the evening studying B. no tradeoff occurs by spending the evening studying C. the marginal benefit of spending the evening studying is greater than the marginal cost of spending the evening studying D. the marginal benefit of spending the evening studying is greater than the marginal cost of going to see a movie

the marginal benefit of spending the evening studying is greater than the marginal cost of spending the evening studying

Gross domestic product is ______.

the market value of all the final goods and services produced within a country in a given time period

Veronica has two tacos for lunch. The marginal benefit that Veronica receives from the second taco is _______. A. the total benefit she receives from eating two tacos B. the minimum amount that she is willing to pay to produce the second taco C. the total benefit she receives from producing two tacos D. the maximum amount that she is willing to pay for the second taco

the maximum amount that she is willing to pay for the second taco

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

Leigh has three tacos for lunch. The marginal benefit that Leigh receives from the third taco is _______.

the maximum amount that she is willing to pay for the third taco

The relative price of a gallon of gasoline in terms of a pound of bananas is ______.

the money price of a gallon of gasoline divided by the money price of a pound of bananas

Macroeconomics is the study of

the national economy and the global economy.

You can spend the weekend at college or you can go home. Your rational choice will be to spend the weekend at college if___

the net benefit from spending the weekend at college is greater than the net benefit from going home

Goods and services are ______ and ______ is an example of a good and ______ is an example of a service.

the objects and actions that people value and produce to satisfy human wants; a golf ball; a haircut

The table shows some of Brazil's production possibilities for ethanol and food crops. Marginal cost of a good is _______.

the opportunity cost of producing one more unit of it

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

What is macroeconomics?

the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

The demand for gym memberships does not change when a change in _______ occurs.

the price of a gym membership

What influences people's buying plans and does not shift the demand curve?

the price of the good

A supply curve shows the relation between the quantity of a good supplied and

the price of the good. Usually a supply curve has a positive slope.

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

Firms are institutions that organise _____ of goods and services.

the production

Firms are institutions that organize _____ of goods and services

the production

Suppose the price of a bag of chips is 60 cents. To return to equilibrium, ______.

the quantity demanded decreases and the quantity supplied increases

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price

The quantity of DVD players that firms plan to sell this month depends on all of the following except _______ because ______.

the quantity of DVD players that consumers plan to buy this month; a change in the quantity of DVD players that consumers plan to buy this month changes the quantity supplied

If the price of a cell phone rises, with all other influences on buying plans remaining the same,

the quantity of cell phones demanded decreases

The flows in the market economy that go from firms to households are _______. The flows in the market economy that go from households to firms are _______.

the real flows of goods and services and the income flows of wages, rent, interest, and profit; the real flows of labor, land, capital, and entrepreneurship and the flow of expenditure on goods and services

Which of the following is a macroeconomic topic? a. the reasons for a rise in the price of orange juice b. the reasons for the rise in average prices c. why plumbers earn more than janitors d. whether the army should buy more tanks or more rockets

the reasons for the rise in average prices

Demand is _____, when all other influences on buying plans remain the same.

the relationship between the quantity demanded of a good and the price of the good

Supply is _____, when all other influences on buying plans remain the same.

the relationship between the quantity supplied of a good and the price of the good

The relative price of a pack of granola bars is an opportunity cost because ______.

the relative price tells us how many boxes of ramen noodles we must give up to get a pack of granola bars

The relative price of a jar of pasta sauce is an opportunity cost because ______.

the relative price tells us how many packs of frozen burritos we must give up to get a jar of pasta sauce

A bakery can produce either cakes or cookies. If the price of cookies rises, then

the supply curve of cake shifts leftward.

what change in would shifts the demand curve?

the tastes and preferences of consumers

The point where economic activity bottoms out in a full business cycle is known as:

the trough

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

Which of the following is NOT a factor of production? a. the water used to cool a nuclear power plant b. the efforts of farmers raising cattle c. the wages paid to workers d. the management skill of a small business owner

the wages paid to workers

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises a. the demand curve shifts rightward. b. the demand curve shifts leftward. c. there is a movement down along the demand curve to a larger quantity demanded. d. there is a movement up along the demand curve to a smaller quantity demanded.

there is a movement up along the demand curve to a smaller quantity demanded.

When a market is in equilibrium

there is no shortage and no surplus at the equilibrium price

People specialize and trade for all of the following reasons except _______.

they can obtain an absolute advantage

In 1966, the production possibilities per person in the United States were more than ______ times those in Hong Kong.

three

When the price of a diamond ring rises from $2000 to $3000, the quantity demanded decreases from 13000 to 7000 The demand for diamond rings is elastic

true

scarcity

unlimited wants, limited resources

Which of the following examples describes macroeconomics?

us unemployment has inc by .4

price up, quantity down, or price down, quantity up

utility theory

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people _____ - it is not possible to produce more of a good or service _____ some of another good that people _____.

value most highly; without giving up; value more highl

value most highly; without giving up; value more highly

wealth

value of everything you own

Opportunity cost of a pair of running shoes is best defined as the

value of the highest-valued alternative given up to get a pair of running shoes

The opportunity cost of a pizza is best defined as the _______.

value of the highest-valued alternative given up to get a pizza

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.

Which of the following describes the reason why scarcity exists

wants exceed the resources available to satisfy them

Scarcity guarantees that

wants will exceed demands.

Hundreds line up for a 5 p.m. Eminem ticket giveaway. Because all the tickets were free, the marginal benefit from the concert______zero because___

was not; regardless of the price, the fans received a benefit from attending the concert

Hundreds line up for a 5 p.m. Eminem ticket giveaway. For people who scored tickets, the concert ______free because_____

was not; the time they spent lining up for tickets could have been used doing something else

The graph shows a production possibilities frontier. Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .

we are giving up the minimum amount of y possible to increase the production of x

Allocative efficiency occurs when ______.

we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal cost

Allocative efficiency occurs when ______.

we are producing at a point on the PPF that we prefer above all other points

Allocative efficiency occurs when ______. A. we are producing at a point on the PPF that we prefer above all other points B. we cannot produce more of any good without giving up some other good C. marginal benefit exceeds marginal cost D. the difference between marginal benefit and marginal cost is maximized

we are producing at a point on the PPF that we prefer above all other points

Allocative efficiency occurs when ______.

we are producing at a point on the PPF we prefer abov others

Every day, we make many choices. We can't avoid having to make choices because

we face scarcity.

Economists measure the benefit of something by

what a person is willing to give up to get it

The what, how, and for whom questions in economics are questions about ______. A. what are the factors of production, how do we pay the factors of production, and who supplies the factors of production B. what goods and services do we produce in the United States and what goods and services do we buy from other countries, how do we ship goods and services into the United States from abroad, and who benefits from shipping goods into the United States C. what incomes do we pay the people who produce the goods and services we consume, how do firms generate enough income to pay their employees, and who wants the goods and services that are produced D. 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

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

what

what goods and services do we produce

1.1 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

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

Positive

what is, fact, can be tested

Normative

what should be; opinion

The marginal benefit from a cruise is: The marginal cost of a cruise is:

what you are willing to give up to take the cruise; what you must give up to take the cruise

"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

whom

who consumes the goods and services that are produced

Perfectly inelastic demand means that consumers

will buy a certain quantity, regardless of price

The ____ and ___ that people devote to producing goods and services is labour.

work time and work labour

The _____ that people devote to produce goods and services is labor.

work time, and work effort

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

Harry would be ______ off getting a higher grade in economics because ______

worse; his marginal benefit from tennis would exceed his marginal cost

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $9,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $2,000, visas cost $200, and living expenses are $1,700. What is the opportunity cost of your plan to travel in Europe?

your opportunity cost is 12900

The slope at a line tangential to the maximum or minimum of a nonlinear curve will always be equal to:

zero

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7% increase in the price charged by the owner of this stand leads to

zero peaches sold by this stand

An economy produces only digital cameras, chocolate bars, and watches The table gives the quantities produced and prices in 2013 and 2014. The base year is 2013. What is real GDP in 2014 in terms of the base-year prices? Real GDP in 2014 in terms of base-year prices is _____

$20

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.

30; 100

30; 100 50 cakes; 15 pies

______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 33 caps, ______.

;sue both Sue and Tessa gain

Mario's can produce more pasta only by producing less pizza

In one hour, Sue can produce 70 caps or 21 jackets and Tessa can produce 50 caps or 25 jackets. Suppose that Tessa buys a new machine for making jackets that enables her to make 125 jackets per hour. (She can still make only 50 caps per hour.) Now ______ has a comparative advantage in producing jackets. ______ from trade. A. Sue; both Sue and Tessa gain B. Tessa; both Sue and Tessa gain C. Sue; Tessa gains but Sue loses D. Tessa; Sue loses but Tessa gains Sue and Tessa are ------- to trade 1 jacket for 4 caps.

Tessa; both Sue and Tessa gain no longer willing

In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Suppose that Tessa buys a new machine for making jackets that enables her to make 35 jackets per hour. (She can still make only 70 caps per hour.) Now ______ has a comparative advantage in producing jackets. ______ from trade. Sue and Tessa are _______ to trade 1 jacket for 7 caps because _______.

Tessa; both Sue and Tessa gain no longer willing; Sue can produce jackets at an opportunity cost of 1 jacket for 5.0 caps

alternatives; incrementally; opportunity cost; increase; benefit; increase

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

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.

cannot; less

A smartphone and a text message are ______. A text message and an email are ______.

complements; substitutes

The table shows the demand and supply schedules for boxes of chocolates. The price of chocolates is $17.00 a box. To reach equilibrium, the quantity supplied ______, the quantity demanded ______. The price ______ until the ______ is eliminated.

decreases; increases falls; surplus

I calculated real GDP by summing the components of aggregate _____, so I used the _____ approach.

expenditure; expenditure

Net exports of goods and services is the value of _____ of goods and services _____ the value of _____ of goods and services.

exports; minus; imports

The night before an economicsan economics test, you decide to watch televisionwatch television instead of working your MyEconLab study planworking your MyEconLab study plan. You get 8585 percent on your test compared with the 9090 percent that you normally score. You ______ a tradeoff ______, and the opportunity cost of your evening watching televisionwatching television was ______.

faced; between a higher test score and an evening watching televisionwatching television; the 55 percent fall in your grade

falls; rises

"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 ______.

Gross domestic product (GDP) is the market value of all the _____ goods and services produced _____ a country in a given time period.

final; within

When a firm decides to produce a good by using a labor intensive method, it is answering the ______ question. When a firm decides to produce computers rather than DVD players, it is answering the ______ question. Who gets the goods and services that are produced answers the ______ question.

how; what; for whom

increases; equally

increases; more

Failure to specialize and reap the games from trade is _______ because _______.

inefficient; production is at a point inside the economy's PPF

land; labor; income; capital

land; labour; income; capital

Households are individuals or groups of people _____ together. Firms are institutions that organize _____ of goods and services.

living; the production

A country that trades internationally imports a good at a price ______ than the price of the good in the domestic market before the country began to trade internationally. And it exports a good at a price ______ than the price of the good in the domestic market before the country began to trade internationally.

lower; higher

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

The opportunity cost of catching a pound of tunatuna is ______ for JimJim than for DavidDavid, and the opportunity cost of picking a pound of orangesoranges is ______ for JimJim than for DavidDavid. So ______ has a comparative advantage in producing ______.

lower; higher Jim; tuna

Question Facts In an hour, Simon can catch 20 pounds of pickerel or pick 10 pounds of strawberries. In an hour, Fred can catch 10 pounds of pickerel or pick 10 pounds of strawberries. The opportunity cost of catching a pound of pickerel is ______ for Simon than for Fred, and the opportunity cost of picking a pound of strawberries is ______ for Simon than for Fred. A. lower; lower B. higher; higher C. lower; higher D. higher; lower So ______ has a comparative advantage in producing ______. A. Fred; pickerel B. Fred; both pickerel and strawberries C. Simon; strawberries D. Simon; pickerel

lower; higher Simon; pickerel

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

Preferences are _____.

people's likes and dislikes and the intensity of those feelings

All points on the PPF are points of ______ efficiency. When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

production; allocative

rose; fell

If the price of a rose is $6, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $6, there is a _____ of roses and the price of a rose_____. If the price of a rose is $9, describe the situation in the rose market. Explain how the price adjusts. If the price of a rose is $9, there is a _____ of roses and the price of a rose _____. What is the market equilibrium? At the market equilibrium, the price of a rose is ______ and _____ roses per week are bought and sold.

shortage; rises surplus; falls 7;100 $8 $9

Coal and oil are ______. A skateboard and an iPod are ______.

substitutes; complements

Pasta and pizza are ______. A video game and a laptop are ______.

substitutes; complements

Coal and oil are ______. A skateboard and roller blades are ______.

substitutes; substitutes

In 2013, the price of corn fell and in 2014 some corn farmers will switch from growing corn to growing soybeans. This statement illustrates the law of _________because the fall in the price of corn results in _________. A corn farmer would grow soybean because _______.

supply; a decrease in the quantity of corn supplied soybean is a substitute in production for corn, and when the relative price of corn falls, farmers plant more soybeans

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