chapter 1
The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity.
marginal benefit
If pencils and paper are complements for most consumers, then if the price of paper increases, you would expect:
the equilibrium price and quantity of pencils to fall
By convention, there are two major divisions of economics, called:
microeconomics and macroeconomics.
The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:
microeconomics.
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:
$4
What might cause a demand curve to shift to the right?
An increase in the price of a substitute.
Which of following is NOT true of the equilibrium price?
It is fair in the sense that everyone can afford basic goods and services.
Which of the following is NOT true of a demand curve?
It reflects sellers' reservations prices.
Assume both the demand for bagels and the supply of bagels increase. Which of the following outcomes is certain to occur?
The equilibrium quantity of bagels will rise.
All else equal, relative to a person who earns minimum wage, a person who earns $30 per hour has:
a higher opportunity cost of taking the day off work.
If the demand for computers increases as consumers' incomes rise, then computers are:
a normal good.
Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:
an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.
If a country's economic decisions are made by an individual or small number of individuals, then it has a:
centralized economy.
The marginal cost of an activity is the:
change in the total cost of the activity that results from carrying out an additional unit of the activity.
Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.
economic surplus; $3,000
When the demand curve shifts to the right and supply doesn't change:
equilibrium quantity will rise.
If price is above the equilibrium price, then there will be:
excess supply.
If an increase in the price of good X leads to a decrease in the demand for good Y, then:
good X and good Y are complements.
Economics is best defined as the study of:
how people make choices in the face of scarcity and the implications of those choices for society as a whole.
The quantity that sellers wish to sell tends to ______ as price increases, and so the supply curve is ______ sloping.
increase; upward
If the demand curve for bologna shifts to the right as income falls then bologna is a(n):
inferior good.
The buyer's reservation price for a particular good or service is the:
largest price the buyer would be willing to pay for it.
In deciding how many guitars to buy for his shop before the Christmas season, Mark is making a(n) ______ decision.
microeconomic
If the demand for a good decreases as income decreases, then the good is a(n):
normal good.
the cost-benefit principle in an example of a _________ economic principle because it says how people should behave
normative
positive economic principle
one that predicts how people will behave
normative economics principle
one that says how people should behave
An implication of scarcity is that:
people must make trade-offs.
Positive economic principles are those that:
predict how people will behave.
If there is an excess supply of sport utility vehicles, then:
quantity supplied is greater than quantity demanded.
Jessica's marginal cost for producing a pitcher of lemonade is $0.25. Therefore, $0.25 is her:
reservation price
If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:
substitutes
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:
the benefits of studying for an additional hour exceed the costs of studying for an additional hour.
The economic surplus of an action is:
the difference between the benefit and the cost of taking an action.
You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:
the income effect of a price change.
The entire group of buyers and sellers of a particular good or service makes up:
the market.
An increase in the quantity of tea demanded occurs if:
the price of the tea falls.
When a market is in equilibrium:
there is neither excess demand nor excess supply.
If supply and demand both increase, the new equilibrium price will be ______ and the new equilibrium quantity will be ______.
uncertain; higher
Which branch of economics is most likely to study differences in countries' growth rates?
macroeconomics
Suppose demand decreases, but there is no change in supply. As the market reaches its new equilibrium:
excess supply will lead the price to fall.
When the supply curve shifts to the left and there is no change in demand:
he equilibrium price will rise.
A study of the impact of various government policies on economic growth would be considered:
macroeconomics.
The demand curve illustrates the fact that consumers tend to purchase:
more of a good as its price falls.
The opportunity cost of an activity includes the value of:
the next-best alternative that must be foregone.
Suppose that as the price of apples rises, people switch from eating apples to eating oranges. This is known as:
the substitution effect of a price change.
You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
the wage for teachers in that district is lower than the equilibrium wage.