ECON 202 ULL EXAM 1
cause the demand curve for product A to shift to the left?
An increase in money income if A is an inferior good
the relationship between quantity demanded and price is
inverse
An economic hypothesis
is a possible explanation of cause and effect
if an economy produces its most wanted goods but uses outdated production methods, it is
not achieving productive efficiency
Allocative efficiency is concerned with
producing the combination of goods most desired by society
An efficiency loss (or deadweight loss)
results from producing a unit of output for which the maximum willingness to pay exceeds the minimum acceptable price
Currently (2013) the marginal tax rates of the federal personal income tax
rise from 10 to 39.6 percent
In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are
substitute goods and the higher price for oil increased the demand for natural gas
A typical concave (bowed out from the origin) production possibilities curve implies
that society must choose among various attainable combinations of goods
Demand-side market failures occur when
the demand and supply curves don't reflect consumers' full willingness to pay for a good or service
Which of the following is an exhaustive governmental outlay
A NASA payment to Boeing Corporation for space hardware
The tax rates embodied in the federal personal income tax are such that
the marginal tax rate is higher than the average tax rate, causing the average tax rate to rise
According to the marginal-cost-marginal-benefit rule
the optimal project size is the one for which MB = MC
The average tax rate is
the ratio of total taxes paid to total taxable income
Purposeful behavior suggests that
Individuals must make different choices because of different desired outcomes
A normative statement is one that
Is based on value judgments
For economists, the word "utility" means
Pleasure or satisfaction among various attainable combinations of goods
Market failure is said to occur whenever
Private markets do not allocate resources in the most economically desirable way
An increase in money income
Shifts the consumer's budget line to the right
If the demand curve reflects consumers' full willingness to pay, and the supply curve reflects all costs of production, then which of the following is true?
The benefit surpluses shared between consumers and producers will be maximized
The basic purpose of the other-things-equal assumption is to
allow one to reason about the relationship between variables X and Y without the intrusion of variable Z
As a proportion of domestic output, taxes in the United States
are lower than in most other industrially advanced countries
Markets, viewed from the perspective of the supply and demand model
assume many buyers and many sellers of a standardized product
Professional buyers of antiques often have more information about the value of antique objects than do the sellers. This illustrates
asymmetric information
The study of economics is primarily concerned with
choices that are made in seeking the best use of resources
The relationship between quantity supplied and price is
direct
If the production possibilities curve is a straight line
economic resources are perfectly substitutable between the production of the two products
A price ceiling means that
government is imposing a legal price that is typically below the equilibrium price
The opportunity cost of borrowing funds to finance government deficits is
greatest when the economy is doing well
