Econ 201 University of Idaho

The double-coincidence of wants is a problem with

Barter

Because of increasing marginal cost, most supply curves

Have a positive slope

Because of increasing marginal cost, most supply curves

Have positive slope

What always raises the equilibrium price?

an increase in demand combined with a decrease in supply

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

complements

The tradeoff between current consumption and the production of capital goods also reflects a tradeoff between

current consumption and future consumption.

A recession occurs and people's incomes decrease. Knowing that an iPad is a normal good, you predict that the demand for an iPad

decreases.

A change in the price of a good

does not shift the good's demand curve but does cause a movement along it.

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will ________ and the quantity demanded will ________.

fall; increase

A factor market is a market in which

households sell the services of the factors of production they control.

If macaroni and cheese is an inferior good, a decrease in income will

increase the demand for macaroni and cheese.

An increase the expected future price of a good

increases its demand.

In our macro example using the PPC model, according to the Keynesian school of thought, the economy is typically

inside the PPC frontier implying 0% opportunity cost to government stabilization efforts.

As a person consumes more and more of a good,

marginal benefit decreases.

The "law of supply" states that, other things remaining the same, firms produce

more of a good the higher its price.

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it

must be producing along the production possibilities frontier today and will see a shift outward of the frontier in the future if produces more capital goods.

Productive or technical efficiency is achieved when

producing one more unit of one good cannot occur without producing less of some other good.

Using a production possibilities frontier, economic growth is illustrated by a

rightward shift of the curve.

When the demand for a good increases, its equilibrium price ________ and quantity supplied ________.

rises; increases

After Hurricane Katrina devastated parts of Mississippi and New Orleans in 2005, we can be sure that the production possibilities frontier for that area temporarily

shifted inward, toward the origin

The law of demand implies that demand curves

slope down

Economic growth is the result of which of the following?

technological change. capital accumulation. investment in human capital.

Marginal cost is the opportunity cost

that arises from producing one more unit of a good or service.

Marginal cost is the opportunity cost

that arises from producing one more unit of a good or service. of a good or service divided by the number of units produced.

Each point on the demand curve reflects

the highest price consumers are willing and able to pay for that particular unit of a good.

Each point on a supply curve represents

the lowest price for which a supplier can profitably sell another unit.

The "law of demand" states that changes in

the quantity demanded of a good are inversely related to changes in its price.

Resource use is allocative efficient

when marginal benefit equals marginal cost.