Econ 231 Review

Which of the following will cause the demand curve for product A to shift to the left

An increase in money income if A is an inferior good.

Brinley says that "gas prices are rising because there aren't enough oil refineries." Katie argues that "gas prices are rising because of the growing demand for gasoline from China and India." We can conclude that:

Both statements are positive

Which of the following terms implies the least degree of confidence in an economic generalization?

Hypothesis

Which of the following statements is true about price ceilings

Price ceilings cause goods to be rationed by some other means than legally determined market prices.

The law of supply indicates that, other things equal

Producers will offer more of a product at high prices than at low prices.

What two conditions must hold for a competitive market to produce efficient outcomes

Supply curves must reflect all costs of production, and demand curves must reflect consumers' full willingness to pay

Which of the following is a microeconomic statement

The price of personal computers declined 4.7 percent last year

Which of the following will not produce an outward shift of the production possibilities curve?

The reduction of unemployment

Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences

a consumer surplus of $9 and Nathan experiences a producer surplus of $3

Microeconomics is concerned with:

a detailed examination of specific economic units that make up the economic system.

The typical production possibilities curve is:

a downsloping line that is bowed out from the origin.

A market:

a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade

Which of the following is a capital resource?

a piece of software used by a firm

Suppose an economist says that "other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that

all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant

Blu-ray players and Blu-ray discs are:

complementary goods

An increase in the price of a product will reduce the amount of it purchased because

consumers will substitute other products for the one whose price has risen.

Economic resources are also called:

factors of production

According to economists, economic self-interest:

is a reality that underlies economic behavior.

A public good:

is available to all and cannot be denied to anyone

A normative statement is one that

is based on value judgments.

producer surplus

is the difference between the minimum prices producers are willing to accept for a product and the higher equilibrium price

Which of the following is not considered by economists to be an economic resource

money

The two main characteristics of a public good are:

nonrivalry and nonexcludability

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates:

opportunity costs

The demand curve shows the relationship between:

price and quantity demanded

In presenting the idea of a demand curve, economists presume the most important variable in determining the quantity demanded is:

price of the product itself

A well-tested economic theory is often called:

principle

Market failure is said to occur whenever

private markets do not allocate resources in the most economically desirable way.

The term "quantity demanded":

refers to the amount of a product that will be purchased at some specific price.

An effective ceiling price will:

result in a product shortage.

Any point inside the production possibilities curve indicates

that more output could be produced with the available resources.

Macroeconomics approaches the study of economics from the viewpoint of

the entire economy

Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by

the income effect.

Because of the free-rider problem:

the market demand for a public good is nonexistent or understated.

At the output level defining allocative efficiency

the maximum willingness to pay for the last unit of output equals the minimum acceptable price of that unit of output.

A negative externality or spillover cost occurs when

the total cost of producing a good exceeds the costs borne by the producer

Which of the following is not a main function of the entrepreneur

to make routine pricing decisions

Graphically, if the supply and demand curves are linear, consumer surplus is measured as the triangle:

under the demand curve and above the actual price

A positive statement is concerned primarily with

what is

Which of the following will not cause the demand for product K to change?

A change in the price of product K