Econ exam 1 key/studyguide
___ occurs when economic benefits are distributed fairly
equity
if Blake can pick more cherries in one hour than Cody, then Blake has a comparative advantage in cherry picking
false
the difference between the consumer surplus and the producer surplus in a market is equal to the dead weight loss
false
the term "market" refers only to trading arrangements that have been approved by the government.
false
the basic economic problem of scarcity
has always existed and will continue to exist.
in a market economy, those who are willing and able to buy what is produced
receive the most of what is produced
The SUPPLY CURVE for umbrellas...
shows the relationship between the price of umbrellas and the quantity of umbrellas supplied.
normative statement
statement which describes how the world SHOULD be
the process used to produce goods and services describes
technology
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer CAN ONLY HAVE COMPARATIVE ADVANTAGE IN 1 CATEGORY
Consumer Surplus (CS)
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
producer surplus
the amount a seller is paid for a good minus the seller's cost of providing it
if the price of gasoline increases, what will be the impact in the market for public transportation?
the demand curve for public transportation shifts to the right.
opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity
A consumer is willing to purchase a product up to the point where
the marginal benefit equals the price of the product
the production possibilities frontier (PPF) shows
the maximum attainable combinations of 2 products that may be produced in a particular time period with available resources
one would speak of a movement along a supply curve for a good, rather than a change in supply if...
the price of the good changes
allocative efficiency refers to
the production of the product-mix most wanted by society.
the circular flow model demonstrates
the roles played by households and firms in the market system
without technological advancement, how can a nation achieve economic growth
through an increase in supplies of factors of production
a technological advancement would shift the supply chart graph...
to the right
The division of the burden of a tax between buyers and sellers in a market is called tax incidence.
true
which of the following is a macro economic question? A)what determines the employment rate? B) how is the production quantity of Digital cameras determined C)what factors determine the price of iPhones? D)what determines the wage benefits of flight attendants.
what determines the employment rate
bret buys a new cell phone for 100$. He receives consumer surplus of 80$ from the purchase. how much does Brett value his cellphone.
$180 the 100 he paid, plus the 80 he was willing to pay
which of the following is a result of government price controls? A) Some people win and some people lose B)price controls benefit poor consumers but harm producers and wealthy consumers. C)price controls increase economic efficiency. D)the deadweight loss from price ceilings is greater than the dead weight loss from price floors
A) some people win and some people lose
the law of demand implies, holding everything else constant that as the price of yogurt, A)increases, the demand of yogurt will increase B increases, the quantity of yogurt demanded will decrease C)decreases, the quantity of yogurt demanded will decrease D)decreases, the demand for yogurt will increase
B)increases, the quantity of yogurt will decrease
consumers make all economic decisions in a mixed economy
False
for most goods and services, the burden of a tax is on the sellers
False
if the demand curve for a product shifts to the right and the supply curve for the product shifts to the left, equilibrium price and equilibrium quantity will both increase
False
If society decides it wants more of one good and all resources are _____ then it has to give up some of the another good and incur some opportunity costs. technology advances resources are underutilized resources are fully utilized new resources are discovered
Fully utilized
If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.
True
an increase in the unemployment may be represented as a movement from a point on the PPF to a point inside the frontier
True
Productive efficiency refers to:
Using resources to their fullest
if a decrease in income leads to an increase in the demand for macaroni, then macaroni is
an inferior good
voluntary exchange increases the economic efficiency
because neither the buyer nor the seller would agree to a trade unless they both benefit
in Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. these price ceilings were set ________ the market prices, which resulted in ______ of food.
below; shortages
economies promotes which of the following as the way to make the best decision?
continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost
because minimum wage is a price floor,
it will create a deadweight loss.
economic surplus is maximized in a competitive market when
marginal benefit equals marginal cost
the income effect of a price change results in a
movement along the demand curve due to a change in purchasing power brought about by the price change
if the production possibilities frontier is linear, then
opportunity costs are constant as more of one good is produced