Econ

An economic naturalist is someone who

applies economic insights to understand everyday life.

The Cost-Benefit Principle indicates that an action should be taken if

its extra benefit is greater than or equal to its extra cost

Microeconomics differs from macroeconomics in that microeconomics focuses on

the choices made by individuals and the implications of those choices

Tony notes that an electronics store is offering a flat $20 off all prices in the store. Tony reasons that if he wants to buy something with a price of $50, then it is a good offer, but if he wants to buy something with a price of $500, then it is not a good offer. This is an example of:

inconsistent reasoning; saving $20 is saving $20.

Buyers and sellers of a particular good make up the: A. market for the good. B. demand for the good. C. supply for the good. D. production possibilities curve for the good.

A. market for the good.

You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?

$2

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

$1

Economics is best defined as the study of A. inflation, interest rates and the stock market. B. supply and demand. C. how people make choices in the face of scarcity and the implications of those choices for society as a whole. D. the financial concerns of businesses and individuals.

C. how people make choices in the face of scarcity and the implications of those choices for society as a whole.

A market equilibrium: A. is socially optimal. B. leaves unexploited opportunities for individuals. C. might not maximize total economic surplus. D. is never socially optimal.

C. might not maximize total economic surplus.

Which of the following factors will lead to a decrease in the current supply of a good? A. A fall in the current price of a good or service B. A technological advance that decreases production costs C. A decrease in the price of inputs to the production process D. A belief that the price of a good or service will go up in the future

D. A belief that the price of a good or service will go up in the future

Suppose that the equilibrium price of apples decreases and the equilibrium quantity of apples increases. This is best explained by: A. an increase in the demand for apples. B. a decrease in the supply of apples. C. a decrease in the demand for apples. D. an increase in the supply of apples.

D. an increase in the supply of apples

An outcome is socially optimal if it: A. is an equilibrium outcome. B. leaves no unexploited opportunities for individuals. C. is determined by the government. D. maximizes total economic surplus.

D. maximizes total economic surplus.

A market equilibrium might not maximize total economic surplus because: A. efficiency is not an important social goal. B. in a market equilibrium individuals do not act rationally. C. in a market equilibrium individuals do not exploit all opportunities for individual gain. D. sometimes goods entail costs and benefits that do not fall on buyers and sellers.

D. sometimes goods entail costs and benefits that do not fall on buyers and sellers.

According to the textbook, NAFTA was expected to help which country exploit its comparative advantage in the production of goods made by unskilled labor?

Mexico

Suppose that the equilibrium price of T-shirts increases and the equilibrium quantity of T-shirts decreases. This is best explained by: Multiple Choice an increase in the demand for T-shirts. a decrease in the supply of T-shirts. an increase in the supply of T-shirts. a decrease in the demand for T-shirts.

a decrease in the supply of T-shirts.

Suppose you observe a decrease in the equilibrium price and quantity of corn. Of the options listed below, this is best explained by: Multiple Choice a decrease in the cost of growing corn. an increase in the cost of growing corn. a rise in consumer income assuming corn is a normal good. a fall in consumer income assuming corn is a normal good.

a fall in consumer income assuming corn is a normal good.

When the demand curve shifts to the right and supply doesn't change: Multiple Choice quantity demanded will rise. equilibrium price will fall. equilibrium quantity will rise. supply will rise.

equilibrium quantity will rise.

The benefits of specialization can be used to explain why

individuals and nations benefit from trade

An implication of scarcity is that

people must make trade-offs

When the supply curve shifts to the left and there is no change in demand: Multiple Choice the market cannot reestablish an equilibrium. the equilibrium price will fall. the equilibrium quantity will rise. the equilibrium price will rise.

the equilibrium price will rise.