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.