Micro Econ Midterm Test

Which of the following is not a characteristic of a perfectly competitive market?

All of the above are characteristics of a perfectly competitive market

Which of the following will reduce the quantity demanded for bread?

An increase in the price of bread

Which of the following will reduce the supply of domestically made automobiles?

An increase in the price of steel used in production.

If macaroni and cheese is an inferior good, what would happen to the equilibrium price andquantity of macaroni and cheese if consumers' incomes rise?

Both the equilibrium price and quantity would decrease.

A 2 percent decrease in the price of good X increases quantity demanded of good Y by 5percent. You conclude X and Y are ______ goods.

Complement

If the price of blue jeans rises, what happens to supply for blue jeans?

It doesn't change

In a competitive market, the price of a product

None of the above is correct

When a country has a comparative advantage in producing a certain good

None of the above is correct

Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are

Normal good

Which of the following trade-offs does the production possibilities frontier illustrate?

Once an economy has reached the efficient points on its production possibilities frontier, the only way ofgetting more of one good is to get less of the other

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups perday. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?

Students would purchase more than 750 cups per day

The production possibility frontier shows the opportunity cost of obtaining more of a good as

The amount of the other good that must be given up

When we move along a given demand curve

all nonprice determinants of demand are held constant

Which of the following events would cause a movement upward and to the right along the supply curve formangos?

The price of mangos rises.

If both the supply and demand curves shift to the left, then we can expect

a decrease in the equilibrium quantity

Trade between the United States and Guatemala

benefits both the United States and Guatemala

A decrease in demand will have what effect on equilibrium price and quantity?

both price and quantity will decrease

A movement upward and to the left along a demand curve is called a(n)

decrease in quantity demanded.

Equilibrium quantity must decrease when demand

decreases and supply does not change, when demand does not change and supply decreases, and whenboth demand and supply decrease.

The unique point at which the supply and demand curves intersect is called

equilibrium

Economists make assumptions to

focus their thinking on the problem at hand

Economics is the study of

how society manages its scarce resources

Prices direct economic activity in a market economy by

influencing the actions of buyers and sellers.

The law of demand states that, other things equal, an increase in

price causes quantity demanded to decrease

Holding the nonprice determinants of supply constant, a change in price would

result in a movement along a stationary supply curve.

Economics deals primarily with the concept of

scarcity

When quantity demanded increases at every possible price, the demand curve has

shifted to the right.

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This impliesthat X and Y are

substitute goods

Matthew bakes apple pies that he sells at the local farmer's market. If the price of apples increases, the

supply curve for Matthew's pies will decrease

You have driven 800 miles on a vacation and then you notice that you are only 15 miles from an attraction youhadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction youhad not planned to visit, you should include

the cost of driving the next 15 miles, but not the cost of driving the first 800 miles

Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as

the law of demand

When computing the opportunity cost of attending a basketball game you should include

the price you pay for the ticket and the value of your time

If a country does not have an absolute advantage in producing anything it

will have a comparative advantage in the activity in which it is less inefficient