Micro Unit 1

When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being: a. balanced budget b. prudent monetary policy c. low inflation d. assuring competition between firms

low inflation

The basic difference between macroeconomics and microeconomics is: a. microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. b. microeconomics concentrates on the behavior of individual consumers while macroeconomics focuses on the behavior of firms. c. microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. d. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

The demand curve for a typical good has a(n): a. negative slope because some consumers switch to other goods as the price rises. b. negative slope because consumer incomes fall as the price of the good rises. c. negative slope because the good has less "snob appeal" as its price falls. d. inverse slope because as the price goes up, the good has more profitability.

negative slope because some consumers switch to other goods as the price rises.

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. a. normative statement b. budget constraint c. trade-off d. opportunity cost

normative statement

The �law of supply� functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied. a. price b. demand c. supply d. quantity

price

As depicted in _________________________________, it is necessary to give up some of one good to gain more of the other good. a. the production possibilities frontier b. allocative efficiency c. scarcity d. utility

production possibilities frontier

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. a. demand schedule c. market price b. quantity supplied d. demand curve

quantity supplied

A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will: a. shift to the right, increasing the price of the drug. b. shift to the left, increasing the price of the drug. c. shift to the right, decreasing the price of the drug d. shift to the left, decreasing the price of the drug.

shift to the right, decreasing the price of the drug.

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is: a. $0 b. $4 c. $40 d. $44

$44

1. Price go down because of change in demand 2. Price go up because of change in demand 3. Price go down because of change in supply 4. Price go up because of change in supply a. Demand goes up. b. Demand goes down. c. Supply goes up. d. Supply goes down.

1. Demand goes down 2. Demand goes up 3. Supply goes up 4. Supply goes down

1. There is a movement down the demand curve 2. There is a movement up the demand curve 3. The demand curve shifts to the left 4. The demand curve shifts to the right a. Demand goes down. b. Demand goes up. c. Quantity Demanded goes down. d. Quantity demanded goes up.

1. Quantity demanded goes up. 2. Quantity demanded goes down. 3. Demand goes down. 4. Demand goes up.

Which of the following best describes a monetary policy tool? a. interest rates b. taxes c. household savings d. government spending

interest rates

Who wrote: "The Wealth of the Nations"? a. Adam Smith b. Karl Marx c. John Maynard Keynes d. Milton Friedman

Adam Smith

If a window gets broken and somebody says, 'do not fret, this creates wealth because it creates a job for the glass maker'. What is that an example of: a. Broken Window Fallacy b. Scarcity c. Choices d. Production Possibilities Frontier

Broken Window Fallacy

The ___________ is the only price where quantity demanded is equal to quantity supplied. a. equilibrium price b. horizontal axis intercept c. vertical axis intercept d. market price

Equilibrium price

T/F: In the circular flow model looking at just firms and households. Do physical goods and money flow in the same direction?

False

T/F: Is the product market(goods market) and the factor market(AKA resource market) the same thing?

False

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that: a. the price of Good Y will increase. b. Goods X and Y are normal goods. c. Goods X and Y are substitute goods. d. Goods X and Y are complement goods.

Goods X & Y are complement goods

which one looks at the big picture? a. Macroeconomics b. Microeconomics

Macroeconomics

A surplus happens when a. Market price is above market equilibrium b. Market price is below market equilibrium c. Quantity demanded is greater than quantity supplied d. When supply is greater than demand e. Equilibrium price is above market price

Market price is above market equilibrium

Most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers. a. Market-oriented economy b. Macroeconomy c. Microeconomy d. Command economy

Market-oriented economy

What is a chart that shows all possible combinations a country can produce of two different goods. It shows the trade off of producing more of one good over another one. a. A Productions Possibility Frontier b. Scarcity c. Incentives d. Opportunity Cost

Productions Possibility Frontier

In a market for a good, if there is a shift in supply (supply goes up). What happens to demand? a. Demand goes down b. Demand goes up c. There is a movement down along the demand curve. d. There is a movement up along the demand curve e. None of the above

There is a movement down along the demand curve

Steel mill wage costs increase by 18 percent over a year. What is the likely economic effect on the market for steel? a. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the right, thereby increasing the price of steel. b. There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. c. There is a decrease in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel. d. The increase in wage costs will shift the demand curve for steel to the left, increasing the cost of steel.

There is an increase in the cost of producing steel, which shifts the supply curve of steel to the left, thereby increasing the price of steel.

T/F: Demand for a good goes up. Because of this the price of the good rise.

True

T/F: If measuring opportunity cost on a budget constraint line. Can the opportunity cost be less than one? Can it be one-half a good?

True

T/F: Is the budget constraint a visual of the opportunity cost between two goods?

True

T/F: The demand curve has a negative slop

True

What does a budget constraint show? a. Various combinations of goods or services an individual can purchase with their income. b. The items a person wants, but cannot afford c. Government Spending Budget Wish List d. The ups and down of the stock market

Various combinations of goods or services an individual can purchase with their income.

What is the definition of a shortage When market price is greater than equilibrium price a. When supply is greater than demand b. When demand is greater than supply c. When quantity supplied is greater than quantity demanded d. When quantity demanded is greater than quantity supplied

When quantity demanded is greater than quantity supplied

Please list these in the order they go in ____The supply of fruit goes down ____A frost freezes fruit

__2__The supply of fruit goes down __1__A frost freezes fruit

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is: a. no change; only the supply curve for beef is likely to be affected. b. a shift of the demand curve for beef to the left. c. a movement down along the demand curve for beef to the right. d. a shift of the demand curve for beef to the right.

a shift of the demand curve for beef to the left

Which of the following results in a rightward shift of the market demand curve for labor? a. a decrease in labor productivity b. a decrease in the firm's product price c. an increase in the wage rate d. an increase in demand for the firm's product

an increase in demand for the firm's product

Which of the following will not result in a rightward shift of the market supply curve for labor? a. a decrease in non-wage income b. an increase in the working-age population c. an increase in labor productivity d. an increase in immigration

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor? a. a decrease in labor productivity b. a decrease in demand for the firm's product c. an increase in the wage rate d. a decrease in the firm's product price

an increase in the wage rate

n the Circular Flow Model do businesses demand or supply? (tricky question, think about it, there are two markets in the model) a. Both b. Demand c. Supply d. Neither

both

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: a. all consumers b. buyers and sellers c. producers and input suppliers d. producers and government planning committees

buyers & sellers

The nature of demand indicates that as the price of a good increases: a. suppliers wish to sell less of it b. more of it is produced c. more of it is desired d. buyers desire to purchase less of it

buyers desire to purchase less of it

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories. a. financial capital market b. circular flow diagram c. financial investment market d. specialization model

circular flow diagram

What items could cause equilibrium quantity to go up: a. Demand goes up b. Demand goes down c. Supply goes up d. Supply goes down

demand goes up, supply goes up

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers. a. division of labor b. interconnected economy c. task economy d. modern economy

division of labor

The circular flow diagram of economic activity is a model of the: a. flow of goods, services, and payments between households and firms. b. influence of government on business behavior. c. role of unions and government in the economy. d. interaction among taxes, prices, and profits.

flow of goods, services, & payments between households & firms

Which of the following best describes a fiscal policy tool? a. government spending b. bank lending c. financial capital markets d. household spending

government spending

Improvements in the productivity of labor will tend to: a. decrease wages b. decrease the supply of labor c. increase wages d. increase the supply of labor

increase wages

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________ a. surplus or excess supply b. shortage or excess demand c. ceteris paribus d. a price ceiling

shortage or excess demand

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . a. demand curve to the right b. supply curve to the left c. supply curve to the right d. demand curve to the left

supply curve to the right

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. a. technology b. high-skill labor c. lower wage d. market

technology

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: a. nothing, because he enjoys playing basketball more than studying. b. the increase in skill he obtains from playing basketball for that hour. c. the benefit to his grades from studying for an hour d. nothing, because he had a free pass into the sports complex to play basketball.

the benefit to his grades from studying for an hour

The opportunity cost of attending university is likely to include all except which of the following? a. the cost of haircuts received during the school term b. the income you forgo in order to attend classes c. tuition fees d. the cost of required textbooks

the cost of haircuts received during the school term

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________. a. the quantity demanded of financial capital at any given interest rate will remain unchanged. b. the quantity demanded of financial capital at any given interest rate will shift to the left. c. the quantity demanded of financial capital at any given interest rate will shift to the right. d. the quantity demanded of financial capital at any given interest rate will achieve equilibrium.

the quantity demanded of financial capital at any given interest rate will shift to the right.

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of: a. the supply curve. b. the demand curve, as consumers try to economize because of the shortage. c. both the supply and demand curves. d. the supply curve and a rightward shift of the demand curve, resulting in a higher equilibrium price.

the supply curve

Scarcity exists because of: a. the market mechanism. b. specialization and division of labor. c. the allocation of goods by prices d. unlimited wants and limited resources.

unlimited wants & limited resources

In the market for labor. What happens to real wages when there is an increase in the demand curve? a. will stay the same b. will decrease c. will increase d. may increase, decrease or stay the same depending on the relative slopes.

will increase