Econ 121 Quiz 1

a smaller quantity of GPS systems supplied.

A decrease in the price of GPS systems will result in a larger quantity of GPS systems supplied. a decrease in the demand for GPS systems. a smaller quantity of GPS systems supplied. an increase in the supply of GPS systems.

marginal benefit equals the marginal cost.

Economists reason that the optimal decision is to continue any activity up to the point where the marginal benefit is greater than the marginal cost. marginal benefit is zero. marginal cost is zero. marginal benefit equals the marginal cost.

economic benefits are distributed fairly

In economics, the term "equity" means everyone has an equal standard of living. only elected officials have high standards of living. the hardest working individuals consume all they want. economic benefits are distributed fairly.

market

In economics, the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade. collective market trade-off cooperative

S increases, D no change, P decreases, Q increases

Let D = demand, S = supply, P = equilibrium price, Q = equilibrium quantity. What happens in the market for electric vehicles if the government offers incentives to manufacturers to produce more electric vehicles? D increases, S no change, P and Q increase D and S increase, P and Q decrease S increases, D no change, P decreases, Q increases D no change, S increases, P decreases, Q decreases

S decreases, D no change, P increases, Q decreases

Let D= demand, S = supply, P = equilibrium price, Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged? D and S decrease, P and Q increase S decreases, D no change, P increases, Q decreases D no change, S decreases, P increases, Q increases D decreases, S no change, P and Q decrease

weighing the costs and benefits of a decision before deciding if it should be pursued

Making optimal decisions "at the margin" requires making borderline decisions. weighing the costs and benefits of a decision before deciding if it should be pursued. making consistently irrational decisions. making decisions according to one's whims and fancies.

Graph C

Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. A portion of his land is more suitable for raising cattle, and the other portion is better suited for raising llamas. Which of the graphs in Figure 2-3 represent his production possibilities frontier? Graph B either Graph B or Graph C Graph C either Graph A or Graph C Graph A

marginal cost.

The extra cost associated with undertaking an activity is called net loss. marginal cost. opportunity cost. foregone cost.

voluntary exchange

Which of the following is a result of a market economy? an equal income distribution voluntary exchange environmental protection agreement on equity

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Which of the following statements about scarcity is true? Scarcity is not a problem for the wealthy. Scarcity only arises when there is a wide disparity in income distribution. Scarcity refers to the situation in which unlimited wants exceed limited resources. Scarcity is only a problem when a country has too large a population.

those who are willing and able to buy them

Who receives the most of what is produced in a market economy? everyone receives an equal amount those who are willing and able to buy them people who earn the highest incomes lawmakers and other politically favored groups

The statement is false because a change in the price of apples would not change the demand for apples.

"Because apples and oranges are substitutes, an increase in the price of oranges will cause the demand for apples to increase. This initial shift in demand for apples results in a higher price for apples; this higher price will cause the demand curve for apples to shift to the right." Which of the following correctly comments on this statement? The statement is false because oranges are inferior goods; apples are normal goods. The statement is false because a change in the price of apples would not change the demand for apples. The statement is false because one cannot assume that apples and oranges are substitutes for all consumers. The statement will be true if consumer tastes for apples and oranges do not change.

decrease in demand; increase in quantity demanded

A(n) ________ is represented by a leftward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve. decrease in demand; increase in demand decrease in demand; increase in quantity demanded increase in demand; decrease in quantity demanded decrease in quantity demanded; decrease in demand

The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase.

An increase in input costs in the production of electric automobiles caused the price of electric automobiles to rise. Holding everything else constant, how would this affect the market for gasoline-powered automobiles (a substitute for electric automobiles)? The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease. The demand for gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would increase. The supply of gasoline-powered automobiles would increase and the equilibrium price of gasoline-powered automobiles would decrease. The demand for gasoline-powered automobiles would decrease because consumers could afford to buy fewer gasoline-powered automobiles.

the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.

Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease. the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will decrease. the equilibrium price of MP3 players will decrease; the equilibrium quantity will increase. both the equilibrium price and quantity of MP3 players will decrease.

The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase.

Positive technological change in the production of LCD televisions caused the price of LCD televisions to fall. Holding everything else constant, how would this affect the market for Blu-ray players (a complement to LCD televisions)? The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease. The demand for Blu-ray players would decrease because consumers could afford to buy fewer LCD televisions and Blu-ray players. The demand for Blu-ray players would increase and the equilibrium price of Blu-ray players would increase. The supply of Blu-ray players would increase and the equilibrium price of Blu-ray players would decrease.

The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right.

Prices of California Merlot wine (assume that this is a normal good) have risen steadily in recent years. Over this same period, prices for French oak barrels used for wine storage have dropped and consumer incomes have risen. Which of the following best explains the rising prices of California Merlots? The supply curve for Merlot has shifted to the right more than the demand curve has shifted to the right. The demand curve for Merlot has shifted to the right more than the supply curve has shifted to the right. The demand curve and the supply curve for Merlot have both shifted to the left. The supply curve for Merlot has shifted to the right while the demand curve for Merlot has shifted to the left.

Graph A

Refer to Figure 2-3. Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in Figure 2-3 represent his production possibilities frontier? Graph C Graph B either Graph B or Graph C Graph A either Graph A or Graph C

D2 to D1.

Refer to Figure 3-1. A decrease in taste or preference would be represented by a movement from D1 to D2. B to A. D2 to D1. A to B.

D1 to D2.

Refer to Figure 3-1. A decrease in the price of a complementary good would be represented by a movement from B to A. D1 to D2. D2 to D1. A to B.

S1 to S2.

Refer to Figure 3-2. A decrease in the expected future price of the product would be represented by a movement from A to B. S1 to S2. B to A. S2 to S1.

Panel (c)

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for used clothing, an inferior good. Which panel describes what happens in this market as a result of a decrease in income? Panel (c) Panel (a) Panel (d) Panel (b)

inside Tomaso's production possibilities frontier.

Refer to Table 2-1. Assume Tomaso's Trattoria only produces pizzas and calzones. A combination of 24 pizzas and 15 calzones would appear inside Tomaso's production possibilities frontier. at the horizontal intercept of Tomaso's production possibilities frontier. along Tomaso's production possibilities frontier. outside Tomaso's production possibilities frontier

increases; they both benefit

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________. increases; they both benefit increases; only one party benefits decreases; they both benefit decreases; neither benefit