Micro Econ test 1 Gjosh
In the context of decision making, the word "marginal" is most closely associated with the word
"edge."
Suppose Susan can wash three windows per hour or she can iron six shirts per hour. Paul can wash two windows per hour or he can iron five shirts per hour.
All of the above are correct
Assume Leo buys coffee beans in a competitive market. It follows that
Leo cannot influence the price of coffee beans even if he buys a large quantity of them.
In a given market, how are the equilibrium price and the market-clearing price related?
They are the same price
When can two countries gain from trading two goods?
Two countries could gain from trading two goods under all of the above conditions
Which of the following would shift the demand curve for gasoline to the right?
a decrease in the expected future price of gasoline
The term market failure refers to
a situation in which the market on its own fails to allocate resources efficiently
Rational people make decisions "at the margin" by comparing
additional costs and benefits.
In competitive markets...
all of the above
The basic principles of economics suggest that
all of the above
The goal of an economist who formulates new theories is to
contribute to an understanding of how the world works
A movement upward and to the left along the demand curve is called
decrease in quantity demanded
An increase in the price of a good will
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 when both demand and supply decrease.
Which of the following events must cause equilibrium price to fall?
demand decreases and supply increases
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises
In the simple circular-flow diagram, who buys the factors of production?
firms only
Economists make assumptions to
focus their thinking on the essence of the problem at hand
For two individuals who engage in the same two productive activities, it is impossible for one of the two individuals to
have a comparative advantage in both activities
In the simple circular-flow diagram, the participants in the economy are
households and firms
A market demand curve shows
how much of a good all buyers are willing and able to buy at each possible price.
Economic models
incorporate simplifying assumptions that often contradict reality, but also help economists better understand reality
Trade between countries tends to
increase both competition and specialization
A decrease in the price of a good will
increase in quantity demanded
A movement downward and to the right along a demand curve is called
increase in quantity demanded
A rightward shift of a supply curve is called
increase in supply
Absolute advantage is found by comparing different producers'
input requirements per unit of output
It is possible for an economy to increase its production of both goods if the economy
moves from a situation of inefficient production to a situation of efficient production
A comparative market is a market in which
no individual buyer or seller has any significant impact on the market price
Comparative advantage is related most closely to which of the following?
opportunity cost
In the simple circular-flow diagram, households
own the factors of production
Assume a market is perfectly competitive. When a new producer enters the market, the
price in the market does not change
The "invisible hand" directs economic activity through
prices
In the circular-flow diagram, which of the following items does not flow from households to firms?
profit
The government enforces property rights by
providing police and courts
The market supply curve:
represents the sum of the quantities supplied by all the sellers at each price of the good.
An increase in quantity demanded
results in a movement downward and to the right along a demand curve
decrease in quantity demanded
results in a movement upward and to the left along a demand curve.
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should
sell the ticket because the marginal benefit exceeds the marginal cost
Economists who are primarily responsible for advising Congress on economic matters work in which agency?
the Congressional Budget Office
The "invisible hand" refers to
the free market
A movement along the supply curve might be caused by a change in
the price of the good or service that is being supplied
A production possibilities frontier is bowed outward when
the rate of tradeoff between the two goods being produced depends on how much of each good is being produced
Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is
this can not be determined from the information given
Which of the following is not one of the four principles of individual decision making?
trade can make everyone better off
The quantity demanded of a good is the amount that buyers are
willing and able to purchase
England can benefit from trade
with any nation
