Nwoha Econ Test 1

Which of the following events would cause both the equilibrium price and equilibrium quantity of number two grade potatoes to increase if number two grade potatoes are an inferior good?

fewer government restrictions on agricultural chemicals

Economists make assumptions to

focus their thinking on the essence of the problem at hand

Another term for factors of production is

inputs

An economy's production of two goods is efficient if

it is impossible to produce more of one good wihtout producing less of the other

A rational decision maker takes an action only if the

marginal benefit is greater than the marginal cost

a competitive market is a market in which

no individual buyer or seller has any significant impact on the market price

What must be given up to obtain an item is called

opportunity cost

A likely example of substitute goods for most people would be

pencils and pens

a monopoly is a market with one

seller, and that seller sets the price

Efficiency means that

society is getting the most it can from its scarce resources

In a market economy, economic activity is guided by

Self interest and prices

Productivity is defined as the

The amount of goods and services produced from each unit of labor input

Total output in an economy increases when each person specializes because

Each person spends more time producing that product in which he or she has a comparative advantage

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different how

Equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources

The principle of comparative advantage does not provide answers to certain questions. One of those questions is

How are the gains from trade shared among the parties to a trade

Goods produced abroad and sold domestically are called

Imports

A bagel shop sells fresh baked bagels from 5 a.m. until 7 p.m. every day. The shop does not sell day-old bagels, so all unsold bagels are thrown away at 7 p.m. each day. The cost of making and selling a dozen bagels is $1.00; there are no costs associated with throwing bagels away. If the manager has 8 dozen bagels left at 6:30 p.m. on a particular day, which of the following alternatives is most attractive?

Lower the price of the remaining bagels, even if the price falls below $1.00 per dozen.

Consider two individuals — Marquis and Serena — each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Marquis's skills are such that he can probably produce only sweaters and Serena's skills are such that she can produce only tasty food.

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

The price of mangos rise

If the demand for a good falls when income falls, then the good is called

a normal good

A likely example of complementary goods for most people would be

chips and salsa

Positive statements are

claims about how the world is

Which of the following statements about comparative advantage is not true?

comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources

A decrease in the price of a good will

decrease in quantity supplied

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces a tradeoff between?

efficiency and equality

Central planning refers to

government guiding economic activity. Today many countries that had this system have abandoned it.

A circular-flow diagram is a model that

helps to explain how the economy is organized.

In the simple circular-flow diagram, the participants in the economy are

households and firms

Microeconomics is the study of

how individual households and firms make decisions.

Market power refers to the

power of a single person or small group to influence market prices

which of the following is not held constant in a demand schedule

price

A demand schedule is a table that shows the relationship between

price and quantity demanded

the ability of an individual to own and exercise control over scarce resources

property rights

A improvement in production technology will shift the

supply curve to the right

If something happens to after the quantity demanded at any given price, then

the demand curve shifts

Who gets scarce resources in a market economy?

whoever is willing and able to pay the price