test one-econ

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that the sellers are willing and able to sell.

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises.

A production possibilities frontier can shift outward if

there is a technological improvement.

High-school athletes who skip college to become professional athletes

understand the opportunity cost of college is high

If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls significantly below lattes?

Both the equilibrium price and quantity would decrease.

Which of the following statements does not apply to a market economy?

Government policies are the primary forces that guide the decisions of firms and households.

Which of the following would incur the highest opportunity cost

Solar panels placed in a farm field

For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?

The good is a luxury

Which of the following is not an assumption of the productions possibilities frontier?

There is a fixed quantity of money.

A statement describing how the world should be

a normative statement

What would you expect from the correlation between rental cars and air travel.

a quotation that is less than 1 or negative

In a competitive market, the quantity of a product produced and the price of the product are determined by

all buyers and all sellers.

OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to

an inelastic demand for oil and a reduction in the amount of oil supplied.

Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price

and quantity both increase.

Demand is said to be price elastic if

buyers respond substantially to changes in the price of the good.

Suppose you make jewelry. If the price of gold falls, then we would expect you to

be willing and able to produce more jewelry than before at each possible price.

Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,

both Sam and Annie are made better off by trade.

A good will have a more inelastic demand, the

broader the definition of the market.

Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, and the number of ice cream cones demanded falls to 45, then demand for ice cream cones is considered to be

elastic

When small changes in price lead to infinite changes in quantity demanded, demand is perfectly

elastic, and the demand curve will be horizontal.

For a market to exist, there must be a

group of buyers and sellers.

A decrease in the price of a good would

increase the quantity demanded of the good.

When a Production Possibilities Frontier is bowed outward, the opportunity cost of producing an additional unit of a good

increases as more of the good is produced.

A statement describing how the world is

is a positive statement.

The "broken window fallacy"

is illustrated when a government program is justified not on its merits but on the number of jobs it will create.

While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's

is negative, and Laura's is positive.

When a surplus exists in a market, sellers

lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.

Goods with many close substitutes tend to have

more elastic demands.

Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is

negative, so Joan considers hamburger to be an inferior good.

The adage, "There is no such thing as a free lunch," means

people face tradeoffs.

"invisible hand" works to promote general well-being in the economy primarily through

people's pursuit of self-interest.

Unemployment would cause a society to

produce inside its production possibilities frontier.

The signals that guide the allocation of resources in a market economy are

quantities.

The price elasticity of demand measures how much

quantity demanded responds to a change in price.

The ability for society to satisfy wants or relieve uneasiness depends upon

resources

The phenomenon of scarcity stems from the fact that

resources are limited

Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

shortage to exist and the market price of roses to increase.

If the cross-price elasticity of two goods is positive, then the two goods are

substitutes.

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

supply shifts to the left, demand is unaffected, and price increases.

For a good that is a luxury, demand

tends to be elastic.

The law of supply states that, other things equal, when the price of a good

the quantity supplied of a good increase as its price increases, and the quantity supplied of a good decrease as its price decreases.

Generally, a firm is more willing and able to increase quantity supplied in response to a price change when

the relevant time period is long rather than short.

A decrease in the number of sellers in the market causes

the supply curve to shift to the left