Micro - Mid Term Exam

A change in the quantity _____ is a movement between points along a stationary demand curve, ceteris paribus

Demanded

A jointly consumed good

Complimentary

Any price where the quantity demanded equals the quantity supplied.

Equilibrium

T or F If input prices increase, the supply curve for cheese will shift to the right.

False

A competing good

Substitute

Surpluses cause prices to fall while shortages cause prices to rise. True or False

True

T or F According to the law to demand, if the price of a good increase, other things being equal, the quantity demanded will decrease.

True

Assume Congress passes a new tax of $2.00 per pack on cigarettes. The effect on the supply curve is a(n): a. decrease in supply b. increase in supply c. decrease in quantity supplied d. increase in quantity supplied

a. decrease in supply

Which of the following would shift the demand curve for autos to the right? a. A fall in the price of autos b. A fall in the price of auto insurance c. A fall in consumer's incomes d. A fall in the price of steel

b. A fall in the price of auto insurance

Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi? a. A movement down along the Pepsi demand curve b. A rightward shift in the Pepsi demand curve c. A movement up along the Pepsi demand curve d. A leftward shift in the Pepsi demand curve

b. A rightward shift in the Pepsi demand curve

Assume that Coca-Cola and Pepsi-Cola are substitutes. A rise in the price of Coca-Cola will have which of the following effects on the market for Pepsi? a. a movement down along the Pepsi demand curve b. A rightward shift in the Pepsi demand curve c. A movement up along the Pepsi demand curve d. A leftward shift in the Pepsi demand curve

b. A rightward shift in the Pepsi demand curve

If a decrease in price of good X causes the demand curve for good Y to increase, then these two goods are: a. normal goods b. complementary goods c. substitute goods d. equilibrium goods e. market-day goods

b. complementary goods

Assume that crackers and soup are complementary goods. The effect on the soup market of an increase in the price of crackers (other things being equal) would best be described as a(n): a. decrease in the quantity of soup demanded b. decrease in the demand for soup c. increase in the quantity of soup demanded d. increase in the demand for soup

b. decrease in the demand for soup

A shift occurs in the supply curve for sale when: a. the price of salt increases b. improvements are made in the production process c. salt is found to be associated with high blood pressure d. consumers expect the price of salt to increase in the future

b. improvements are made in the production process

If an individual's income increases, then the demand for a normal good will: a. decrease b. increase c. remain constant d. rotate e. fall to zero

b. increase

Which of the following is true for the law of demand? a. Sellers increase the quantity of a good available as the price of the good increases. b. An increase in price results from false needs c. There is an inverse relationship between the price of a good and the quantity of the good demanded. d. Prices increase as more units of a product are demanded.

c. There is an inverse relationship between the price of a good and the quantity of the good demanded.

Assume that oranges and peaches can both be grown on the same type of land, a decrease in the price of peaches, other things being equal, will cause a(n): a. upward movement along the supply curve for oranges b. downward movement along the supply curve for oranges c. rightward shift of the supply curve for oranges d. leftward shift of the supply curve for oranges

c. rightward shift of the supply curve for oranges

Suppose that X and Y are substitute goods. If the price of good X increases, we can expect: a. the demand for good X to shift to the left b. an upward movement along the demand curve for good Y c. the demand curve for good Y to shift to the right d. a downward movement along the demand curve for good Y e. the demand curve for good Y to shift to the left

c. the demand curve for good Y to shift to the right

Which of the following best explains the determination of the equilibrium price of a product? a. production costs b. the supply of a good c. the interaction of supply and demand d. the decisions of government

c. the interaction of supply and demand

A(n) _____ _____ is one that is jointly consumed with another good. As a result, there is an inverse relationship between a price change for one good and the demand for its "go together" good.

complementary good

Which of the following will not cause a movement along the supply curve? a. Changes in the sellers' expectations b. Increases in taxes per unit of output c. Advances in technology d. All of the answers above are correct

d. All of the answers above are correct

Which of the following will increase the demand for large automobiles? a. A fall in the price of small automobiles b. A rise in insurance rates for large automobiles c. A fall in the price of large automobiles d. An increase in buyers' incomes (assuming large automobiles to be a normal good)

d. An increase in buyers' incomes (assuming large automobiles to be a normal good)

Which of the following pairs is the best example of substitutes? a. Coffee and Cream b. Honey and biscuits c. Tortillas and salsa d. Hiking boots and athletic shoes

d. Hiking boots and athletic shoes

A good for which there is an inverse relationship between a change in income and its demand curve

inferior good

A mechanism that creates market equilibrium

price system

The _____ _____ is the supply and demand mechanism which establishes equilibrium through the ability of prices to rise and fall.

price system

A market condition existing at any price where the quantity supplied is less than the quantity demanded is a(n) _____.

shortage

When the quantity demanded exceeds the quantity supplied

shortage

A change in the quantity _____ is a movement along a stationary supply curve, ceteris paribus

supplied

Economic theories, or models, enable us to predict and to give reasonable explanations regarding economic variables. T or F

True

Economics is the study of people making choices faced with the problem of unlimited wants and limited resources. True or False

True

Financial capital by itself is not a factor of production; instead it is only a paper claim on economic capital. T or F

True

A textbook is an example of: a. capital a natural resource c. labor d. non of the above are correct

a. capital

The software program that make computer hardware useful in production and management tasks are: a. capital b. labor c. a natural resource d. non of the above are correct

capital

If the _____ _____ assumption is violated, a model cannot be tested.

ceteris paribus

A(n) _____ _____ is one that competes with another good for consumer purchases. As a result, there is a direct relationship between a price change for one good and the demand for its "competitor" good.

substitute good

Man-made goods used to produce other goods.

Capital

(T F) The statement "A tax hike for the rich is the fairest way to raise tax collections" is an example of positive economic analysis.

False

(T F) The statement "American workers are lazy" is an example of positive economic analysis.

False

(T F) The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis.

False

Microeconomics is the branch of economics in which you study inflation and unemployment in the economy. T or F

False

_____ is the fundamental economic problem that human wants exceed the availability of time, goods, and resources.

Scarcity

Which of the following is included in the study of macroeconomics? a. Salaries of college professors b. Computer prices c. Unemployment in the nation d. Silver prices

c. Unemployment in the nation

A positive state is: a. something good or desirable b. a call for improvement c. a statement of opinion d. a statement testable by facts e. a suggestion for policy

d. a statement testable by facts

The study of how society chooses to allocate its scarce resources to satisfy unlimited wants.

Economics

The mental and physical capacity of workers to produce.

Labor

_____ _____ _____ states that there is a direct relationship between the price and the quantity supplied, ceteris paribus.

Law of Supply

_____ applies an economywide perspective, which focuses on such issues as inflation, unemployment, and the growth rate of the economy.

Macroeconomics

_____ examines small units of an economy, analyzing individual markets such as the market for personal computers.

Microeconomics

A simplified description of reality.

Model

A(n) _____ _____ is one that consumers buy more of when their income increases.

Normal Good

_____ economics is an analysis based on value judgement which cannot be proven by facts.

Normative

(T F) All human wants cannot be satisfied because of the problem of scarcity.

True

(T F) Economics is the study of people's making choices faced with the problem of unlimited wants and limited resources.

True

(T F) The statement "Cutting government spending is the best way to boost consumer confidence" is an example of normative economics.

True

(T F) The statement "It is better to suffer a little more unemployment and a little lower prices" is an example of normative economic analysis.

True

Which of the following would NOT be classified as a capital resource? a. The Empire State Building b. A Caterpillar bulldozer c. A Macintosh computer. d. 100 shares of stock in General Motors

d. 100 shares of stock in General Motors

Which of the following is a macroeconomic subject? a. shipping rates b. price of corporate stock c. market price of Japanese cars d. unemployment rate in the nation

d. unemployment rate in the nation

A _____ provides a means to clearly show economic relationships in a two-dimensional space.

graph

A(n) _____ _____ is one in which two variables are unrelated.

independent relationship

A(n) _____ _____ is one in which two variables change in the opposite direction.

inverse relationship

The mental and physical capacity of workers to produce goods and services is _____.

labor

A simplified description of reality used to understand and predict economic events is called a(n) _____.

model

Factors of production classified as: land, labor, and capital are also called _____.

resources

The ratio of the vertical change (the rise or fall) to the horizontal change (the run) is called the _____.

slope

When the price of a good is greater than the equilibrium price, there is an excess quantity supplied called a(n) _____.

surplus

A phrase that means that while certain variables change, "all other things remain unchanged or constant".

Ceteris Paribus

_____ is the study of how individuals and society choose to allocate scarce resources to satisfy unlimited wants.

Economics

An individual that seeks profits by combining resources to produce innovative products.

Entrepreneur

_____ is the creative ability of individuals to seek profits by combining resources to produce innovative products.

Entrepreneurship

(T F) Policies to determine the price of troll dolls are a concern of macroeconomics.

False

(T F) Policies to increase the supply of money in the economy are primarily a concern of microeconomics.

False

If renting videos is an inferior good, demand for this service will rise when consumer income falls. True or False

False

Other things being equal, an increase in the price of aspirin will decrease the demand for aspirin. True or False

False

Policies to determine the price of troll dolls are a concern of macroeconomics. T or F

False

Policies to increase the supply of money in the economy are primarily a concern of microeconomics. T or F

False

Suppose the market price of a good X is below the equilibrium price. The result is a shortage and sellers can be expected to decrease the quantity of the good X supplied. True or False

False

T or F Excess quantity demanded for a good creates pressure to push the price of the good down toward the equilibrium price.

False

T or F Other things being equal, an increase in the price of aspirin will decrease the demand for aspirin.

False

T or F Suppose A and B are substitute goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes down.

False

T or F Suppose the market price of good X is below the equilibrium price. The result is a shortage, and sellers can be expected to decrease the quantity of good X supplied.

False

T or F Supposed A and B are complementary goods. Other things being equal, the demand curve for A will shift to the right when the price of B goes up.

False

The statement "The income tax is unfair to those who work hard to earn their incomes" is an example of positive economic analysis. True or False

False

A natural resource.

Land

_____ is a shorthand expression for any natural resource provided by nature.

Land

The _____ _____ _____ states that there is an inverse relationship between the price and the quantity demanded, ceteris paribus.

Law of Demand

The principle that there is a direct relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus, is the _____ _____ _____.

Law of Supply

The principle that there is a direct relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus.

Law of Supply

_____ _____ is an analysis based on value judgment.

Normative economics

_____ economics is an analysis limited to statements that are verifiable by reference to facts.

Positive

_____ _____ uses testable statements.

Positive economics

The basic categories of inputs used to produce goods and services.

Resources

The condition that human wants are forever greater than supply.

Scarcity

(T F) The statement "It would be better to put up with price controls that to have continuing higher medical care prices" is an example of normative economic analysis.

True

A straight line or curve can shift when a factor not included on the vertical axis or horizontal axis changes. T or F

True

Campaign speeches normally include normative economic statements. T or F

True

T or F If a vacation in Paris is a normal good, other things being equal, an increase in consumer income will increase the demand for travel to Paris.

True

T or F If people buy more of a generic brand when consumer income falls, it is an inferior good.

True

T or F If pork and beans is an inferior good, other things being equal, an increase in consumer income will decrease the demand for pork and beans.

True

Which of the following best represents the effects of a decrease in the price of tomato juice, other things being equal? a. An upward movement along the demand curve for tomato juice b. A downward movement along the demand curve for tomato juice c. A rightward shift in the demand curve for tomato juice d. A leftward shift in the demand curve for tomato juice

a. A downward movement along the demand curve for tomato juice

Other things being equal, the effects of an increase in the price of computers would best be represented by which of the following? a. A movement up along the demand curve for computers b. A movement down along the demand curve for computers c. A leftward shift in the demand curve for computers d. A rightward shift in the demand curve for computers

a. A movement up along the demand curve for computers

Which of the following would not cause market demand for a normal good to decline? a. An increase in the price of a substitute b. An increase in the price of a complement c. A decline in consumer income d. Consumer expectations that the good will go on sale in the near future d. An announcement by the Surgeon General that the product contributes to premature death

a. An increase in the price of a substitute

An economist at the University of Alaska at Anchorage has been asked to explain why the price of Alaskan crude oil has fallen recently. In order to develop a model, the professor should take which steps? a. Identify the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion. b. Gather data on crude oil prices and seemingly unrelated variables in order to look for associations, then formulate a hypothesis based on those unexpected associations. c. Ask people in Alaska why they are not purchasing oil. d. None of these is correct.

a. Identify the problem, develop a model based on simplifying assumptions and test the model to formulate a conclusion

When economists say the demand for a product has increased, they mean the: a. demand curve has shifted to the right b. price of the product has fallen, and consequently, consumers are buying more of it c. cost of producing the product has risen d. amount of the product that consumers are willing to purchase at various prices has decreased

a. demand curve has shifted to the right

Seller A, has an upward-sloping supply curve, and is willing to supply 400 units of a commodity at a price of $5 per unit. Seller A is now willing to supply 500 units at a price of $5 per unit. Evidently, seller A has experienced a(n): a. increase in supply b. decrease in supply c. increase in quantity supplied d. decrease in quantity supplied e. decrease in demand

a. increase in supply

Seller A, has an upward-sloping supply curve, and is willing to supply 400 units of a commodity at a price of $5 per unit. Seller A is now willing to supply 500 units at a price of $5 per unit. Evidently, seller A has experienced a(n): a. increase in supply b. decrease in supply c. increase in quantity supplied d. decrease in the quantity supplied

a. increase in supply

Microeconomics approaches the study of economics from the viewpoint of: a. individual or specific markets b. the national economy c. government units d. economywide markets

a. individual or specific markets

An economic theory claims that a rise in gasoline prices will cause gasoline purchases to fall, ceteris paribus. The phrase "ceteris paribus" means that: a. other relevant factors like consumer incomes must be held constant b. the gasoline prices must first be adjusted for inflation c. the theory is widely accepted but cannot be accurately tested d. consumers' need for gasoline remains the same regardless of the price

a. other relevant factors like consumer incomes must be held constant

Microeconomics is concerned with: a. some specific market in the economic system b. the entire economic system c. reducing national unemployment and inflation rates d. what causes changes in the overall level of economic activity

a. some specific market in the economic system

"The federal minimum wage causes higher unemployment among teenagers" is a: a. statement of positive economics b. statement of normative economics c. testable value judgment d. fallacy of composition

a. statement of positive economics

Other things being equal, the effect of an increase in the price of Coca-Cola would cause a(n): a. upward movement along the demand curve for Coca-Cola b. leftward shift in the demand curve for Coca-Cola c. downward movement along the demand curve for Coca-Cola d. rightward shift in the demand curve for Coca-Cola

a. upward movement along the demand curve for Coca-Cola

Which of the following is closest to the definition of capital? a. c and e b. c and d c. tools, equipment, means of transportation d. factories and machinery e. borrowed money

b. c and d

Yesterday Seller A supplied 400 units of a good X at $10 per unit. Today Seller A supplies the same quantity of units at $5 per unit. Based on this evidence, Seller A has experienced a(n): a. decrease in supply b. increase in supply c. increase in the quantity supplied d. decrease in the quantity supplied e. increase in demand

b. increase in supply

When there is a surplus of a product in a market the: a. price will rise b. price must be above the equilibrium price c. producers will expand output and sales will rise d. price must be below the equilibrium price

b. price must be above the equilibrium price

Coffee and tea are: a. complements b. substitutes c. inferior goods d. unrelated goods e. nonmarket goods

b. substitutes

There is a technological advance in the production of digital watches. This will cause: a. demand to increase b. supply to increase c. demand to decrease d. supply to decrease e. the price to increase

b. supply to increase

Tickets to the Indiana-Purdue basketball game are usually sold out in advance of game day. this suggests: a. the price of the tickets must be very high or else people would not consider them valuable b. The price is set below the equilibrium level c. the Indiana basketball stadium is relatively small d. everyone who attends the game will enjoy it

b. the price is set below the equilibrium level

Select the normative statement that completes the following sentence: If the minimum wage is raised: a. cost per unit of output will rise. b. workers will gain their rightful share of total income. c. the rate of inflation will increase. d. profits will fall

b. workers will gain their rightful share of total income

Select the normative statement that completes the following sentence: If the minimum wage is raised: a. cost per unit of output will rise. b. workers will gain their rightful share of total income. c. the rate of inflation will increase. d. profits will fall.

b. workers will gain their rightful share of total income.

Which of the following is the best definition of economics? a. Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. b. Economics is the study of how to manage city and country government to generate the greatest good to its citizens. c. Economics is the study of how society chooses to allocate the scarce resources. d. Economics is the study of how to track revenues and costs within a business.

c. Economics is the study of how society chooses to allocate the scarce resources.

Which of the following is a statement of positive economics? a. Government control of rent is a fair way to help poor people afford housing b. Government control of rent keeps landlords from charging too much rent. c. Government control of rent decreases the number of new apartments constructed. d. Government control of rent is an injustice.

c. Government control of rent decreases the number of new apartments constructed.

Which of the following represents positive economics? a. Policy A is fair b. Outcome B is the best objective to achieve c. If policy A is followed, then outcome B results d. all of these is correct

c. If policy A is followed, then outcome B results

To be valid, an economic model must: a. include every activity which occurs in the real world b. include at least 85 percent of the activity which occurs in the real world c. be able to predict events occurring in the real world d. exclude any link to the real world e. not be based on an abstraction of the real world

c. be able to predict events occurring in the real world

When economists want to hold a number of factors constant, they are demonstrating which of the following expressions? a. positive economics model b. consumer sovereignty c. ceteris paribus d. normative economics

c. ceteris paribus

The subject of economics is primarily the study of; a. the government decision-making process b. how to operate a business successfully. c. decision-making because of the problem of scarcity. d. how to make money in the stock market.

c. decision-making because of the problem of scarcity

Assuming that travel from New York to Los Angeles is a normal good, a decrease in consumer income, other things being equal, will: a. decrease the quantity demanded of travel to Los Angeles b. increase the demand for travel to Los Angeles c. decrease the demand for travel to Los Angeles d. increase the quantity of travel to Los Angeles demanded

c. decrease the demand for travel to Los Angeles

A movement along a demand curve is called a change in: a. income b. quantity demanded c. demand d. tastes e. population

c. demand

Which of the following is NOT a factor of production? a. a computer chip b. the service of a lawyer c. dollars d. all of the above are correct e. none of the above are correct

c. dollar

Which of the following is not a factor of production? a. a computer chip b. the service of a lawyer c. dollars d. all of these are correct

c. dollars

Three of the four events described below might reasonably be expected to shift the demand curve for beef to a new position. One would not shift the demand curve. The single exception is a(n): a. change in people's tastes with respect to beef b. increase in the money income of beef consumers c. fall in the price of beef d. widespread advertising campaign undertaken by the producers of a product competitive with beef (e.g. pork)

c. fall in the price of beef

Economics, according to its definition, studies how people: a. earn and spend money b. invest in the stock and bond markets c. make choices in the face of scarcity d. supply goods in response to demand

c. make choices in the face of scarcity

Assuming that wheat and corn can both be grown on the same type of land, a decrease in the price of corn, other factors held constant, will cause a(n): a. downward movement along the supply curve for wheat b. upward movement along the supply curve for wheat c. rightward shift in the supply curve for wheat d. leftward shift in the supply curve for wheat

c. rightward shift in the supply curve for wheat

Assume that both oranges and peaches can be grown on the same type of land. A decrease in the price of peaches, other things being equal, will cause a(n): a. upward movement along the supply curve for oranges b. downward movement along the supply curve for oranges c. rightward shift of the supply curve for oranges d. leftward shift of the supply curve for oranges

c. rightward shift of the supply curve for oranges

The definition of a model is a: a. description of all variables affecting a situation. b. positive analysis of all variables affecting an event. c. simplified description of reality to understand and predict an economic event. d. data adjusted for rational action

c. simplified description of reality to understand and predict an economic event

Positive economics is a(n): a. reflection of a country's values b. judgment of the correctness of an economic outcome c. statement of fact d. analysis of what ought to be e. analysis of all the good market outcomes

c. statement of fact

Positive economics is a(n): a. reflection of a country's values b. judgment of the correctness of an economic outcome c. statement of fact d. analysis of what ought to be analysis of all the good market outcomes

c. statement of fact

The theory of supply states that: a. there is a negative relationship between the price of a good and the quantity of it purchased by suppliers b. there is a positive relationship between the price of a good and the quantity that buyers choose to purchase c. there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers d. at a lower price, a greater quantity will be supplied

c. there is a positive relationship between the price of a good and the quantity of it offered for sale by suppliers

Which of the following is included in the study of macroeconomics? a. salaries of college professors b. computer prices c. unemployment in the nation d. silver prices

c. unemployment in the nation

The physical plants, machinery, and equipment used to produce other goods. Capital goods are human made goods that do not directly satisfy human wants _____.

capital

A movement along a stationary demand curve caused by a change in price is called a(n) _____ _____ ______ _____.

change in quantity demanded

A movement along a stationary supply curve in response to a chnage in price is called a(n) _____ _____ _____ _____.

change in quantity supplied

Which of the following best represents the effects of an increase in the price of coffee, other things being equal? a. A leftward shift in the demand curve for coffee b. A downward movement along the demand curve for coffee c. A rightward shift in the demand curve for coffee d. An upward movement along the demand curve for coffee

d. An upward movement along the demand curve for coffee

Which of the following is a positive statement? a. I think we should pass a constitutional amendment to reduce the deficit. b. President X's way of dealing with the economy is better than President Y's. c. I hope interest rates come down soon. d. If taxes are raised, unemployment will drop.

d. If taxes are raised, unemployment will drop.

Which of the following is a statement of positive economics? a. I hope unemployment comes down soon b. President X's way of dealing with unemployment is better than President Y's c. I think everyone should sacrifice to reduce the deficit. d. If taxes are reduced, unemployment will drop.

d. If taxes are reduced, unemployment will drop

Which of the following is true about renewable resources? a. Land resources include oil, coal, and natural gas that have a fixed stock b. Land resources include irrigation networks and wastewater treatment plants that utilize water. c. Land resources include air filtration systems in buildings that renew and refresh polluted air from the outside. d. Land resources include forests, range lands, and marine fisheries that naturally regenerate.

d. Land resources include forests, range lands, and marine fisheries that naturally regenerate.

Assuming coffee and tea are substitutes, a rise in the price of coffee will have which of the following effects on the market for tea? a. a movement up along the tea demand curve b. a movement down along the tea demand curve c. a leftward shift in the tea demand curve d. a rightward shift in the tea demand curve

d. a rightward shift in the tea demand curve

The condition of scarcity: a. cannot be eliminated b. prevails in poor economies c. prevails in rich economies d. all of the above are correct

d. all of the above are correct

An advance in technology results in: a. suppliers offering a larger quantity than before at each given price b. suppliers offering the same quantity as before at a lower price c. a rightward shift of the supply curve d. an increase in supply d. all of the answers are correct

d. all of the answers are correct

Market equilibrium is defined as: a. the condition in which there is neither a shortage or surplus b. the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market c. represented graphically by the intersection of the supply and demand curves d. all of the answers are correct

d. all of the answers are correct

The "ceteris paribus" clause in the law of demand does not allow which of the following factors to change? a. Consumer tastes and preferences b. The prices of other goods c. Expectations d. All of the answers are correct

d. all of the answers are correct

When the price of a good in a market is above equilibrium: a. the quantity supplied exceeds the quantity demanded b. a surplus of a good c. the price will fall in the near future d. all of the answers are correct

d. all of the answers are correct

If a shortage exists in a market then: a. the price is below equilibrium b. the quantity demanded exceeds the quantity supplied c. the price will rise in the near future d. all of these

d. all of these

Market equilibrium is: a. defined as the condition in which there is neither a shortage or surplus b. defined as the condition under which the separately formulated plans of buyers and sellers exactly mesh when tested in the market c. represented graphically by the intersection of the supply and demand curves d. all of these are correct

d. all of these are correct

Which of the is true of resources? a. resources are inputs used to produce goods and services b. labor is the mental and physical capacity of workers to produce goods and services c. entrepreneurship organizes resources to produce goods and services d. all of these are true

d. all of these are true

If a textbook price rises and then students reduce the quantity demanded of textbooks, an economic model can show a cause-and-effect relationship only if which of the following occurs? a. students incomes fall b. tuition decreases c. the number of students increases d. all other factors are held constant e. the bookstore no longer accepts used book trade-ins

d. all other factors are held constant

If the price of potato chips increases, other things constant, demand for potato-chip dip will: a. not change; only quantity demanded will change b. increase, because the goods are substitutes c. decrease, because the goods are substitutes d. decrease, because the goods are complements e. increase, because the goods are complements

d. decrease, because the goods are complements

If the price of a textbook rises and then students purchase fewer textbooks, an economic model can show a cause-and-effect relationship only if which of the following conditions holds: a. students incomes fall b. tuition decreases c. the number of students increase d. everything else is constant e. the bookstore no longer accepts used book trade-ins

d. everything else is constant

A supply curve: a. has a negative slope b. is based on the assumption of a stable demand curve c. illustrates the negative relationship between price and quantity supplied d. illustrates the positive relationship between price and quantity supplied e. shifts about in random fashion

d. illustrates the positive relationship between price and quantity supplied

Assume that brand X is an inferior good and name brand Y is a normal good. An increase in consumer income, other things being equal, will cause a(n): a. upward movement along the demand curve for name brand Y b. downward movement along the demand curve for brand X c. rightward shift in the demand curve for brand X d. leftward shift in the demand curve for brand X

d. leftward shift in the demand curve for brand X

An increase in the quantity demanded of a good is most often due to: a. current prices b. higher prices c. higher income d. lower prices e. technological change

d. lower prices

The condition of scarcity can be eliminated if: a. people satisfy needs rather than false wants. b. sufficient new resources were discovered. c. output of goods and services were increased. d. none of the above are correct

d. none of the above are correct

Which of the following would eliminate scarcity as an economic problem? a. Moderation of people's competitive instincts. b. Discovery of sufficiently large new energy reserves. c. Resumption of steady productivity growth. d. none of the above are correct

d. none of the above are correct

Which of the following would eliminate scarcity as an economic problem? a. Moderation of people's competitive instincts b. Discovery of sufficiently large new energy reserves c. Resumption of steady productivity growth d. none of these is correct

d. none of these is correct

"The government should provide health care for all citizens." This statement is an illustration of: a. positive economic analysis b. correlation analysis c. fallacy of association analysis d. normative economic analysis

d. normative economic analysis

A demand curve for The Steel Porcupines concert tickets would show the: a. quality of service that customers demand when they buy a ticket b. number of people who like to attend the concert c. number of tickets the promoters are willing to sell at each price d. number of concert tickets that will be purchased at each price

d. number of concert tickets that will be purchased at each price

When economists say the quantity supplied of a product has decreased, they mean the: a. supply curve has shifted to the left b. supply curve has shifted to the right c. price of the product has risen, and consequently, suppliers are producing more of it d. price of the product has fallen, and consequently, suppliers are producing less of it

d. price of the product has fallen, and consequently, suppliers are producing less of it

An increase in the supply of the product implies: a. producers will now change a higher price for a given quantity of output b. the supply curve will shift to the left c. some producers are dropping out of this market d. producers will now charge a lower price for a given quantity of output e. the price of this product has increased

d. producers will now charge a lower price for a given quantity of output

The equilibrium price is best defined as the price at which: a. demand is smaller than supply b. suppliers want to supply more goods c. demanders want to buy more goods d. quantity demanded is equal to quantity supplied e. the quantity demanded increases

d. quantity demanded is equal to quantity supplied

Supply curves slope upward because: a. the quality is assumed to vary with price b. technology improves over time, increasing the ability of firms to produce more at each possible price c. increases in the price of a good lead to rightward shifts of the supply curve d. rising prices provide producers with higher profit incentives needed to increase the quantity supplied

d. rising prices provide producers with higher profit incentives needed to increase the quantity supplied

Assume that a computer is a normal good. An increase in consumer income, other things being equal, would: a. cause an upward movement along the demand curve for computers b. cause a downward movement along the demand curve for computers c. shift the demand curve for computers to the left d. shift the demand curve for computers to the right

d. shift the demand curve for computers to the right

"An increase in the federal minimum wage will provide a living wage for the working poor" is a: a. statement of positive economics b. fallacy of composition c. tautology d. statement of normative economics

d. statement of normative economics

Assume that the equilibrium price for a good is $5. If the market price is $10 a: a. shortage causes the price to decline toward $5 b. surplus causes the price to rise above $10 c. shortage causes the price to rise above $10 d. surplus causes the price to decline toward $5

d. surplus causes the price to decline toward $5

A(n) _____ _____ is one in which two variables change in the same direction.

direct relationship

Which of the following statements is correct? a. slope is the ratio of the vertical change (the rise or fall) to the horizontal change (the run). b. A direct relationship is one in which two variables change in the same direction. c. An inverse relationship is one in which two variables change in opposite directions. d. An independent relationship is one in which two variables are unrelated. e. all of these are correct

e. all of these are correct

All of the following are examples of capital except: a. the robot used to help produce your car. b. a computer used by your professor to write this exam. c. the factory that produces the costume jewelry you buy. d. the inventory of unsold goods at your local hardware store. e. an uncut diamond that you discover in your backyard.

e. an uncut diamond that you discover in your backyard.

Suppose that X and Y are complementary goods. If the price of good X decreases, we can expect the: a. demand for good X to increase b. quantity demanded of good Y to decrease c. quantity demanded of good Y to increase d. demand for good Y to decrease e. demand for good Y to increase

e. demand for good Y to increase

There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in: a. tastes b. income levels c. the price of other goods d. the number of buyers e. expectations

e. expectations

The supply curve reflects the: a. inverse relationship between price and quantity offered b. positive relationship between demand and supply c. negative relationship between price and quantity bought d. positive relationship between price and quantity bought e. positive relationship between price and quantity offered

e. positive relationship between price and quantity offered

The unique price and quantity established at the intersection of the supply and demand curves is called _____.

equilibrium

A(n) _____ _____ is one that there is an inverse relationship between changes in income and its demand curve.

inferior good

A(n) _____ is any arrangement in which buyers and sellers interact to determine the price and quantity of goods and services exchanged.

market