Econ Prep Chapter 1-4
Potential GDP per person ______.
grows at a steady pace but not at a constant pace
Jack's opportunity cost of producing a ton of apples is ___ than Stephen's, so Stephen ___ gain from specialization and trade with Jack. Jack ___ an absolute advantage in the production of apples and grapes
higher than; can has
The opportunity cost of any action is
the highest−valued alternative given up.
Which of the following is correct? Factors of production are
the inputs used to produce goods and services.
On the diagram shown above, a movement from A to C represents __________.
an increase in demand
The U.S. GDP per capita in 2013 was approximately __________.
$50,000
The relationship between two variables that are unrelated can be shown by ______.
a vertical line
The money price of a pack of frozen waffles is $1.50, and the relative price of a pack of frozen waffles in terms of ramen is 2.50 boxes of ramen noodles per pack of frozen waffles. The money price of a box of ramen noodles is _______.
$0.60
The table gives data about an economy in 2014. The value of GDP in 2014 is ______.
$1,213 billion
Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime?
$18.00
During a year, a firm's net investment is $1,600 and depreciation is $400. The firm's gross investment is ______.
$2,000
The equilibrium price is ______.
$250.00 per ticket
Becky, an eeconomics student, buys four cups of coffee a day, which costsher $12.00. She decides to buy one more cup each day andher expenditure on coffee increases to $15.00. The marginal cost to Becky of a cup of coffee is _______.
$3.00
In 2013, real GDP per person was ______ per year lower than it would have been with no growth slowdown in the 1970s.
$31,000
An economy produces only digital cameras, chocolate bars, and watches The table gives the quantities produced and prices in 2013 and 2014. The base year is 2013. What is real GDP in 2014 in terms of the base-year prices? Real GDP in 2014 in terms of base-year prices is ___
$43
A south sea island produces only coconuts. In 2011, the price of a coconut is $2.50 and the quantity produced is 300. In 2012, the price of a coconut is $3.50 and the quantity produced is 350. 2011 is the reference base year. Real GDP in 2012 in terms of base-year prices is ______.
$875
Aggregate income in an economy in 2014 is $995 billion. Saving is $25 billion and imports are $30 billion. Aggregate expenditure in the economy in 2014 is ______.
$995 billion
1) What is the marginal cost of producing the 2 millionth hot tub? 2) The marginal cost curve is upward sloping because _______.
1) 12 2) resources are not all equally productive in all activities
In the above graph, which of the following formulas is the correct expression for the slope of the line between points a and b?
(Y2 - Y1) / (X2 - X1)
What is the value of the slope of this line?
-1 /5
If Y = 800 - 4X, what is the slope of this line?
-4
Suppose that demand increases by 50 downloads a day and supply decreases by 100 downloads a day. What is the new equilibrium price of a movie download and what is the new equilibrium quantity of movie downloads? 1) A new equilibrium price is ___ per download 2) The new equilibrium quantity if ___ downloads per day.
1) $2.00 2) 650
Elizabeth owns a take-out counter. In an hour she can produce 40 sandwiches or 40 wraps. Ben also owns a take-out counter. In an hour he can produce 20 sandwiches or 10 wraps. 1) Elizabeth's opportunity cost of 1 sandwich is ______. Ben's opportunity cost of 1 sandwich is ______. 2) ___ has a comparative advantage in sandwiches and ____ has an absolute advantage in both goods.
1) 1 wrap; 0.5 wrap 2) Ben; Elizabeth
1) What is Sam's opportunity cost of milkshakes? 2) What is Amy's opportunity cost of milkshakes? 3) Who has the absolute advantage in milkshakes, Sam or Amy? 4) Who has the absolute advantage in fries, Sam or Amy? 5) Who has the comparative advantage in milkshakes, Sam or Amy? 6) Who has the comparative advantage in fries, Sam or Amy? 7) Who should you assign to make milkshakes, Sam or Amy? 8) Suppose Sam and Amy agree to specialize and trade. Which of the following would be a trade price that would benefit both of them?
1) 2 2) .4 3) Amy 4) Sam 5) Amy 6) Sam 7) Amy 8) None of these would be acceptable to both of them.
Emma owns an ice cream parlor. In an hour she can produce 21 milkshakes or 84 ice cream sundaes. Bonnie also owns an ice cream parlor. In an hour she can produce 7 milkshakes or 21 ice cream sundaes. Calculate Emma's and Bonnie's opportunity cost of a milkshake. 3) _____ has a comparative advantage in milkshakes and ______ has an absolute advantage in both goods.
1) Emma's opportunity cost of 1 milkshake is 4 ice cream sundaes 2) Bonnie's opportunity cost of 1 milkshake is 3 ice cream sundaes 3) Bonnie; Emma
Ezra and Debra grow turnips and potatoes. 1) Ezra has a comparative advantage in producing turnips if ____. 2) If Ezra also has an absolute in growing turnips and potatoes, he will
1) Ezra's opportunity cost of producing turnips is less than Debra's opportunity cost of producing turnips 2) be more productive than Debra
From the fourth quarter of 2016 to the fourth quarter of 2017, nominal GDP increased by 4.4 percent. From the fourth quarter of 2016 to the fourth quarter of 2017, real GDP increased by 2.2 percent 1) Which had the faster growth rate, nominal GDP or real GDP? 2) Why did nominal GDP have the faster growth rate.
1) nominal GDP 2) Because prices increased
1) A decrease in the price of a raw material of production. 2) The price of a complement in production falls. 3) The price of a good rises and other influences stay the same. 4) The price of a good is expected to rise in the future. 5) The number of suppliers of a good increases. 6) Advances in technology lower the cost of producing existing products. 7) The weather that year is particularly perfect for agriculture.
1) shift right 2) shift left 3) movement up 4) shift left 5) shift right 6) shift right 7) shift right
1. To describe preferences, economists use the conceptual of marginal benefit. 2. The marginal benefit from a good or service is the benefit received from consuming one more unit of it
1. and 2. are correct statements
When the quantity of food produced is 1.5 tons a day, the marginal cost of producing a ton of food is __ barrels of ethanol.
10
The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies?
10 percent off your grade.
Aaron normally spends four nights studying for his biology test and his current grade in the course is 65 percent. He decides to spend five nights studying for his next biology test and his grade after that test rises to 75 percent. The marginal benefit to Aaron of studying one more night for his biology test is _________.
10 percentage points
The table above indicates the demand schedules for four types of consumers: A, B, C, and D and the number of consumers in each group (top row). The quantity demanded by each type of consumer (QA, QB, QC, and QD) is shown for market prices ranging from $10 down to $4. What is the combined quantity demanded at a market price of $4?
10,400
Are either or both of these newspaper headlines positive or normative? 1. Our planet is warming because we burn too much coal. 2. Flex-time, which allows employees to shift their work hours over a two dash week period, will allow workers to better meet family needs. Statement 1 is a ______ statement because it ______ be tested. Statement 2 is a ______ statement because it ______ be tested.
1: positive; can 2: normative; cannot
The figure shows Cindy's PPF. Cindy currently produces 10 bags of fudge and no candies. If Cindy decides to produce 1 bag of candies, her opportunity cost of the bag of candies is _______ of fudge.
2 bags
Using information in the previous table, what is country A's opportunity cost of producing 1 unit of clothing?
2 units of food
The previous table shows the marginal benefit that Ted earns from keeping his store open one more hour. Ted has a marginal cost of $90 per hour. How many hours should Ted stay open?
22 hours
At 2013 prices, the value of production in 2014 was 2 percentage points higher than in 2013. At 2014 prices, the value of production in 2014 was 4 percentage points higher than in 2013. The chained-dollar real GDP is ______ in 2014 than in 2013
3 percent greater
The table shows the marginal benefit from pizza and the marginal cost of pizza in terms of soda forgone. If ______ pizzas are produced, the quantity of soda that people are willing to give up to get an additional pizza is equal to the quantity of soda that they must give up to get that additional pizza.
30
When Kim and Liam move from spending 30 minutes of each hour producing pies and 30 minutes producing cakes to specializing in the good in which they have a comparative advantage, the total gains from trade are ______ pies and ______ cakes.
30; 100
Oakdale achieves allocative efficiency if _______.
4 batches of cookies an hour are produced
The money price of a pound of bananas is $0.60 and the money price of a half gallon of milk is $2.40 The opportunity cost of a half gallon of milk is ____. The relative price of a half gallon of milk is an opportunity cost because ____.
4.00 pounds of bananas, which is the relative price of a half gallon of milk the relative price tells us how many pounds of bananas we must give up to get a half gallon of milk
Eric has been spending six nights studying for his physics tests and his current grade in the course is 75 percent. He decides to take a part-time job and study only five nights for his next test. As a result, after his next test, his grade falls to 70 percent. The marginal cost to Eric of working one night a week is _______.
5 percentage points
If they share the total gains equally, Kim gives Liam ______ and Liam gives Kim ______.
50 cakes; 15 pies
If the price of an amusement park ticket falls from $80 to $20, while all other influences on buying plans are unchanged, the quantity of amusement park tickets demanded changes from _____ to _____.
6 million; 24 million
The graph shows the marginal cost of producing stuffed animals and the marginal benefit from stuffed animals in Oakdale. Oakdale achieves allocative efficiency if _______.
6 stuffed animals an hour are produced
The equilibrium quantity of milkshakes is ___ a day
650
Valued at the market exchange rate, GDP per person in the United States in 2013 is ______ times that in China. Valued at purchasing power parity prices, real GDP per person in the United States in 2013 is ______ times that of China.
7.9; 5.4
Ann currently produces cookies and bread at point A in the graph. Ann's marginal cost of producing an additional unit of cookies is _______.
8 units of bread
Refer to the previous graph. What is the best descriptor of the relationship between disposable income and consumption spending?
A positive relationship
In the previous graph, the solid line can be expressed algebraically as Y = a + bX. What causes the line to shift from the solid line to the dashed line?
A change in the value of a
___ earns ____
A coal deposit; rent
______ good is an item that is bought by its final user during a specified time period. ______ good is an item that is produced by one firm, bought by another firm, and used as a component of a final good or service.
A final; An intermediate
___ is an example of a good ___ is an example of a service
A golf ball A haircut
When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?
A market
Which of the following goods and services would be excluded from personal consumption expenditures in the Bureau of Economic Analysis (BEA) statistics?
A new house
(Upward Sloping Graph) The graph shows ______.
A positive relationship becoming steeper.
Choose the statement that is incorrect.
A rational choice will turn out to have been the best choice after the event.
_______ is an example of _______.
A sewing machine in a Levi's production plant; capital
Which of the following will cause an outward (rightward) shift in supply?
A technological improvement.
According to the graph, at what point does the economy begin a period of recession?
After the peak
The following statements are about economic coordination. Choose the statement that is false.
All economic activity is coordinated by markets.
What kind of efficiency are we achieving when we are producing at a point of the PPF that we prefer above all other points:
Allocative
Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then _______.
Alpha consumes less than Beta today, but it will grow faster than Beta
Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then _______.
Alpha consumes less than Beta today, but it will grow faster than Beta
Which of the following is consistent with the law of supply?
An increase in the market price of MP3 players causes an increase in the production of MP3 players.
Two countries, Antarctica and Arctica, produce only two goods: frozen fish and party ice. The table gives their production possibilities. _______ has a comparative advantage in frozen fish and _______ has a comparative advantage in party ice.
Antarctica; Arctica
How does the Bureau of Economic Analysis of the U.S. Department of Commerce measure GDP?
By adding the value in dollar terms of all the final goods and services produced domestically.
Choose the statement that is incorrect.
Canada has the world's highest HDI value
What kind of economic system relies on private ownership of resources, direct incentives and decisions made via markets and the price mechanism?
Capitalism
In what type of economy does the government decide how most economic resources will be allocated?
Centrally planned economy
Ms. Boulware is the best lawyer and the best secretary in town. She has:
an absolute advantage in both jobs
Choose the correct statement.
Choices that are the best for society as a whole are said to be in the social interest
Claire and Doug are farmers who produce beef and corn. Use the question facts to answer the following question. To maximize their total output of beef and corn _______.
Claire specializes in beef and Doug specializes in corn
In the above graph, which of the following combinations is unattainable with the current resources available in this country?
Combination G
According to the economic way of thinking, people:
Compare costs and benefits and make a choice to achieve the greatest benefit over the cost for the person making the choice.
Which is the largest component of GDP?
Consumption
In the graphs shown, which country has a comparative advantage in the production of shirts?
Country B
What are the four goals of any economic system?
Efficiency, equity, stability, growth
Choose the correct statement.
Entrepreneurs bear the risk of business decisions.
Hire factors of production Organize factors of production to produce and sell goods and services
Firms
In the above graph, which of the following combinations of pies and cakes is unattainable given the existing resources?
Four cakes and seven pies
Comparing the data for the fourth quarter of 2017 with that for the second quarter of 2012, how has GDP changed?
GDP has decreased.
In the circular flow model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?
Goods markets
Choose the statement that is incorrect.
Governments can make better decisions by using the tools of economics, but businesses require the tools of business administration, not economics
In the previous series of graphs, which graph shows a negative and increasing relationship between X and Y?
Graph C
Olivia and Helen produce afghans and quilts. The figure shows Olivia's production possibilities frontier, PPFO, and Helen's production possibilities frontier, PPFH. Olivia and Helen can achieve gains from trade if _______.
Helen sells afghans to Olivia in exchange for some of the quilts that Olivia produces
Since 1969, economic growth in ______ has been greater than in ______ because ______.
Hong Kong; the United States; the ratio of production of consumption goods to production of capital goods is greater in the United States than in Hong Kong.
In the circular flow model, who supplies factors of production in exchange for income?
Households
_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent. _______ choose the quantities of factors of production to hire.
Households; Firms
Macroeconomics focuses on which of the following topics?
How do we produce the products?
Which of the following questions is a microeconomics question?
How would a tax on Internet trading affect eBay?
Which of the following is TRUE regarding real GDP? I. Real GDP is the value of the total production of the country's farms, factories, shops, and offices. II. Real GDP rises whenever inflation occurs. III. Real GDP does not measure all that is produced.
I and III
Assume the cost of aluminum used by soft-drink companies increases. Which of the following correctly describes the resulting effects in the market for canned soft drinks? I. The demand for soft drinks decreases. II. The quantity of soft drinks demanded decreases. III. The supply of soft drinks decreases. IV. The quantity of soft drinks supplied decreases.
II and III
Which of the following is a positive economic statement?
If minimum wage rates rise, then unemployment will rise.
Scarcity - be it in time, talent, or money - forces all of us to make choices. But according to economists, those choices can be influenced. What do choices respond to?
Incentives
Choose the statement about incentives that is incorrect.
Incentives create scarcity
What kind of efficiency do we achieve when we produce goods and services at the lowest possible cost?
Production
Which of the following best defines capital as a factor of production?
Instruments, machines, and buildings used in production.
Which of the following are not counted as final goods and used in the GDP calculation?
Intermediate goods
Consider the previous figure and assume that it is the market for health-care services. When the "baby boomer" generation retires, the number of people who require health care increases by 30%, and, as a result, the number of health-care providers also increases, but by only 25%. What is the effect on the price of health-care services over time
It increases because demand increased by more than supply.
Which of these is not a shortcoming of GDP as a measure of standard of living?
It only counts final goods and services and not intermediate goods.
Who is Chairman of the Board of Governors of the Federal Reserve?
Janet Yellen
Which of these covers the study of topics such as inflation and unemployment?
Macroeconomics
When production is efficient, ______.
Mario's can produce more pasta only by producing less pizza
Choose the correct statement.
Market prices and factor cost diverge because of indirect taxes and subsidies.
Facilitate trade Enable buyers/sellers to get info and do business with each other
Markets
Martha can produce 90 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 6 quilts or 18 batches of chocolate chip cookies in a month. ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.
Martha; Jane
Which of the following countries has an economy where most of the resource allocation is determined by a central planning authority?
Microeconomics
Kelly is an architect, and she is trying to decide whether to hire Mike, a draftsman, to assist with her work. Kelly could hire Mike at $20 per hour, but it would take him three times as long to complete a task as it takes Kelly. Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle. Which of the following is true?
Mike should be hired at the $20 per hour wage rate.
Anything accepted as a means of payment Makes trading efficient
Money
Refer to the previous graph. Which of the following best represents the situation in which BMW must face a trade-off between producing SUVs and producing hybrids?
Moving from point B to point C
Choose the correct equation.
Net investment + Depreciation = Gross investment
An economy produces only robots, pens, and pizza. The table gives the quantities produced and prices in 2012 and 2013. The reference base year is 2012. What is nominal GDP in 2012 and in 2013?
Nominal GDP in 2012 is $23. Nominal GDP in 2013 is $125.
Choose the correct statement.
Nominal GDP is just a more precise name for GDP.
How many variables are involved in explaining the movement from Point A to Point C on this graph?
One
Refer to images A, B, & C. These represent what type of graphs?
One variable graphs
What is the name given to the highest-valued alternative that must be given up to engage in any activity?
Opportunity cost
The supply curve passes through the point (0,350) and has slope equal to 2. The equation of the supply curve is _______.
P=350+2QS
The y-axis intercept of the demand curve is 55 and the slope is −9. The equation of the demand curve is _______.
P=55-9QD
The equation of the demand curve that you have drawn is ______.
P=6-2QD
The y-axis intercept of the demand curve is 65 and the slope is −10. The equation of the demand curve that you have drawn is _______.
P=65-10QD
A demand curve passes through the point (0,700) and has slope equal to −2. The equation of the demand curve is _______.
P=700-2QD
The y-axis intercept of the supply curve is 75 and the slope of the supply curve is 9. The equation of the supply curve is _______.
P=75+9QS
According to the graph, which point represents an efficient use of resources?
Point C
According to the graph, which point represents an inefficient use of resources?
Point F
Choose the statement that is incorrect.
Potential GDP per person grows at a constant rate.
In a market system, which of the following provides the information that individuals need to make decisions about resource allocation?
Prices
Jobs alone are not the measure of economic well-being. If this were the case, then we could increase the well-being of an economy by giving highway workers spoons rather than backhoes and garment workers needles and thread instead of computerized sewing machines. What does provide the source of high living standards?
Production of goods and services people value.
Govern ownership & use of things people value Provide incentive to specialize/produce
Property Rights
What are copyrights designed to accomplish?
Protect intellectual property rights
Gustavo graduates from college and his income increases by $20,000 a year. Nothing else changes. Gustavo decreases the quantity of ramen noodles and chocolate chip cookies that he buys and increases the quantity of winter vacations that he buys. For Gustavo, _______.
Ramen noodles and chocolate chip cookies are inferior goods
Which phase of the business cycle is characterized by decreasing levels of real GDP?
Recession
Choose the option that is an example of government expenditure.
Secret service protection for the President.
Explain how the following headlines concern self-interest and the social interest: 1. Staples, a U.S. office supply store, is opening in Europe and McDonalds is expanding in India 2. All automobiles must be fitted with seat belts
Staples and McDonalds make decisions in their self-interest. Seat belts are in the social interest, but people decide whether to wear them in their self-interest.
Choose the correct statements. 1. We measure the marginal benefit from a good or service by the least that people are willing to pay for an additional unit of it. 2. We calculate marginal benefit from the slope of the PPF. 3. The marginal benefit from a good or service is the benefit received from consuming one more unit of it. 4. We measure the marginal benefit from a good or service by the most that people are willing to pay for an additional unit of it.
Statement 3 and 4 are correct
Choose the correct statements about competitive markets. 1. A competitive market has many buyers. A competitive market has many buyers. 2. A competitive market has many sellers. A competitive market has many sellers. 3. All competitive markets are physical places where buyers and sellers meet. All competitive markets are physical places where buyers and sellers meet. 4. In a competitive market, prices are eventually driven down to zero.
Statements 1 and 2 are correct
Choose the correct statements about competitive markets. 1. A competitive market has many sellers. 2. A competitive market has many buyers. 3. A competitive market must be a global market. 4. A competitive market is a market for goods but not for services.
Statements 1 and 2 are correct
Choose the statement that is incorrect.
The Lucas wedge equals real GDP minus potential GDP
People are willing to give up 12 tacos per pizza if only 1 pizza is available; 7 tacos per pizza if 3 pizzas are available; and 3 tacos per pizza if 5 pizzas are available. Choose the correct statement.
The basic reason why marginal benefit decreases as we consumer more of a good is that we like variety.
An economy produces only digital cameras, chocolate bars, and watches. The table gives the quantities produced and prices in 2013 and 2014. The base year is 2013. What is the chained-dollar real GDP in 2014?
The chained-dollar real GDP in 2014 is $35
An economy produces only leaf blowers, lollipops, and jigsaw puzzles. The table gives the quantities produced and prices in 2013 and 2014. The base year is 2013. What is the chained-dollar real GDP in 2014?
The chained-dollar real GDP in 2014 is $47
An economy produces only cell phones, pens, and pizza. The table gives the quantities produced and prices in 2013 and 2014. The base year is 2013. What is the chained-dollar real GDP in 2014?
The chained-dollar real GDP in 2014 is $58
Which of the following is not a possible opportunity cost of attending college?
The cost of housing
In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?
The division of labor
The price at which no one is willing to buy a good is $150 per unit. As the quantity demanded of the good increases by one unit, the maximum price that someone is willing to pay for that unit decreases by $5. What is the equation for this demand curve?
The equation of the demand curve is P=150-5QD
The price at which no one is willing to buy a good is $900 per unit. If the demand curve passes through the point (4,864), what is the equation of the demand curve?
The equation of the demand curve is P=900 −9QD.
The price at which sellers are not willing to supply a good is $125 per unit. As the quantity supplied of the good increases by one unit, the minimum price at which someone is willing to sell that unit increases by $6. What is the equation of this supply curve?
The equation of the supply curve is P=125+6QS
The price at which sellers are not willing to supply a good is $450 per unit. If the supply curve passes through the point (2,462), what is the equation of the supply curve?
The equation of the supply curve is P=450+6QS
What is the equilibrium price of a DVD rental?
The equilibrium price is $4 a DVD rental
Which of the graphs represents a relationship between two variables?
The graph on the left
Which of the following items is an example of a tradeoff?
You spend more on textbooks and less on movies
Resource use is efficient when _______.
it is not possible to make someone better off without making someone else worse off.
Suppose that when you study 4 hours for an exam, your mark is 80 percent. If you study for an extra hour, your mark is 85 percent. Choose the correct statement.
The marginal benefit from studying one more hour is 5%
When most economists wake up in the morning, their first decision is whether or not to hit the snooze alarm. What statement best represents their thought process as a rational decision maker? (How does an economist approach analyzing a situation like this?)
The marginal benefit of sleeping 10 more minutes is greater than the marginal benefit of 10 more minutes of work.
Every week, Kate plays tennis for two hours, and her grade on each French test is 80 percent. Last week, after playing tennis for two hours, Kate considered playing for another hour. She decided to play for another hour and cut her study time by one hour. But last week, her French grade fell to 60 percent. Given that Kate spent a third hour playing tennis, what can you conclude about the marginal benefit and marginal cost of the second hour of playing tennis playing tennis?
The marginal benefit of the second hour of playing tennis exceeded its marginal cost.
In the above graph, what move describes the impact of an increase in income on consumption?
The move from b to c
The table gives the demand and supply schedules for movie downloads. Suppose that demand increases by 100 downloads a day and supply decreases by 50 downloads a day. What is the new equilibrium price of a movie download and what is the new equilibrium quantity of movie downloads?
The new equilibrium price is $4.0 per download. The new equilibrium quantity is 700 downloads per day.
Consider the following statements about factors that influence the standard of living, and choose the statement that is incorrect.
The omission of household production from GDP means that GDP overestimates total production.GDP overestimates total production.
The market for corn is initially in equilibrium. Suppose that the production of biofuels, which use corn as an input, increase, and at the same time, increases in the price of oil cause farm production costs to rise. Which of the following explains the effect on equilibrium price and quantity in the corn market?
The price of corn will rise, but the effect on equilibrium quantity cannot be determined without more information.
Choose the option that is an example of government expenditure.
The purchase of airline tickets by Congress to send members to visit overseas troops
Which of the following is included in the economist's definition of investment?
The purchase of new machines, factories, or houses
Choose the correct statement.
The quality of labor depends on human capital.
Washington state had a bumper apple crop this year, significantly increasing the supply of apples in the U.S. Given this information, choose the statement that correctly describes the effect on the U.S. apple market.
The quantity of apples demanded will increase as the price of apples falls.
Which of these is a macroeconomic study?
The study of how fast prices in general are rising.
The graph above shows the market for laptop computers. Suppose the price of memory chips used in laptop computers decreases. How will this event impact on the equilibrium quantity and the market price?
The supply increases, causing the equilibrium quantity to rise and the market price to fall.
Suppose the current price of a printer is $6 and 4 million printers a year are bought. What do you predict will happen to the price of a printer?
The surplus of printers forces the price down
Assume there are three variables involved in the previous graph: (1) price, (2) quantity, and (3) a third variable. Which of these variables cause a move from Point C to Point D in the graph?
The third variable
The table gives some of the items in the U.S. National Income and Product Accounts in 2012. What is the value of U.S. GDP (income approach) in 2012?
The value of U.S. GDP (income approach) in 2012 is $15.3 trillion.
In 2012, U.S. GDP using the income approach is $15.3 trillion and net domestic income at factor cost is $12.0 trillion. What is the value of indirect taxes less subsidies plus depreciation in 2012?
The value of indirect taxes less subsidies plus depreciation in 2012 is $3.3 trillion.
In 2013, U.S. exports were $2,260 billion and imports were $2,757 billion. What was the value of net exports?
The value of net exports in 2013 was -497 billion dollars
Which of the following statements is true about the value of the slope of this line?
The value of the slope is the same between points a and b and points c and d.
Which of the following is critical to the success of the market system?
To allow individuals or firms to have exclusive use of their property
Choose the correct statement.
To isolate the increase in production from the rise in prices, we distinguish between real GDP and nominal GDP.
The price change in the price of an amusement park ticket illustrates the law of demand in action
True
What is the fundamental fact of life from which all economic problems arise?
Wants cannot be satisfied with the available resources.
The table below shows the maximum output of wine and cloth that England and Portugal can produce under constant cost conditions. WINE CLOTH ENGLAND 150 140 PORTUGAL 110 70
What is the lowest possible price England will sell cloth for? 1.07 What is the highest possible price Portugal will pay for cloth? 1.571
Which of the following topics is NOT a macroeconomics question?
What will happen to the price of a computer as more firms produce computers?
Which of the following represents an inferior good?
When consumer income increases, the demand for bologna decreases.
If, as Miles's income increases, his demand for magazines increases, then for Miles, magazines are _______.
a normal good
You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?
You have a comparative advantage in picking apples.
You plan to go to school this summer. If you do, you won't be able to take your usual summer job that pays $8,000 for the summer. The cost of tuition is $1,000 and textbooks cost $200. You live with your family, which covers your living expenses of $1,800. What is your opportunity cost of going to school this summer?
Your opportunity cost of going to summer school is $9,200
______ is an example of U.S. consumption expenditure.
Your purchase of a model car kit.
______ is an example of U.S. consumption expenditure.
Your purchase of a tire for your car
In what type of economy does the government decide how economic resources will be allocated?
a centrally planned economy
All of the following will change the demand for onions except _______.
a change in the price of onions
We know that there have been shifts of both the demand curve for and the supply curve of a good. We also know that one end result of the changes in this market was that the equilibrium price of the good fell. Given this information, which combination of supply and demand changes could NOT have possibly occurred?
a decrease in supply and an increase in demand.
In the market for chocolate bars, the supply of chocolate bars will decrease if any of the following occur except ______.
a decrease in the price of a chocolate bar
(Increasing Graph) The graph shows _______.
a direct relationship
When Nike decides to produce running shoes by using more labour and less capital, it is answering ______ question. When Sony decides to produce computers rather than DVD players, it is answering ______ question.
a how; a what
Which of the following is included in the measure of U.S. GDP?
a loaf of Wonder Bread produced and sold in the United States
Nominal GDP is ______. Real GDP is ______.
a more precise name for GDP; the value of finals goods and services produced in a given year when valued at the prices of a reference base year.
All of the following are examples of investment except ______.
a person depositing $100 a well to her savings account
All of the following are examples of investment except ______.
a person money adding money to his retirement fund.
The graph shows _______. An example of a relationship like this is the relationship between _______.
a positive relationship becoming less steep; study time and you GPA
An incentive is _______.
a reward that encourages an action or a penalty that discourages an action
The graph illustrates the market for tea. The market equilibrium is at point A. After one or more changes, the market equilibrium moves to point B. You predict that the market for tea was most likely influenced by _______.
a rise in household income and a rise in the number of plantations
You predict that the market for tea was most likely influenced by _______.
a rise in household income and a rise in the number of plantations
Which of the following --- by itself --- causes a decrease in demand for a certain good?
a rise in the price of some item that is a complement of the good
Resource use is efficient when _______.
a situation cannot be improved upon
Other things remaining equal, the law of demand says that higher prices will lead to:
a smaller quantity demanded and lower prices to a larger quantity demanded.
Economics is all of the following except _______.
a subject that tells countries what goods they must trade.
The condition that exists when quantity supplied exceeds quantity demanded at the current price is known as __________.
a surplus or excess supply
The outward shift of the production possibilities frontier from point A to point B in the above graph would most likely be caused by:
a technological advance that affects both the production of automobiles and aircraft carriers
All of the following will decrease the supply of airline flights except:
a technological change that makes airplanes safer and more fuel-efficient.
When a gym club chooses to spend more on cardio equipment and less on free weights, its choice illustrates ____.
a tradeoff
The use of purchasing power parity prices
accounts for differences in the prices of the same goods in different countries when measuring real GDP.
Potential GDP is
achieved when all factors of production are fully employed.
If Nike, an American corporation, produces sneakers in Thailand this would
add to Thailand's GDP but not to U.S. GDP.
Economists assume that when there is a change in demand and/or supply, that prices reach a new equilibrium:
after an adjustment period that varies.
Along this PPF, the quantities of ______.
all goods other than pillows and quilts remain constant
Flour purchased by Chef Bondi to make pizza dough is an example of ____ good. Concrete purchased by Your Swimming Inc is an example of ___ good.
an intermediate; an intermediate
The equilibrium quantity _______.
and equilibrium price are determined at the intersection of the supply curve and the demand curve
A market is ___
any arrangement that enables buyers and sellers to get information and to do business with each other.
If OPEC is correct, the price change could have occurred as a result of demand changing because of ______ in the expected price of oil and supply changing because of ______ in the expected price of oil.
an increase; an increase
People make rational choices by comparing _______.
benefits and costs
According to the graph, which period of time is the economy generally considered to be in an expansion phase of the business cycle?
between points A and C.
An U.S. firm buys a new industrial sewing machine from a company located in France. Which of the following is true? I. U.S. net exports decrease. II. U.S. investment increases.
both I and II
The price of food increased during the past year. The law of demand applies to food because when the price of food rises, there is ______.
both a substitution effect and an income effect
The figure shows the production possibilities frontiers for two countries, Remus and Romulus in 1980. Production possibilities per person are smaller in Remus than in Romulus. Put a point on each curve and label the the curves. Between 1980 and 2015, economic growth occurred in both countries, so that production possibilities per person in Remus are now greater than production possibilities in Romulus. Since 1980, _______.
both countries have experienced economic growth, and growth in Remus has been more rapid than that in Romulus
Market price is determined by _________.
both supply and demand
Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______.
both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs
The line (demand curve) shifts to the right due to a:
change in a third variable other than price or quantity of pizza
On the diagram shown above, a movement from A to B represents a:
change in quantity supplied.
The value of exports of goods and services minus the value of imports of goods and services is ______.
called net exports
Graphs are often used in economics because they:
can simplify complex topics
Marginal benefit from food crops _______.
cannot be calculated from the table
If demand and supply change in the same direction, we _____ the direction of change of the equilibrium quantity and we _____ the direction of change of the equilibrium price.
can predict; cannot predict
The income earned by the people who sell the services of the factor of production _______ is called _______.
capital; interest
Along a curve showing a linear relationship, for each increase in x of one unit, y _______.
changes by the same amount
Bottled water and health club memberships are _______.
complements
If, as the price of onions increases, the quantity of tomatoes that people buy decreases, then onions and tomatoes are _______.
complements
If as the price of vitamin E increases, the quantity of vegetable oil that firms plan to sell increases, then vitamin E and vegetable oil are _______.
complements in production
Low-fat milk and cream are _______.
complements in production for a dairy
A cellphone and a phone call are ______. A text message and an email are ______.
complements; substitutes
Pizza and sausage are ______. Wheat and rye are ______.
complements; substitutes
Real GDP ______.
does not include a measure of leisure time or environmental quality.
The expenditure approach to measuring GDP sums together ______, and the largest component is ______.
consumption expenditure, investment, government expenditure on goods and services, and net exports; consumption expenditure
To make comparisons of real GDP between two countries we must ______.
convert the real GDP of one country into the same currency units as the real GDP of the other country, and use the same prices to value the goods and services in the countries being compared
Which of the following are included in the income approach to calculating GDP?
corporate profits; depreciation; indirect taxes less subsidies
Read the news clip, then answer the following question. The news clip illustrates a change in the supply of flights when it reports that American Airlines is _______.
cutting the number of flights with no mention of a change in the airfare
Making a choice at the margin means ___
deciding to do a little bit more or a little bit less of an activity
Computers and DVDs are complements. If the price of a computer increases, the demand for DVDs will _______.
decrease; and the demand curve for DVDs will shift leftward
Comparing the data for the fourth quarter of 2017 with that for the second quarter, how has consumption expenditure changed as a percentage of GDP? Consumption expenditure as a percentage of GDP has _______.
decreased
An increase in the price of onions ___.
decreases the quantity of onions demanded and results in a movement up along the demand curve for onions.
A rise in the wage rate of dairy workers ______ the supply of low-fat milk. A rise in the price of cream ______ the supply of low-fat milk.
decreases; increases
Da Vinci Code fans in Paris increased the ______ travel in Paris and increased the ______ restaurant meals and hotel rooms.
demand for; demand for
CNN commented on the "fierce competition from budget airlines." This competition decreases the ______ Eurostar travel because Eurostar and budget airlines are ______.
demand for; substitutes
In measuring changes in the standard of living of a country, economists rely heavily on comparisons over time of real GDP per capita because:
despite its well-known flaws, it is the best means we have of comparing the performance of an economy over time
As the value of a country's real GDP increases, the country is likely to:
devote more resources to pollution reduction
1. If you study for zero hours a day (x = 0) your grade point average (y) is 1. 2. The more hours per day you study, the higher is your grade point average, but each extra hour brings a smaller and smaller increase in your grade. The curve you have drawn indicates a ____ relationship
direct
A rise in the price of low-fat milk ___ the supply of low-fat milk
does not change
With the period of low rainfall extending, dairies raise their expected price of low-fat milk next year. The supply of low-fat milk ______ today. With advice from health-care experts, dairy farmers decide to switch from producing full-cream milk to growing vegetables. The supply of low-fat milk ___.
does not change; decreases
An economy that uses new technology _______.
does not eliminate scarcity
Real GDP ______.
does not include a measure of leisure time or environmental quality
Harry's PPF ______and his MB curve ______.
does not change; shifts rightward
This PPF ___ illustrate scarcity because ____.
does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food
When firms use new and better ways of producing all goods and services, ____
economic growth occurs, but it is not free
For the past year, Venus has played tennis three times a month. She now decides to play tennis four times a month. You infer that for Venus, _______.
either the marginal benefit from a game of tennis has increased or the marginal cost has decreased.
The slope at a line tangential to the maximum or minimum of a nonlinear curve will always be equal to:
eliminate climate change
One of the first steps in deciding whether to complete your education is to:
evaluate the marginal cost and marginal benefit of that decision.
A typical business cycle can be described by the sequence ______.
expansion, peak, recession, trough
A typical business cycle can be described by the sequence ______.
expansion; peak; recession; trough
Net exports increase when ______.
exports decrease but imports decrease by more than the exports decrease
The goods and services that we sell to people in other countries are ______. The goods and services that we buy from people in other countries are ______.
exports; imports
Real flows are the flow of _______.
factors of production from households to firms and the flow of goods and services from firms to households
Producers of electric guitars expect the price of a factor of production used to produce an electric guitar to fall and the number of firms producing and selling electric guitars to increase. You predict that the price of an electric guitar will ______ and the quantity of electric guitars bought will ______.
fall; increase
Producers of electric guitars expect the price of a factor production used to produce an electric guitar to fall and the number of firms producing and selling electric guitars to increase. You predict that the price of an electric guitar will ___ and the quantity of electric guitars bought will ____.
fall; increase
The first sentence is completed by inserting the word ___________. The manner in which recent weather conditions have affected the supply curve for corn is shown in the movement of supply from S to S' in the _________ diagram.
fallen; first
Consumers' actions indicate that airline tickets and hotel rooms are complements. Suppose that for some reason the price that airline companies pay to buy airplane fuel falls. As a result --- assuming all other relevant factors remain unchanged --- the price of airline tickets _____________, and the price of hotel rooms _______________.
falls; rises
"As fewer people buy computers, the demand for Internet service will decrease and the price of Internet service will increase. The rise in the price of Internet service will increase the supply of Internet service." This statement is ______ because ______.
false; a decrease in demand for Internet service does not increase the price of internet service and an increase in the price of Internet service does not increase the supply of Internet service.
U.S. gross domestic product is the market value of all the ______ produced ______ in a given time period.
final goods and services; within the United States
The factor market can best be described as where
firms buy the services of labor, land and capital
Which of the following is a final good?
flour purchased at the store to bake cookies
"Delta Airlines fails to reach deal with pilots" involves a ______ question. "Scientists blast NASA program cuts" involves a ______ question.
for who; what
Whether Sony gets a larger profit or its workers get higher wages is a ___ question
for whom
Two countries, A and B, have identical production possibilities. The graph shows the PPF of these economies. The production possibilities of country B are growing faster than those of country A. The graph illustrates that the opportunity cost of economic growth is ______.
forgone current consumption
If the price of going to the movie theater falls by a large amount, you have an incentive to _______.
go to see more movies.
In the previous graph, the value of the slope is:
greater between points g and h than between points i and j
The law of supply states that other things remaining the same, the higher the price of a good, the _______; and the lower the price of a good, the _______.
greater is the quantity supplied; smaller is the quantity supplied
The table shows some data on the quantity of ice cream consumed at different prices and in different weather conditions. To draw a graph of the relationship between the quantity of ice cream consumed and the temperature, we must ______.
hold the prices of ice cream constant at any of the five levels shown.
We describe a point in a graph by its coordinates. The x-coordinate gives the distance in the ______ direction from the ______ to the point. The y-coordinate gives the distance in the ______ direction from the ______ to the point.
horizontal; y-axis vertical; x-axis
If we compare the four sources of spending in the economy we see that
household consumption is the largest
In the figure, flow B represents ________.
household purchases of goods and services
"Consultants replacing high school counselors" involves a ____ question.
how
Macroeconomics can be used to understand all of the topics listed below, except:
how a consumer decides between the purchase of two different cars
The market for gasoline is a competitive market _______.
if many people buy and many firms sell gasoline, so no single buyer or seller can influence the price
The graph shows the most recent U.S. business cycle. During 2012, the U.S. economy was ______.
in an expansion
Entrepreneurship ______.
includes people who come up wit new ideas about what and how to produce
A decrease in the price of vegetable oil, a complement in production of vitamin E, will ______ the equilibrium price of vitamin E and ______ the equilibrium quantity of vitamin E.
increase; decrease
Before starring as Tony Stark in Iron Man, Robert Downey Jr. had played in 45 movies that had average first-weekend box office revenues of a bit less than $5 million. Iron Man grossed $102 million in its first weekend. The success of Iron Man ___ the opportunity cost of hiring Robert Downey Jr. Movie producers now have ____ incentive to h ire Robert Downey Jr.
increase; more
If the price of a cell phone rises from $20 to $80, while all other influences on selling plans are unchanged, the quantity of cell phones supplied _______ .
increased from 2 million to 8 million
Da Vinci Code fans helped to raise Eurostar's sales because they ______ between London and Paris.
increased the demand for travel
A new technology lowers the cost of producing ice cream. The supply of low-fat milk ____.
increases
If the price of an amusement park ticket falls from $80 to $20, while all other influences on buying plans are unchanged, the quantity of amusement park tickets demanded ____.
increases
The figure shows a scatter diagram. As the value of variable x increases, the value of the variable y _______.
increases
In the previous graph, the relationship between output produced and cost of production can best be described as the cost of production:
increases at a decreasing rate up to point a, then it increases at an increasing rate
The dots in this scatter diagram show that as the value of variable x increases, the value of variable y _______.
increases then decreases
Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a sweater ______.
increases. Resources are not equally productive in all activities
The price of oil rises if the demand for oil ______ and the supply of oil ______.
increases; decreases
A dairy produces butter an ice cream. The marginal cost of producing each of these products increasing as more is produced. The dairy adopts a new technology that allows it to use fewer resources to make butter.
increases; equally
Harry's efficient time allocation ___
inreases
A demand curve _____
is a willingness-and-ability-to-pay curve
Economics:
is concerned with how people respond to incentives
Atlantis produces only coral beads and exotic shells. The table shows the marginal benefit and marginal cost schedules for exotic shellsexotic shells. If Atlantis produces 36 exotic shells, the marginal benefit from exotic shells ______ the marginal cost of exotic shells. To achieve allocative efficiency, Atlantis must ______ the quantity of exotic shells produced.
is less than; decrease
Human capital _______.
is the knowledge and skill that people obtain from education, on-the-job training, and work experience.
The substitution effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
its relative price rises; purchase more of a different food that is less expensive.
A dog trainer is an example of the factor of production ____
labor
The resources provided by nature and used to produce goods and services are also known as:
land
Which of the following go together?
land; a city block in New York City
The opportunity cost of producing a loaf of bread is ______ at point A than at point B. The opportunity cost of producing a cake is ______ at point B than at point A.
less; less
In an hour, Jacob can catch 4 pounds of salmon or pick 8 pounds of cherries. In an hour, Sam can catch 4 pounds of salmon or pick 20 pounds of cherries. ...................................................................................... The opportunity cost of catching a pound of salmon is ______ for Jacob than for Sam, and the opportunity cost of picking a pound of cherries is ______ for Jacob than for Sam. So ______ has a comparative advantage in producing ______.
lower; higher Jacob; salmon
Simon wants to go to a party at the frat house tonight and also to spend time doing his math homework. He thinks hard about how to allocate the evening between partying and doing homework and decides to spend the first 4 hours partying and then spend 2 hours doing homework. Simon's decision is an example of _______.
making a choice at the margin
You want to play the piano and read a good book. You think hard about how to allocate the next hour between playing the piano and reading and decide to play the piano for the first 30 minutes and then spend 30 minutes reading. Your decision is an example of _______.
making a choice at the margin
An economy produces protein shakes. If more than the efficient quantity of protein shakes is produced _______.
marginal cost exceeds marginal benefit.
Suppose a meticulous housekeeper cleans her house for 5 hours every day, but to prepare for company, she decides to clean for an extra hour. The _____ of one more hour of cleaning is _____.
marginal cost; an hour of watching Martha Stewart on TV, if that is her best alternate use of the time.
Gross domestic product (GDP) is best defined as the __________.
market value of the final goods and services produced within a country in a given time period
The GDP is a measure of the __________.
market value of the final goods and services produced within a country in a given time period
Luxury car makers announce a fall in next year's price of a luxury car and an increase in the ease in which credit can be obtained. You predict that the demand for luxury cars today _______.
might increase; decrease, or remain the same
An increase in the demand for computers together with an increase in the supply of computers ___ create a surplus or a shortage of computers at the original price. The price of computers ___.
might; might fall, rise, or not change
Factors of production include all of the following EXCEPT ____
money
When Apple Inc. expands and rents an adjacent building, the flows are a ______ from firms to households and a ______ from households to firms.
money flow; real flow
When you buy an iPad from the Apple Store, the flows are a ____ from households to firms and a ____ from firms to households.
money flow; real flow
If the price of renting a DVD falls, a ______ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs.
movement down along; shift of
If the price of a taco rises, a ______ the supply curve occurs. If any factor that influences selling plans other than the price changes, then a ______ the supply curve occurs.
movement up along; shift of
The table gives information about the relationship between two variables, x and y. The relationship between x and y is ______ and the slope of the relationship ______ as x increases.
negative; remains constant
The $20 bill in your pocket is an example of ______ good. The waste basket you bought when you moved into residence is an example of ______ good.
neither a final nor an intermediate; a final
Second-hand blue jeans is an example of ____ good. Sugar purchased by Angelo's bakery to make pies and cakes is an example of ___ good.
neither a final nor an intermediate; an intermediate
Second-hand jeans is an example of ______ good. Sugar purchased by Angelo's bakery to make pies and cakes is an example of ______ good.
neither a final nor an intermediate; an intermediate
Which of the following are included in the expenditure approach to calculating GDP?
net exports of goods and services; consumption expenditure; government expenditure
If the president announced that "we should do something to stimulate economic growth" this is an example of a __________.
normative statement
Marginal benefit from a good or service is the benefit received from consuming ______. It is measured by the most that people are willing to pay for ______.
one more unit of it; an additional unit of it
in 2011, Ozzie purchased a 2008 Ford Escort from his neighbor for his son, purchased a 2007 "one owner" Camry from Larchmont Toyota for his wife, bought a 2011 new Ford for himself, and sold his 2000 Dodge Caravan to his teenage nephew. Which, if any, of these transactions will be included in GDP in 2011?
only the purchase of the Ford
Which of the following statements are normative and which are positive? 1. Sweatshop labor in third-world countries does not help those economies grow. 2.When the inflation rate rises, the unemployment rate falls. 3. Drugs used to treat terminally ill patients should be free. 4. All fast-food restaurants should sell healthy-choice meals.
options 1 and 2 are positive, and options 3 and 4 are normative.
The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded.
other things remaining the same; higher
Unattainable points are ___.
outside the PPF
Unattainable points are ______.
outside the PPF
The equilibrium price is the best deal available for both buyers and sellers because buyers ______ and sellers ______.
pay the highest price they are willing to pay; receive the lowest price at which they are willing to sell
The stock of computers, factory buildings and machine tools used to produce goods is known as:
physical capital
Aggregate expenditure in the United States is equal to consumption expenditure plus investment ______.
plus government expenditure plus net exports
Macroeconomics is concerned with all of the following except:
political party affiliation
The table gives information about the relationship between two variables, x and y. The relationship between x and y is ______ and the slope of the relationship______ as x increases.
positive; remains constant
Changes in what six things cause a shit of the demand curve?
preferences, related goods, future prices, income, future income, population
Read the news clip, then answer the following question. A shortage in the market for oil implies that ______.
price adjustments are being prevented from playing their role as the regulator of buying and selling plans
A change in ___ causes movement along demand curve and a change in ____.
price; quantity demanded
We achieve production efficiency if we _______.
produce goods and services at the lowest possible
Absolute advantage is the ability of an individual, firm, or country to:
produce more of a good or service than competitors using the same amount of resources
The production possibilities frontier is the boundary between those combinations of goods and services that can be _____ and those that ______
produced; cannot be produced
Harry produces 4 balloon rides and 7 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier.
producing inside
Harry produces 22 balloon rides and 55 boat rides an hour. Harry could not produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier.
producing on
At the market equilibrium price:
quantity demanded equals quantity supplied.
In the United States, GDP is typically measured
quarterly
The GDP per capita is computed by dividing a country's:
real GDP by its population
The relationship between real GDP and potential GDP is that
real GDP fluctuates about potential GDP.
In a price system:
relative prices change constantly to reflect changes in supply and demand.
The amount paid each month by a car park operator to the owner of the land he uses is called _______.
rent
An increase in the demand for golf clubs brings a ______ in the price of golf clubs and ______ in the quantity of golf clubs supplied.
rises; an increase
When the increase in demand is less than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.
rises; decreases
When a shortage arises, the price ______ to its equilibrium, which _______.
rises; decreases the quantity demanded and increases the quantity supplied
When the increase in demand is greater than the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.
rises; increases
When the increase in demand equals the decrease in supply, the equilibrium price _____ and the equilibrium quantity _____.
rises; remains unchanged
In 1998, the price of a barrel of oil was $20. In 2012, the price of a barrel of oil was $106. In 1998, the price of a loaf of bread was $0.86. In 2012, the price of a loaf of bread was $2.32. Between 1998 and 2012, the relative price of a barrel of oil with respect to a loaf of bread _______ and the relative price of a loaf of bread with respect to a barrel of oil _______.
rose; fell
Economics is the study of choice under conditions of:
scarcity
The principle of opportunity cost evolves from the concept of:
scarcity
An increase in the demand for pizza brings a ______ of pizza at the original price and the market price will ______ .
shortage; rise
In the previous diagram, when supply decreases, a __________ develops at the original price. Equilibrium price will __________ and equilibrium quantity will __________ as a new equilibrium is established.
shortage; rise; fall
The principle of increasing opportunity cost states that the more resources devoted to any activity, the __________ the payoff to devoting additional resources to that activity.
smaller
A relationship with a minimum _____.
starts out sloping downward, and then slopes upward
Choose the correct statement or statements. 1. Economists use natural experiments, statistical investigations, and economic experiments.experiments. 2. Ignoring details in an economic model makes the model inadequate for prediction. nothing 3.An economic model is more complex than the economic world it describes. nothing 4. An economic model is a description of some aspect of the economic world that includes only those features that are needed for the purpose at hand.
statements 1 and 4 are correct
If, as the price of a taxi ride increases, the quantity of bus rides that people buy increases, then taxi rides and bus rides are _______.
substitiutes
Diet coke and regular coke are _______.
substitutes for consumers and substitutes in production for producers
Leather purses and leather shoes are _______.
substitutes in production
French fries and baked potatoes are _______.
substitutes or substitutes in production
SUVs and pickup trucks are _______.
substitutes or substitutes in production
Coal and oil are ______. A skateboard and an iPod are ______.
substitutes; complements
Pasta and pizza are ______. A video game and a laptop are ______.
substitutes; complements
Suppose that there is a substantial fall in the price of apples. Apples are (obviously) the major ingredient in apple juice. As a result of this event, the market for apple juice changes in this way: ________________.
supply increases and price falls
In the previous diagram when the price is $65 per player, there is a _________ of _________ million players per month.
surplus; 40
A decrease in the demand for chocolate chip cookies together with an increase in the supply of chocolate chip cookies brings a ___ of chocolate chip cookies at the original price and a ___ in their price.
surplus; fall
An increase in the supply of donuts brings a ______ of donuts at the original price and a ______ in their price.
surplus; fall
The role of the entrepreneur always involves:
taking risks
A supply curve _______.
tells us the lowest price at which someone is willing to sell.
The graph shows _______.
that as the value of the variable measured on the x-axis increases, the value of the variables measured on the y-axis decreases
When you make a choice in your self-interest, _______.
that choice may also be the best choice for society.
Choose the definition that gives the best overview of economics. Economics is the social science that studies the choices _______.
that we make as we cope with scarcity
If Americans still worked sixty hour weeks, as they did in 1890, __________.
the GDP would be much higher than it is but the well-being of the typical person would not necessarily be higher
Read the news clip, then answer the following questions. According to the expenditure approach for calculating China's GDP, "each one percent drop in the U.S. economy will shave 1.3 percent off China's growth" because as the U.S. economy shrinks, ______. China's ______ and China's real GDP decreases.
the United States imports less from China; exports decrease
The quantity demanded of a good or service is ______.
the amount that consumers plan to buy during a given time period at a particular price
Leigh has three slices of pizza for lunch. The marginal benefit that Leigh receives from the third slice of pizza is _______.
the benefit she receives from eating the third slice of pizza
The cycle of short-term ups and downs in the economy is called:
the business cycle
A curve on a graph shows the relationship between apartment rent in a town and the quantity of apartments that people want at each rent. A new industry enters the town and the population of the town increases. When the population increases, _________.
the curve shifts
Events in the market for a particular good are such that the market (equilibrium) price and market (equilibrium) quantity of the good move opposite direction (i.e., price falls as quantity rises, and\or price rises as quantity falls). It must therefore be true that _________.
the decisive event in the marketplace is shifting supply curve.
The expected price of an MP 3 player next year rises. As a result, _______.
the demand for MP3 players today increases
Given linear demand curves, if demand and supply both increase but demand increases by a greater amount than supply, then:
the equilibrium price and quantity both increase.
Given linear demand curves, if demand and supply increase by identical amounts, then:
the equilibrium price stays the same and the equilibrium quantity rises.
Given linear demand curves, if demand increases and supply decreases, then __________.
the equilibrium price will increase but the effect on the equilibrium quantity will be ambiguous
By remaining in school, you are paying an opportunity cost that includes _______.
the free time you could have every evening to watch movies.
The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of food crops from 2 tons per day to 3 tons per day, the opportunity cost of the additional ton of food crops is 14 barrels of ethanol. If Brazil increases production of ethanol from 40 barrels per day to 54 barrels per day, the opportunity cost of the additional 14 barrels of ethanol is 1 ton of food crops. The opportunity cost of producing an additional ton of food crops is equal to ______.
the inverse of the opportunity cost of producing an additional barrel of ethanol
We observed a fall in the price of vegetable oil and an increase in the quantity of vegetable oil that producers sell. The most likely explanation is that ______.
the law of supply applies to vegetable oil, but some other influence on selling plans has increased the supply of vegetable oil.
When GDP per person in China in 2013 is valued at ______, GDP per person in the United States is _______ times that in China.
the market exchange rate; 7.9
Leigh has two tacos for lunch. The marginal benefit that Leigh receives from the second taco is _______.
the maximum amount that she is willing to pay for the second taco.
Goods and services are ______.
the objects that people value and produce to satisfy human wants.
Marginal cost of a good is _______.
the opportunity cost of producing one more unit of it
Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is _______.
the opportunity cost of producing the 100th copy of Windows 8
Along the supply curve, _______.
the price changes but all other influences on producers' planned sales remain the same
All of the following scenarios depict the characteristics of substitutes except:
the price of bacon increases and the demand for eggs decreases.
All of the following scenarios depict the characteristics of complements except:
the price of coffee increases and the demand for cream increases.
A shortage in the market for oil implies that ______.
the price of oil is being prevented from influencing buying and selling plans
The income effect influences food purchases because when the price of a certain food rises, other things remaining the same, ______. Consumers ______.
the price rises relative to income; cannot afford to buy all the things they previously bought, so they normally buy less of the food that has experienced the price rise.
The maximum amount that people are willing to pay for the 4 millionth can of soda per day is 18 candies. The marginal benefit curve illustrates _______.
the principle of decreasing marginal benefit
Suppose the price of a bag of chips is 60 cents. To return to equilibrium, ______.
the quantity demanded decreases and the quantity supplied increases
A shortage occurs at a given price when ______. The price _____ to reach equilibrium.
the quantity demanded is greater than the quantity supplied; rises
If the price of a printer rises, with all other influences on buying plans remaining the same, in the market for printers _______.
the quantity of printers demanded decreases
A relative price is _______.
the ratio of one money price to another
The point where economic activity bottoms out in a full business cycle is known as:
the trough
Real GDP is __________.
the value of final goods and services produced in a given year when valued at the prices of a reference base year
A curve on a graph shows the relationship between apartment rent in a town and the quantity of apartments that people want at each rent. If the rent rises, _________.
there is a movement along the curve
No matter what happens to the number of traffic accidents, the quantity of asparagus produced is _______.
unaffected. If the quantity of asparagus produced is changing, it continues to change. If it is constant, it remains constant.
The slope of a straight line equals the change in the value on the __________ axis __________ by the change in the value of the other axis measured between any two points on the line.
vertical, divided
All economic questions arise because we
want more than we can get.
Allocative efficiency occurs when ______.
we are producing at a point on the PPF such that marginal benefit at the quantity produced equals marginal cost
Every day, we make many choices. We can't avoid having to make choices because ________.
we face scarcity
The what, how, and for whom questions in economics are questions about _____
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
Economics explains the choices that end up determining ______ goods and services get produced.
what, how, and for whom
An MP3 player is a normal good. If the price of an MP3 player rises, you predict that the demand for MP3 players _______.
will remain unchanged
Harry would be ______ off getting a higher grade in economics because ______
worse; his marginal benefit from tennis would exceed his marginal cost
The vertical axis on a graph is also known as the:
y-axis
The graph shows the relationship between two variables, x and y. Which of the following equations describes this relationship?
y=-2x+40
The graph shows the relationship between two variables, x and y. This relationship is described by the equation _______.
y=20+4x
When you make economic choices to purchase goods and services, _______.
you are making choices that are in your self-interest and possibly also in the social interest.
U.S GDP in 2017 is $19740 billion I calculated real GDP by summing the components of aggregate _____, so I used the _____ approach.
expenditure; expenditure