Microeconomics: Chapters 1-4- Homework Study Guide

Which of the following is not a factor of production? 1) Six thousand acres of farmland 2) A bulldozer 3) $100,000 cash 4) A psychiatrist

$100,000 cash

Over many years the capital stock in the United States has grown to approximately

$80 trillion

Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus....The lowest opportunity cost e in Table 1.1 for B-1 bombers in terms of Stealth bombers is

1 Stealth bomber per B-1 bomber

The US has roughly how much of the world's arable land?

12 percent

The amendment to the U.S. Constitution that granted the federal government the authority to collect income taxes was the

16th

Approximately how much of the world's output does the United States produce?

18 percent

The 20 percent of families with the lowest income in the United States receive approximately ______ percent of total income.

3

Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of perfume?

A decrease in the price of perfume

Which of the following will cause the production possibilities curve to shift inward? 1) An increase in knowledge 2) A technological advance 3) A decrease in the size of the labor force 4) An increase in the working-age population

A decrease in the size of the labor force

A point on a nation's production possibilities curve represents

A full employment of resources to achieve a particular combination of goods and services

A lower quantity demanded of a good reflects, ceteris paribus,

A higher price of the good

To calculate market demand, we

Add the quantities demanded for each individual demand schedule horizontally.

Which component(s) of U.S. real GDP decreased in size relative to total U.S. real GDP from 1950 to 2000?

Agriculture and manufacturing

Who participates in markets? 1) Business firms 2) Business firms and consumers 3) Consumers and government agencies 4) All of the choices are correct

All choices are correct

The term opportunity cost refers to 1) The most a consumer is willing to exchange to get an item. 2) The slope of the demand line for a consumer or slope of the supply line for the producer. 3) The minimum price that a producer will accept for a product. 4) All of the choices are correct

All of the choices are correct

Ceteris paribus, which of the following would generally cause an increase in the demand curve for new automobiles?

An increase in consumers' income.

Suppose there are a series of forest fires that affect the lumber industry while, at the same time, consumers demand more wooden furniture. The wooden furniture market would experience

An increase in price and an indeterminate change in quantity.

An increase in the equilibrium price of electricity can be caused by

An increase in the demand for electricity.

Which of the following is a determinant of market supply?

Available technology.

An example of human capital would be

Carpentry skills

Which of the following is the government most likely to discourage because of the existence of externalities?

Cars that create an excessive amount of exhaust fumes.

A decrease in the price of bubble gum below equilibrium will

Cause a shortage of bubble gum.

An increase in the price of gasoline above equilibrium will

Cause a surplus of gasoline

Which of the following countries had the highest average growth rate for per capita GDP from 2000 to 2009?

China

Assume a series of forest fires reduces the supply of lumber, which is an input in the production of wooden bats. Baseballs and wooden bats are complements. If the price of wooden bats increases, we can expect the

Demand for baseballs to decrease

Jessie's demand schedule for candy bars indicates

Her opportunity cost of buying candy bars

A rightward shift in a demand curve and a leftward shift in a supply curve both result in a

Higher equilibrium price

The majority of federal expenditures is spent on

Income transfers

A country that increased its literacy rate and thereby its average human capital would probably

Increase GDP

The World View article titled "The Education Gap between Rich and Poor Nations" says that a greater percentage of people graduate from high school in rich nations than in poor nations. This investment in human capital can lead to

Increased output per worker

Outsourcing leads to

Increases in productivity and increases in total output.

Outsourcing leads to

Increases in total output, but with temporary job losses for some domestic workers.

Per capita GDP will rise if GDP

Increases more rapidly than the population increases.

As a nation's average education level increases, the nation's level of productivity

Increases, and the production possibilities curve shifts to the right. Correct

The federal government's role in providing aid to the poor and the aged is justified because of concerns about

Inequity

A public good

Is subject to the free-rider dilemma

If an economy is producing inside the production possibilities curve, then

It can produce more of one good without giving up some of another good

The term market mechanism refers to

The use of market prices and sales to determine resource allocation.

The government regulates food additives

To assess their safety

The goal of the business firms in a market economy is to maximize

Total profits

According to the World View article that compares GDP per capita figures for several nations, which of the following nations has the highest GDP per capita?

United States

Which of the following is a source of government failure but is not typically an example of market failure?

Waste

As a country's human capital increases, we observe that

Worker productivity increases

The income distribution of the United States is basically the nation's answer to the

FOR WHOM question

When workers move from one industry to another in response to demand changes, this is an example of

Factor mobility

True or False: Market price is the same thing as equilibrium price

False

True or False: The desire for carrots changes as one moves down the demand curve for carrots.

False

From the In the News article titled, "Firefighters Watch as Home Burns to the Ground," Which of the following is true?

Fire protection paid for like fire

If Good X has social demand that is less than market demand, then Good X must be a

Good with an external cost

A city's decision to limit smoking in public areas is an example of

Government intervention

Government failure will likely arise if

Government officials attempt to maximize their own utility.

According to the law of increasing opportunity costs

Greater production of one good requires increasingly larger sacrifices of other goods

Which of the following explains why flood control is a public good?

It is not divisible and therefore cannot be kept from people who do not pay.

The market tends to underproduce public goods because

Joint consumption allows those who do not pay for the good to still benefit from the good.

Market failure implies that the market mechanism

Leads the economy to the wrong mix of output.

Social demand is equal to

Market demand plus or minus externalities.

A production possibilities curve indicates the

Maximum combinations of goods and services an economy can produce given its available resources and technology.

Generally speaking, monopolies

May be beneficial to society if they are natural monopolies and are regulated.

As the U.S. economy relies more and more heavily on the production of services rather than goods,

Nearly all future job growth will be in service-producing industries.

The market

On its own may not always provide the optimal mix of goods and services.

Government failure may result from

Outright waste of resources by the public sector or misallocation of resources.

Income inequalities are greatest in

Poor countries

The market will overproduce goods that have external costs because

Producers experience lower costs than society.

A market in which final goods and services are exchanged is a

Product market.

n a market economy, which of the following is an incentive for producers to produce efficiently?

Profits

Cities and other local governments receive most of their tax revenues from

Property taxes

Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?

Public goods

The federal government's role as the provider of national defense is justified by considerations of

Public goods

When market failure occurs, the role of government is to

Push market outcomes closer to the ideal

Suppose that if your income is $50,000, your tax is $5,000, but if your income is $100,000, your tax is $8,000. Such a tax is

Regressive

Which of the following has been a century-long trend in the United States? 1) Relative decline in manufacturing to the service sector. 2) Relative increase in farming to manufacturing 3) Decline of total value of world trade 4) Relative decline in service sector to manufacturing

Relative decline in manufacturing to the service sector.

Productivity

Rises when the ratio of output to input increases.

Factors of production are

Scarce in every society

The law of supply implies that

Supply curves are upward-sloping to the right

If there is a surplus at a given price, then

That price is greater than the equilibrium price.

Microeconomics is concerned with issues such as

The demand for bottled water by individuals.

In 2007 a company sold 35,000 drones at $150 each. In 2008 the same company sold 40,000 drones at $170 each. This information suggests that

The demand for drones increased from 2007 to 2008

Per capita GDP is

The dollar value of GDP divided by total population

Per capita GDP will definitely rise if

The population falls and GDP does not fall

The In the news article titled "Gas Prices Jump in Matthew's Wake" suggests gasoline prices increased a s a result of damage caused by Hurricane Matthew. When the availability of gasoline decreases as a result of this damage the supply curve shifts to the left, causing

The price of gasoline to move up along the market demand curve.

Which of the following can change without shifting demand, ceteris paribus?

The price of the good itself

If corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when, ceteris paribus,

The price of wheat changes.

Which curve shifts and in which direction when the following events occur in the domestic car market? a. The U.S. economy falls into a recession. b. U.S. autoworkers go on strike. c. Imported cars become more expensive. d. The price of gasoline increases.

a. Demand decreases b. Supply decreases c. Demand increases d. Demand decreases

Air pollution best illustrates

an external cost

Approximately how much of the world's output does China produce?

approximately 11 percent

Market power may result from

control of resources

Antitrust activity addresses

market power