Econ Final

Shelter for homeless people is an example of:

a need

Higher education is a ______ and assigned textbooks are ______.

want; wants

For two goods, X and Y, to be classified as substitutes, it must be the case that:

when the price of X rises, the demand for Y increases.

The Scarcity Principle states that:

with limited resources, having more of one thing means having less of another

After subsistence levels of food, shelter, and clothing have been provided, economists refer to all other goods and services as:

"Wants"

For two goods, A and B, the rational spending rule is expressed as:

(MUA/PA) = (MUB/PB).

Which of the following is a defining characteristic of all perfectly competitive markets?

All firms sell the same standardized product.

During Thanksgiving you participated in a pumpkin-pie eating contest. You really enjoyed the first two pies, the third one was okay, but as soon as you ate the fourth one you became ill and lost the contest. After the third pie, your total utility:

Decreased

If Jane can produce 3 pairs of shoes per hour, while Bob can produce 2, then ______ has a(n) ______ advantage in producing shoes.

Jane; absolute

Pat's total utility after eating 99 Reese's Peanut Butter Cups was greater than his total utility after eating 100 Reese's Peanut Butter Cups. Therefore, Pat's marginal utility from the 100th peanut butter cup was:

Negative

Curly told Larry about his new business venture: Curly pays Acme International $1,000 per month for supplies, works out of his apartment on his own computer and earns a monthly revenue of $1,500. Should Larry quit his job and do what Curly is doing?

Not if Larry is earning more than $500 per month at his current job.

Adam Smith's theory of the invisible hand posits the actions of independent, self-interested buyers and sellers will ______ lead to the most efficient allocation of resources.

Often

Assume the demand for coffee increases and the supply of coffee decreases. Which of the following outcomes is certain to occur?

The equilibrium price of coffee will rise.

The long run is best defined as:

a period of time sufficiently long that at least one factor of production is fixed.

The role that prices play in directing resources away from overcrowded markets and towards markets that are underserved is known as the ______ function of price.

allocative

According to the law of diminishing marginal utility:

as you consume less of something, your marginal utility from consuming that good will increase.

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

centralized economy

A movement along a demand curve from one price-quantity combination to another is called a:

change in quantity demanded

Economic theory assumes that a firm's goal is to:

earn an accounting profit

A variable factor of production:

is variable in both the short run and the long run.

Cost-Benefit Principle indicates that an action should be taken if:

its extra benefit is greater than or equal to its extra cost.

The tendency for consumers to purchase more of a good or service as its price falls is captured by the:

law of demand

If a given production combination is efficient, then it must be:

on the production possibilities curve.

Suppose rice is a normal good. If consumers' incomes fall, and a new technology is introduced that lowers the marginal cost of producing rice, then the equilibrium:

price of rice will fall, but we cannot say for sure what will happen to the equilibrium quantity.

The price elasticity of demand for a good measures the responsiveness of:

quantity demanded to a 1 percent change in price of that good.

The role that prices play in distributing scarce goods and services to those consumers who value them the most highly is known as the ______ function of price.

rationing

Adam Smith's theory of the invisible hand posits that the most efficient allocation of resources is often achieved by:

the actions of independent, self-interested buyers and sellers

As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:

the substitution effect of a price change.

Accounting profit is equal to:

total revenue minus explicit costs

Economic profit is equal to

total revenue minus the sum of explicit and implicit costs.

Larry has a comparative advantage over his classmates in writing term papers if he:

has a lower opportunity cost of writing term papers than his classmates.

Economics is best defined as the study of:

how people make choices in the face of scarcity and the implications of those choices for society as a whole.

A rational seller will sell another unit of output:

if the cost of making another unit is less than the revenue gained from selling another unit.