Micro Econ Ch 1-7 Review

is a price floor in the labor market

A minimum wage

Invisible Hand

Adam Smith argued that each person in the competitive market is led to promote the efficient use of society's resources, even though it id no person's intention to make the society better off. His theory uses the phrase:

increase the price of a computer

An increase in the demand for computers and a decrease in the number of sellers of computers will _____ regardless of the magnitude of the shifts

decreases when the income increases

An inferior good is a good for which demand

made up of a loss of both consumer surplus and producer surplus

Assuming both supply and demand are not perfectly elastic or inelastic, deadweight loss

there is no deadweight loss

At the efficient level of production

both overproduction and underproduction.

Deadweight loss can be the result of

are an inferior good and sushi is a normal good.

During strong economic times, when consumer income increases, the demand for tacos decreases and the demand for sushi increases. This implies that tacos

supply curve shifted rightward

During the last decade, the price of a computer fell every year and the quantity sold increased every year. This experience suggests that the

A society learns to produce more using existing resources and acquires new resources.

Economic growth may occur when

Make Choices to cope with Scarcity

Economics is best defined as the study of how people, businesses, governments and societies

is equal to the sum of consumer surplus and producer surplus

Economics surplus

A shift to the left in the supply curve for college education and a shift to the right of the demand curve for college education

From 1970 to 1993, the real price of college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment?

Price and quantity both increase.

If the U.S. Surgeon General announced that increased grapefruit juice consumption could help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit juice?

move away from the ppt towards the origin

If the unemployment rate increases, the economy will

Effective Price Ceilings, Taxes and Underproduction

In competitive markets, deadweight losses can be caused by

the choices made by individual households, firms, and governments.

Microeconomics is best described as the study of

rise; smaller

Poor temperatures in California have produced a depressed crop and caused the supply if strawberries in the U.S. to shift to the left. You predict that the price of strawberries will ______, and the more elastic the demand for strawberries, the _______ will be the effect on the price.

as prices fall, quantity demanded increases.

The "law of demand" implies that

if closer substitutes are available.

The demand for a good is more price elastic

consumer surplus

The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called

Can consume at a point outside their production possibilities frontier, can gain from trading, and shoulder specialize in the production of goods.

The idea of comparative advantage implies that people or countries

depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology

The production possibility frontier

Increasing opportunity costs

The shape of a traditional, curved production possibility frontier shows

Increase in producer surplus

What effect on the market can be used to support an increase in the minimum wage?

Not equal to, larger, or smaller than

When a market is in equilibrum, the total amount of consumer surplus must be ___________ the total amount of producer surplus

opportunity cost

When an action is chosen, the highest-valued alternative NOT chosen is called the

increases

When the price of wood (which is an input in the production of furniture) falls, the consumer surplus associated with the consumption of furniture

What factors determine the price of carrots?

Which of the following is a microeconomics question?

cola and lemon lime soda

Which of the following pairs of goods are most likely substitutes?

When supply increases (shift right), the equilibrium quantity increases and the equilibrium price falls.

Which of the following statements is correct?

A change in the price of Compact Discs

Which of the following will NOT cause a shift in the demand curve for compact discs?

An increase in the number of students attending college.

Which of the following would shift the demand curve for the new textbooks to the right?

Deadweight loss

refers ti the reduction in the economic surplus resulting from not being at the efficient, competitive equilibrium