econ midterm
many people buying bigger houses, and lamp sales increase
change in demand
the process of specialization and trade has positive net benefits and is therefore beneficial to everyone
false
though they may face higher prices, consumers usually see an increase in product quality when price ceilings are imposed
false
suppose rent is too high and imposes a price ceiling of 750$/month, the price ceiling results in a
shortage
consequences of rent controls
shortage of affordable housing, reductions in apartment quality, inefficient allocation of apartments
what does the investment component of GDP measure
spending on goods to be used in future production
special interest group
tend to be smaller than the population and very well organized and exert disproportionate political influence
suppose a classmate claims that the reason he knows nothing about politics is rational ignorance. What does he mean?
that the cost associated with becoming informed is greater than the benefit
comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
absolute advantage
the ability to produce a good using fewer inputs than another producer
the commission paid to the seller of a preciously owned collectors skateboard
included in GDP
old navy purchases mannequins to display cloths
included in US GDP
absolute advantage can be determines by comparing different producers
input requirements per unit of output
domestically manufactured business computer
investment
The demand curve
is a graphical representation of the relationship between price and quantity demanded
which statement accurately characterizes the distribution of real GDP per capita internationally
real GDP per capita varies greatly across countries
real GDP per capita is NOT an adequate measure of
the well-being of each person in an economy.
which is an issue that makes central banking difficult for the FED
there is a lag between when policies are enacted and when the effects of those policies can be seen
which statement is NOT a likely result of this (college meal change) price ceiling
there will be food surpluses at many of the restaurants as quantity supplied exceeds quantity demanded at a price of 1$ per meal
people enter into contracts because
they are better off
What is the great economic problem?
to satisfy as many wants as possible with our limited resources
At the tome of the Great Depression, fiscal and monetary policy were not well understood
true
Had the US government used fiscal and monetary policy more effectively, many economists believe that the Great Depression would not have been as severe
true
a democratic government in a country without press censorship will be more responsive to the public in a food-availability crisis
true
as the standard of living increases people will demand democracy and more economic freedom and at the same time become less rationally ignorant
true
being able to place voter views on a linear spectrum is a key assumption of the median voter theorem
true
booms and busts are natural responses to ever-changing economic conditions
true
countries specialize in the production of goods for which they have a comparative advantage
true
it can be mutually beneficial for two nations to specialize in goods for which they have a comparative advantage and then trade with one another
true
price ceilings result in a reduction in mutually beneficial exchanges
true
rational ignorance helps special interest groups push projects through that are, in monetary terms, low in benefit and high in cost
true
rational ignorance is one reason why better0-looking politicians tend to get more votes
true
the incumbent party is favored in an election when personal disposable income is increasing
true
the incumbent party is favored in an election when the economy is doing well in the year of the election
true
the median voter theorem implies that the candidate who reflects the views of the median voter tends to win in a majority rule election
true
the price of lamps increases, and lamp sales in Urtown drop
change in quantity demanded
the price of lamps increase, so lamp producers increase the number of lamps they produce
change in quantity supplied
lamps become much more profitable to make, so furniture makers make fewer tables and more lamps.
change in supply
domestically manufactured personal computer
consumption
ticket to sporting event and 55-cent taco
consumption
Honda's assembly and dale of cars in the US
Included in US GDP
A farmer produces both beans and corn on her farm. If she must give up 1616 bushels of corn to be able to get 66 bushels of beans, then her opportunity cost of 11 bushel of beans is
2.67 bushels of corn
Which demonstrates a scenario with no opportunity cost?
ALL Answers are correct: It's Friday night and you stay up late talking and hanging out with your friends. The chemistry club is giving out free pizza for lunch to all who come to their table to get it. Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook that she would probably never open. Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous.
growth disasters
Argentina and Nigeria
growth miracles
Japan and South Korea
In economics, what is meant by "optimal decisions are made at the margin?"
The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.
Why we we have a higher standard of living now then 100 years ago
There has been economic growth in our society
does not create incentives for growth
a command economy, civil conflict
all else equal, which scenario would exhibit a country with the most economic growth
a country known to be able to resolve most trials and legal issues within a year
which fable from Aesop best illustrates the moral idea that incentive spurs effort
a hound chased a rabbit
which of these examples provides the best evidence that inflation has occurred
a person whose salary has increased is able to purchase fewer goods and services
a downward fluctuation in the economy
a recession
at a price of 12$ per movie, (over equilibrium)
a surplus occurs
which term best describes the situation that, relative to England, France can produce beef at a lower cost of production(can produce beef using fewer inputs)
absolute advantage
The US nominal gross domestic product is
all final goods and services within a given time period
which statement is the best description of a business cycle
alternating periods of increasing and decreasing economic output
What is inflation
an increase in the overall price level
a new building for Tony Hawk Industries
included in GDP
Label each scenario by deciding whether the opportunity cost has increased or decreased. Emily is deciding between her two favorite restaurants. One makes Indian food and the other makes Chinese food. The Indian restaurant has just raised its prices. The opportunity cost of Chinese food has.
decreased
political instability corrupt government trade restrictions
do not encourage investments in physical and human capital
In what ways does GDP per capita not provide an accurate representation of living standards
does not measure production that occurs outside of the market economy, account for changes in environmental quality, account for how people distribute their time between work and leisure
an outbreak of mad cow disease causes americans to abstain from eating beef
downward pressure on price
sub-zero weather in New York, where the super bowl is being played, causes people to become disinterested in watching the super bowl live. What happens to ticket price in the scalping market
downward pressure on price
the nile river floods this year at an exceptional amount of silt to the soil, resulting in increased crops of cotton.
downward pressure on price
In which field do researchers focus on investigating the phenomena of growth?
economics
Margaret owns a stuffed animal shop. At first, it is just her daughter Allison and her hand‑sewing stuffed bears, stuffed sharks, and stuffed giraffes in the spare bedroom. Over time, Margaret decides to rent a larger shop and hire more workers to help out, increasing to a staff of 20 people. Everything is still hand sewn. She notices, however, that her stuffed animal output increased much more than tenfold despite her work force increasing by that amount. However, any more than 20 workers slows down production.
economies of scale
Property rights Dependable legal system competitive markets
encourage investments in physical and human capital
a gardener can either produce beans or corn in her garden, the gardener's opportunity cost of a bushel of beans multiplied by her opportunity cost of a bushel of corn is
equal to one
a new skateboard for you niece
included in GDP
Price ceilings result in resources being allocated to activities with the highest possible value
false
With enough planning, fiscal and monetary policy can prevent recessions
false
a nation will not have a comparative advantage in a product if it does not also have an absolute advantage in the production of that good
false
a problem with price ceilings is that they lead to surpluses
false
absolute advantage is the source of the potential gains from specialization and trade
false
democracies tend to have a higher percentage of rationally ignorant citizens than non-democracies do
false
special interest groups have lower information benefits than the average voter
false
the incumbent party is favored in an election when inflation is high in the year of the election
false
the median voter theorem applies if voters are equally concerned about two political issues, such as education and taxes
false
what does it mean if sellers use blat to allocate goods and services?
goods and services are allocated using a system based on informal connections and favors. sellers allocate goods to people who can compensate them by offering another scarce good in exchange
public school teachers salary
government purchases
which scenario would least likely change an individuals behavior
in an effort to make people eat healthier, the city of Bakersville tells its residents to eat wheat bread instead of white bread
growth rate of output per capita will
increase as the country benefits from high marginal product of capital
capital
increase output at a diminishing rate
Label each scenario by deciding whether the opportunity cost has increased or decreased. Jacob has a bagel or a muffin for breakfast. Muffins are on sale, so they cost $1$1 less than usual. The opportunity cost of eating a bagel has
increased
Label each scenario by deciding whether the opportunity cost has increased or decreased. Justin decides to take the bus to school instead of driving to school. The price of gasoline has just decreased. The opportunity cost of taking the bus has
increased
Label each scenario by deciding whether the opportunity cost has increased or decreased. Taylor has to take time off work to study. Since her wage has increased from $10$10/hour to$15$15/hour, the opportunity cost of studying has
increased
a commitment by a nations central bank to print money to pay for government expenditures
inhibits economic growth
creation of a price floor on sugar
inhibits economic growth
government confiscation of farmland
inhibits economic growth
income tac rates of 90%
inhibits economic growth
a significant amount of oil discovered in texas
input
an upgrade of computers for Mikey's Motors
input
recent graduate with an engineering degree
input
unskilled migrant worker from latin america
input
a good produced in the current time period but put into a firms inventory instead of being sold
is considered unsold inventory and counted as a part of investment in current GDP
which best describes technological knowledge
knowledge used to produce goods and services
what happens after price ceilings on housing
landlords will begin decreasing the quality of apartments by not making repairs or paying for upkeep
because of differences in firms' ability to make changes to quantity supplied, the long-run supply curve for housing is modeled as a line that is ____ steep than (as) the short-run supply curve
less
therefore supply is _____ elastic in the short run than (as) in the long run
less
developing countries
may grow faster than developed countries because they lack the most basic tools and capital investment leads to higher productivity growth
In the long run, the shortages of available housing resulting from rent controls are _______ pronounced than(as) they are in the short run
more
one explanation for this is that in the long run, firms can make changes to the amount of housing they provide _____ easily than (as) they can in the short run
more
doll house sold abroad
net exports
what is the difference between real and nominal gross domestic product
nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year
a previously owned collectors skateboard
not included in GDP
a ticket for the X games bought from a person on a street corner
not included in GDP
a used copy of the Tony Hawk video game
not included in GDP
a used skateboard you buy for your brother
not included in GDP
wheels used to produce a skateboard that will be sold new
not included in GDP
GM's assembly and sale of cars in mexico
not included in US GDP
Ocean spray purchases plastic to make bottles
not included in US GDP
resale of used textbooks to college students
not included in US GDP
sale of Mrs Baird's Bakery
not included in US GDP
bonds issued by an automaker
ouput
contributions to social security
output
decrease in property taxes
output
profits of a large investment company
output
the condition of the economy in an election year can predict votes in a presidential election
political business cycle
Lawrence stands an hour in line at the local butchers shop to obtain a mutton cutlet. Long waiting lines could result from a
price ceiling
Steve decides not to rent out his second home since he is not allowed to set the rate above $1000 per month even though he knows he could find renters willing to pay much more. Select the term that best fits the scenario.
price ceiling
a 24-hour diner is now open only 20 hours a day. this could result from a
price ceiling
a shortage in the market for tie-dye shirts could result from a
price ceiling
if your favorite restaurant downsizes its portion sizes, this could be the result of a
price ceiling
Garret is an undergraduate looking for a job to pay for college. As Garret seeks employment, he is glad to know that he will be paid at least $7.25 per hour. Select the term that best fits the scenario.
price floor
a surplus of workers in the labor market could result from a
price floor
suppose an airline offers unnecessarily lavish flights. this could result form a
price floor
GDP deflator measures
price level
creates incentives for growth
private property ownership, a market economy, legally protected investments
clearly defined property rights
promotes economic growth
creation of a system of patent law
promotes economic growth
the use of competitive market to allocate goods and services
promotes economic growth
Betserai has so much money he can make kites, what explains this.
rapid rises in price levels made the Zimbabwean dollar near worthless in terms of purchasing power
voters are often uninformed on election issues
rational ignorance
which is not a problem that arises for society from individuals rational ignorance
rational ignorance reduces the total amount if human capital available to society with negative impacts on output and long-run growth
price floor result on increasing college student meal prices
some restaurants like Le Cordon Bleu will create rustic chicken and imported cheese paninis at 10$ a sandwich to satisfy the refined demands of college students instead of its old 5$ ham and cheese specials
how does rational ignorance reduce social welfare
special interests are able to get projects with higher costs than benefits passed because voters fail to acquire sufficient understanding of the complex issues
Productivity is best seen because of
specialization
Daniel is a baker who has decided to create his own brand of chain restaurants, Short and Sweet. He negotiates with three suppliers for weeks and ultimately signs contracts with these suppliers. Francis, who owns a new sugar plantation, agrees to sell Daniel freshly refined sugar on the condition that Daniel helps him advertise his brand of sugar. Diana runs an orchard and provides Daniel with fruit. She enters into the partnership knowing that she can dramatically increase her profits if she can sell fruit to Daniel. Lastly, Ryan, who owns a mill, decides to purchase a new piece of machinery so that he can sell Daniel flour at a lower price than his competitor. The end result of Daniel's interactions with his suppliers is that folks in his neighborhood have a chance to buy delicious baked goods at reasonable prices.
the invisible hand
in the economic context what are institutions
the laws, social norms, and conventions of a culture
when price ceilings are imposed, consumers pay lower explicit prices but often face higher costs in terms of waiting in line foe goods and services
true
an impending nuclear war causes people to stock up on twonkies, a popular snack cake provided by many companies.
upward pressure on price
what can be determined off of GDP and mortality rates that goes with standard of living
wealthiest countries have lowest mortality rates