eco 2023 test 1 M
price floor
Qd<Qs surplus
price ceiling
creates a shortage
OC (opportunity cost) of A =
B lost/ A gained aka opportunity cost of A in terms of B
Examples of Micro
-Components of economy: labor, land, capital, entrepreneurship -performance/behavior of individual units=family, consumer, industry, firms
Examples of Macro
-directly impacts the economy -poverty -GDP -import/export -economic growth -globalization
What are the factors of production?
-land -labor -capital -entrepreneurship -resources owned by the government
Microeconomics
-specifics: -firm -industry -region (state, country, city) -product -group -specific good
Positive (in comparison to normative)
-statements of what is -descriptive statements ****verifiable -can be statements that are accurate but not positive
Normative (in comparison to positive)
-what should be prescriptive -**opinions (can't verify if it is wrong)
OC of B=
A lost/ B gained aka opportunity cost of B in terms of A
Factors of Demand: # of demanders # demanders decrease
# demanders decrease= demand decreases
Factors of Demand: # of demanders # demanders increase
# demanders increase= demand increases
Define Capital
Final goods that are used to produce other goods and services`
Factors of Demand: Preferences Like less
Like less= demand decrease
Factors of Demand: Preferences Like more
Like more= demand increase
price ceiling
Qd>Qs shortage
Factors of Supply: # of suppliers # suppliers increase
Supply increases (shifts right)
Only government intervention can cause a change in equilibrium ceiling/floor T/F?
True
The ONLY factor that shifts both supply and demand curves is?
a change in expected future price
price floor
creates a surplus
Factors of Demand: Ease of credit/state of financial markets credit harder to get
demand decreases
Factors of Demand: expected future price decreases
demand decreases
Factors of Demand: Ease of credit/state of financial markets credit easier to get
demand increases
Factors of Demand: Prices of Related Goods COMPLEMENTS price of complement decreases
demand increases ie: hotdog & buns
the ____ of supply are any factors other than the product's ____ that have an effect on the supply of a good or service and cause the supply curve to shift
determinants price
The points on a production possibilities curve show?
potential output= the maximum attainable output with our limited resources production possibilities curve= shows the limits of our options
in free markets, though prices will rise and fall equilibrium ___ and ___ will always be achived
price and quantity
A change in ___refers to a movement along the demand curve in response to changes in price of a good or service
quantity demanded
change in demand
refers to a shift of the demand curve leftward or rightward in response to anything other than changes in the price of a good or service
Qd > Qs
shortage
The ability & willingness to sell specific quantities of a good at alternative prices in a given time period, ceteris paribus is the definition of market________.
supply
Factors of Supply: Expected Future Price expected future price increases
supply decreases
Factors of Supply: Prices of Substitutes & Complements in production price of production of substitute increases
supply decreases ie: hybrids & SUVs
Factors of Supply: State of Nature Bad state of nature
supply decreases ie: hurricane, earthquakes, tornadoes, flooding, tsunamis, droughts
Factors of Supply: Technology Technological retreat
supply decreases (shifts left)
Factors of Supply: Expected Future Price expected future price decreases
supply increases
Factors of Supply: State of Nature Good state of nature
supply increases
Factors of Supply: Prices of Substitutes & Complements in production price of production of complement increases
supply increases ie: steak & leather chicken breasts & wings
Factors of Supply: Costs Cost decreases
supply increases (shifts right)
Factors of Supply: Technology Technological advance
supply increases (shifts right)
Qd<Qs
surplus
Choose all of the following that will cause a change in supply rather than a change in quantity supplied. A) producer expectations B) product price C) number of sellers D) consumer expectations E) technology
A, C, E producer expectations, technology, number of sellers
Which of the following is not a factor of production? A. A psychiatrist. B. The $100,000 used to start a new business. C. A bulldozer. D. Six thousand acres of farmland.
B. The $100,000 used to start a new business. Land, labor, capital, and entrepreneurship are the factors of production. Money does not fall under any category of the factors of production. Factors of production are what are needed on a camping trip. Money is not needed on a camping trip. Why they are factors of production A) is a type of labor/skill C) is a capital= something used to further produce other goods, a piece of equipment D) first factor is land.
combinations of output that fall inside the production possibilities curve of an economy represent: a) goods that are attainable b) the inefficient use of resources c) goods that are unattainable d) efficiently produced goods
a & b
What does a straight line of the PPC (production possibility curve) imply?
a straight line PPC means resources are equally adaptable to producing either good
An entrepreneur ___. a) is employed by a big company b) innovates c) takes the risk of earning profits or suffering losses from owning an enterprise d) looks for the latest new products to copy e) makes strategic business decisions that set the course of an enterprise
a, b, d
The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ______________.
an opportunity cost
Factors of Demand: Prices of Related Goods SUBSTITUTES price of substitute decreases
demand decreases ie: coke & pepsi
Factors of Demand: Prices of Related Goods COMPLEMENTS price of complement increases
demand decreases ie: hotdog & buns
Factors of Demand: expected future price increases
demand increases
Factors of Demand: Prices of Related Goods SUBSTITUTES price of substitute increases
demand increases ie: coke & pepsi
Macroeconomics
economy wide country wide -inflation, CPI -GDP -fiscal policy
Factors of Demand: Income INFERIOR GOODS increase income decrease income
increase income= decrease demand decrease income= increase demand
Factors of Demand: Income NORMAL GOODS increase income decrease income
increase income= increase demand decrease income= decrease demand
Hint that it is price ceiling aka shortage
maximum wage
Hint that it is price floor aka surplus
minimum wage
Factors of Supply: # of suppliers # suppliers decrease
supply decreases (shifts left)
Factors of Supply: Costs Cost Increase
supply decreases (shifts left)
Mixed economy
utilizes both market and nonmarket signals to allocate goods and services. Have significant roles for gov intervention in allocation of goods & services
Hints that it is supply:
wages of workers