Microeconomics: EOC
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.
allocative efficiency
A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:
cross-price elasticity of demand for iced tea is -2.
"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:
$44
In 2010, Americans had about _____________ outstanding in credit card debts not paid on time.
$900 billion
Which of the following will not result in a rightward shift of the market supply curve for labor? a. a decrease in non-wage income b. an increase in the working-age population c. an increase in labor productivity d. an increase in immigration
an increase in labor productivity
a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.
economies of scale
Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change.
economy
Demand is said to be _______________ when the quantity demanded is very responsive to changes in price.
elastic
Supply is said to be _____________when the quantity supplied is very responsive to changes in price.
elastic
a valid criticism of the production of useful goods and services
environmental pollution
Since Baltimore passed the first _______________ in 1994, several dozen cities enacted similar laws in the late 1990s and into the 2000s.
living wage law
When nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:
low inflation
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and cheese demanded but no change in the price of macaroni and cheese. From this information, we can assume:
macaroni is an inferior good and price elasticity of supply is infinite.
Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal analysis
Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.
marginal analysis
As a person receives more of a good, the _______________ from each additional unit of the good declines.
marginal utility
In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.
market-oriented economy
The marginal benefit of a slice of pizza is the:
maximum amount that a consumer is willing to pay for the slice.
The basic difference between macroeconomics and microeconomics is:
microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.
The basic difference between macroeconomics and microeconomics is that:
microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).
Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________.
new technologies
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be.
normative statement
Attending college is a case where the ________________ exceeds the monetary cost.
opportunity cost
In many cases, it is reasonable to refer to the ________________ as the price
opportunity cost
a subjective valuation that can be determined only by the individual who chooses the action.
opportunity cost
The elasticity of supply is defined as the __________change in quantity supplied divided by the ____________change in price.
percentage; percentage
The "law of supply" functions in labor markets; that is, a higher __________ for labor leads to a higher quantity of labor supplied.
price
In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.
price ceilings
The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.
price, quantity demanded
A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.
quantity
A demand curve shows the relationship between price and _________________ on a graph.
quantity demanded
_________________ refers to the total number of units that are purchased at that price.
quantity demanded
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.
quantity supplied
A straightforward example of a _______________, often used for simplicity, is the interest rate.
rate of return
The price elasticity of demand measures the:
responsiveness of the quantity demanded to a change in price
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in supply will cause the equilibrium price to:
rise and the equilibrium quantity to stay the same
A more efficient means of processing algae to produce an anticancer drug is discovered. As a result, the supply curve for the drug will:
shift to the right, decreasing the price of the drug
The imposition of a price ceiling on a market often results in:
shortage
can lead to an increase in overall production.
specialization
The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.
sunk costs
A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ .
supply curve to the right
Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:
the benefit to his grades from studying for an hour
indicates the quantities that will be purchased at alternative market prices.
the demand schedule for a good
The leader of a federal political party made the following campaign promise: "My administration will increase national defense without requiring sacrifices elsewhere in the economy." The promise can be kept if:
the economy moves from a point inside the production possibilities curve toward a point on the production possibilities curve. the production possibilities frontier shifts outward due to an improvement in technology.
In the United States, a typical credit card interest rate ranges from ______________ per year.
12% to 18%
The United States has approximately ___________ credit card holders.
180 million
For lunch, Maria eats only salads or vegetarian burgers. Her weekly food budget is $36. Each salad costs $6 and each vegetarian burger costs $3. When deciding how much of each good to buy, Maria knows that 2 salads and 4 vegetarian burgers will give her a utility of 8. Maria's utility-maximizing point is:
3 salads, 6 vegetarian burgers
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per month when the price is $15. What is the price elasticity of Bobo's demand curve?
4.25
Which of the following statements most likely lies within the realm of microeconomics? a. Unemployment rises during a recession and falls during an expansion. b. An increase in government spending will increase the aggregate demand for goods and services in the economy. c. A rapid acceleration of the supply of money may create inflation. d. An increase in labor costs will increase the additional cost of producing another bus.
An increase in labor costs will increase the additional cost of producing another bus.
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:
Andy's demand for beer to increae
Why is there scarcity?
Because our unlimited wants exceed our limited resources
On April 1, 2009, in the middle of a recession, the government of the province of Ontario, Canada increased the provincial minimum wage from $8.75 to $9.50. What will the likely effect of this policy be?
Both the leftward shift in the labor demand curve and the higher minimum wage will lead to an increase in the unemployment rate.
In countries like _____________ the command economy predominates.
Cuba and North Korea
best denotes the reason for the existence of substantial black markets
command economy
Which of the following is generally accepted as a valid criticism of the production of useful goods and services? a. government involvement b. the black market Selected:c. environmental pollutionThis answer is correct. d. economic freedom
Environmental pollution
Are markets always in equilibrium?
No, but if there is no outside interference, they tend to move toward equilibrium.
Which of the following would most likely shift the production possibilities curve inward? a. an increase in the number of hours factories are in use b. a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time c. an increase in the production of capital goods d. technological progress
a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time
The supply curve of textbooks (which are produced using paper made from trees) will shift to the left in response to:
a sharp increase in the demand for and construction of wood-frame homes.
After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:
a shift of the demand curve for beef to the left
Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.
all else is held equal
The term "ceteris paribus" means that:
all variables except those specified are constant.
Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:
both equilibrium price and quantity will rise
Macroeconomics primarily examines:
broad issues such as national output, employment and inflation.
macroeconomics primarily examines
broad issues such as national output, employment and inflation.
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible.
budget constraint
The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
budget constraint
When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.
costs of production fall
A change in price of a good or service typically causes ___________________________ for that specific good or service.
change along the supply curve
In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.
division of labor
In the ______________, households receive goods and services and pay firms for them.
goods and services market
The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.
government
Which of the following best describes a fiscal policy tool? a. government spending b. bank lending c. financial capital markets d. household spending
government spending
In the circular flow diagram model:
households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.
The term _____________ describes a situation where a ________________ causes a reduction in the buying power of income, even though actual income has not changed.
income effect; higher price
If the demand curve is perfectly elastic, then an increase in supply will:
increase the quantity exchanged but result in no change in the price.
Improvements in the productivity of labor will tend to:
increase wages
If the demand for software engineers __________ slower than does supply, then wages of software engineers will __________.
increases; fall
Demand is said to be _______________ when the quantity demanded is not very responsive to changes in price.
inelastic
When demand is ____, consumers are not very responsive to changes in price
inelastic
When economists are sketching examples of demand and supply, it is common to sketch a demand or supply curve that is close to vertical, and then to refer to that curve as ______________.
inelastic
Taxes on goods with _____________demand curves will tend to raise more tax revenue for the government than taxes on goods with___________ demand curves.
inelastic; elastic
Which of the following best describes a monetary policy tool? a. interest rates b. taxes c. household savings d. government spending
interest rates
Because of their relatively small national economies, which of the following is most likely considered to be the most important factor for Belgium, Korea, and Canada to take full advantage of specialization?
international trade
When Marietta chooses to only purchase a combination of goods that lie within her budget line, she:
is maximizing utility
Scarcity implies that:
it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.
In the __________, households work and receive payment from firms
labor market
Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.
law of demand
When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.
the quantity demanded of financial capital at any given interest rate will shift to the right
If new manufacturers enter the computer industry, then (ceteris paribus):
the supply curve shifts to the right
If cola and iced tea are good substitutes for consumers, then it is likely that:
their cross-price elasticities are greater than zero
How do apple growers react to the news of medical research findings that suggest that eating apples leads to greater health benefits than were previously known?
they increase the quantity of apples supplied
True or False: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."
true
Demand is said to be _____________when the quantity demanded changes at the same proportion as the price.
unit elastic
Scarcity exists because of:
unlimited wants and limited resources
But nearly all supply curves share a basic similarity: they slope _______________.
up from left to right
Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.a
usury laws
In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income.
utility
The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.
utility
In economics, the demand for a good refers to the amount of the good that people:
will buy at various prices
If labor demand is downward sloping and labor supply is upward sloping, then when labor demand rises faster than labor supply, it is expected that real wages __________.
will increase