MACRO test 1

Producer surplus is defined as:

gap between the supply curve and the market price

In a ______ Economy, individuals and firms own most resources, and in a ________ economy, the government controls most resources.

market; planned

Each point along a production possibilities frontier represents:

maximum output, given the state of technology and resource availability

Which example represents a BAD incentive?

raising homeowners' property taxes because of home improvements

Assume that a student attends a four-year college with tuition costs of $20,000 per year, room and board costs $5,000 per year, and books/entertainment costs $1,000 per year. If the student did not go to college, she would work at a job that pays $25,000 per year but she still faces the same room and board and entertainment expenses. The opportunity cost of attending college for this student for four years is:

$100,000

Suppose the market price is $5. The producer who sells the first unit of output has a willingness-to-sell equal to $1; the producer who sells the second unit of output has a willingness-to-sell equal to $2; and the producer who sells the third unit of output has a willingness-to-sell equal to $4. Total producer surplus across these three producers is:

$8

Which of these is NOT an example of market failure?

Competition leads firms to provide products at the lowest possible price

Which statement illustrates the law of demand?

Lindsay offers to buy more of chewing gum at $1 than at $2

A recent decision regarding the Federal Reserve's impending interest rates increase is an example of a _______ topic. On the other hand, a debate on the impact of the arrival of Uber on a local taxi business is an example of a ________ topic.

Macroeconomics; microeconomics

Opportunity cost is:

The value of the next best alternative

Which factor would NOT change the demand for sea kayak tours?

a decrease in the price of a sea kayak tour

In a market, consumers get extra benefits called _________, while business receive extra benefits known as _____________.

consumer surplus; producer surplus

Suppose that an artist has priced a painting at $150, but it remains unsold. We can conclude that the price of $150 is too:

high for this painting and should be lowered

A country operating inside of its production possibilities frontier (PPF) is operating:

inefficiently but in an area that can be attained

scarcity:

is faced by all individuals and societies

In the table, a combination of 4,500 iPads and 2,000 HDTVs:

is unattainable

People use ______ to determine how many hours to work, and businesses use _______ to determine how much of their product they are willing to supply to the market.

marginal analysis; marginal analysis

Carmax is a national chain that sells used cars. The likely impact of its arrival in the market would be to _________. Everything else held constant, this would likely ___________ the price of used cars.

shift the supply of used cars to the right; lower

The term scarcity means that:

wants are greater than resources

Which shaped curve reflects that most goods are better suited for specific sorts of production

A concave production possibilities frontier

WHich is NOT a basic economic question that societies must answer?

Why are these goods and services being produced>?

WHich circumstances would increase the supply of pork sausage?

a decrease in the price of ingredients used to produce sausage

If a producer does NOT face increasing opportunity cost, then the production possibilities frontier is:

a straight downward-sloping curve

When an economy is producing the mix of goods and services MOST desired by society, that economy is considered to have:

allocative efficiency

Suppose that the quantity supplied of a product equals 8 units and quantity demanded equals 5 units. THis market is MOST likely:

experiencing a surplus of this product

If the demand for iPhones rises as incomes increase, then the iPhone is a(n) __________ good.

normal

When the government choses to use resources to build tourist centers, the selected resources are no longer available to build highways. This BEST illustrates the concept of:

opportunity cost

Employers give stock options to full-time employees who have been on the job more than three years. This is an example of:

people following incentives

Consumer surplus is shown graphically as the area:

under the demand curve and above the market price

All of these are considered human capital, EXCEPT:

working in a factory