ECON EXAM 1
Every society faces trade-offs because we live in a world of scarcity. Suppose a student-athlete has the opportunity to earn $600 next year playing for a minor league baseball team, $100 next year playing for a European professional football team, or$0 returning to college for another year. What is the opportunity cost of the student-athlete returning to college next year?
$600
Which of the following statements about microeconomics and macroeconomics is correct?
Microeconomics involves the study of how households and firms make choices
If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________ .
Shortage; rise
People buy more of good 1 when the price of good 2 rises. These goods are
Substitutes
If a market is NOT in equilibrium, then which of the following is likely to occur?
The price will adjust to bring the market to eqilibrum
Which of the following is a positive statement?
When the national unemployment rate is 9 percent, the unemployment rate for inner-city youth is often close to 40 percent.
Economist point out that scarcity confronts
both the poor and the rich
Ham and eggs are complements. If the price of ham rises, the demand for eggs will
decrease and the demand curve for eggs will shift leftward.
The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of
decrease in the quantity demanded of cereal because of the substitution effect.
Which of the following areas of economics studies issues such as whether government intervention is capable of reducing the severity of recessions?
macroeconomics
When the price of a good falls, the income effect for a normal good implies that people buy
more of that good because they can afford to buy more of all the things they previously bought.
The "law of demand" is illustrated by a
movement along the demand curve
Scarcity is a situation in which
people cannot satisfy all their wants
Which of the following explains why supply curves slope upward?
prices and revenues
The "law of demand" states that changes in
the quantity demanded of a good are inversely related to changes in its price.
A bakery can produce either cakes or cookies. If the price of cookies rises, then
the supply curve of cake shifts leftward.
The "law of supply" refers to the fact that, all other things remaining the same, when the price of a good rises
there is a movement up along the supply curve to a larger quantity supplied.
