Chaps 1-3 macro

The benefits of specialization can be used to explain why:

trade can make both parties to the trade better off

The political concern expressed about the North American Free Trade Agreement (NAFTA) was that:

unskilled workers in the United States would lose their jobs

In general, individuals and nations should specialize in producing those goods for which they have a(n):

comparative advantage

When the price of a good is below its equilibrium value:

consumers will bid the price up

The study of individual choices and group behavior in individual markets defines:

microeconomics

By convention, there are two major divisions of economics, called:

microeconomics and macroeconomics

Sellers tend to offer_____ for sale as price increases, and so the supply curve is ______ sloping

more, upward

According to the textbook, the evidence indicates that NAFTA has:

not reduced the employment of unskilled workers in the United States

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is_____ and the change in the equilibrium is____

positive, indeterminate

Normative economic principles are those that:

predict how people should behave

Positive economic principles are those that:

predict how people will behave

In order to understand how the price of a good is determined in the free market, one must account for the desires of:

purchasers and sellers

Almost every holiday season at least one gift achieves fad status. When that happens, prices tend to increase dramatically. Why?

quantity demanded exceeds quantity supplied

The demand curve illustrates the fact that consumers:

tend to purchase more of a good as its price falls

The United States has a comparative advantage in producing books and movies because:

the English language is understood by many people all over the world

When a market is not in equilibrium:

the economic motives of sellers and buyers will move the market to its equilibrium.

As coffee becomes more expensive, Joe starts drinking tea, and therefore quantity demanded for coffee decreases. This is called:

the substitution effect

The United States generally has a comparative advantage in the development of technology because of:

a high concentration of the best research universities

If a nation has the lowest opportunity cost of producing a good, that nation has a(n):

absolute advantage

An economic naturalist is described as someone who:

applies economic insights to everyday life

A market comprised of a downward sloping demand curve that intersects an upward sloping curve is said to be stable because:

at any price other than equilibrium, forces in the market move price towards the equilibrium.

The United States was unable to maintain its dominance in the production of television because:

automated production allowed production to be outsourced to countries with less skilled workers

The equilibrium price and quantity of any good or service is established by:

both demanders and suppliers

In a free market, if the price of a good is below the equilibrium price, then:

demanders, to acquire the good, will bid the price higher

The key to resolving the apparent paradox of international trade increasing total output yet facing much political opposition is noting that:

everyone does not benefit equally from trade

Economic models are intended to:

generalize about patterns in decision making

If both supply and demand increase simultaneously, the new equilibrium price is _______ and the new equilibrium quantity is_______

indeterminate, higher

If both supply and demand decrease simultaneously, the new equilibrium price is _______ and the new equilibrium quantity is_______

indeterminate, lower

According to the textbook, government price controls fail because:

legislation cannot repeal basic economic motives.

The study of the performance of national economies and ways to improve upon their performance. defines:

macroeconomics

Most of us make sensible decisions most of the time, because:

we know the cost benefit principle

A regulated maximum price that is above the equilibrium price:

will have no effect on the market