ECON test 1
assume the cost of aluminum used by soft drink companies increases. Which of the following correctly describes the resulting effects in the market for canned soft drinks I. The demand for soft drinks decreases. II. The quantity of soft drinks demanded decreases. III. The supply of soft drinks decreases. IV. The quantity of soft drinks supplied decreases.
II and III
In the market for chocolate bars, the supply of chocolate bars will increase if ______.
If the number of a chocolate bar manufacturers increases
Which of the following illustrates scarcity?
Megan wants to buy a CD that costs $25 but only has $10 to spend
Washington state had a number apple crop this year, significantly increasing the supply of apples in the U.S. Given this information, choose the statement that correctly describes the effect on the U.S. apple market.
The quantity of apples demanded will increase as the price of apples falls.
You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?
You have a comparative advantage in picking apples
Specialization and the gains from trade make the economy PPF outward bowed because _______.
a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs
Other things remaining equal, the law of demand says that higher prices will lead to:
a smaller quantity demanded and lower prices to a larger quantity demanded
All of the following will decrease the supply of airline flights except
a technological change that makes airplanes safer and more fuel efficient
Which of the following will cause an outward (rightward) shift in supply
a technological improvement
In a low-income country, _________. As a country invests in capital and uses more advanced technologies _______.
agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks
A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____. Marginal cost is the _____ that arises from one unit _____ in an activity. Marginal benefit is the _____ that arises from one unit _____ in an activity.
alternatives; incrementally; opportunity cost; increase; benefit; increase
Which of the following news headlines does not deal with scarcity?
apply early for your passport
What conditions must be satisfied if resources are used efficiently? Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.
benefit from; cost of a pencil
Rational choice is a choice that uses the available resources to _____ of the person making the choice.
best achieve the objective
Market Price is determined by
both supply and demand
A market is an arrangement that brings _____ together and enables them to get information and do business with each other.
buyers and sellers
The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.
can be produced and the combinations that cannot be produced
Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.
cannot; less
An increase in the price of wheat, a complement in production of straw, will---- the equilibrium price of straw and ---- the equilibrium quantity of straw
decrease; increase
Given the law of demand, you would expect the rise in the price of gasoline to ______ the quantity of gasoline demanded and ______ the demand for gasoline.
decrease; not change
The equilibrium quantity of smartphones _______.
decreases
An increase in the price of onions _______.
decreases the quantity of onions demanded and results in a movement up along the demand curve for onions
A decrease in the demand for tank tops brings a ---- in the price of a tank top and ----- in the quantity of tank tops supplied
fall; a decrease
For each news item below, indicate whether it involves a what, how, or for whom question. "Delta Airlines fails to reach deal with pilots" involves a ______ question. "Kids learning business basics" involves a ______ question.
for whom; what
The law of supply states that other things remaining the same, the _______ the price of a good, the _______.
higher; greater is the quantity supplied
The law of demand states that other things remaining the same, the _______ the price of a good, the _______.
higher; smaller is the quantity demanded
Miles graduates from college and his income increases by $30,000 a year. Nothing else changes. Miles decreases the quantity of hot dogs and pretzels that he buys and increases the quantity of tickets to orchestra concerts that he buys. For Miles, _______.
hot dogs and pretzels are inferior goods
"Fiber replaces aluminum in airplanes" involves a_______ question.
how
The market for pancake mix is a competitive market _______.
if many people buy and many firms sell pancake mix, so no single buyer can influence the price
Advances in technologies for producing other goods and services _______.
increase U.S. production possibilities
As a country experiences economic growth, investment in capital and advances in technology _________.
increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate
If the price of a ski trip decreases, the demand for ski jackets will _______.
increase; and the demand curve for ski jackets will shift rightward
"Fracking" _________.
increases U.S. production possibilities
A supply curve that illustrates the law of supply
is upward sloping
The resources that are used to produce goods and services - _____ are factors of production.
land labor capital and entrepeneurship
4. If "fracking" had been the only technological advance, the opportunity cost of producing oil and gas would have been _________.
lower than it actually was
When you think of an arraignment or institution that brings buyers and sellers of a food or service together, what are you thinking of
market
A decrease in the demand for smartphones together with a decrease in the supply of smartphones ______ create a surplus or a shortage of smartphones at the original price. The equilibrium price of smartphones ______.
might; might fall, rise, or not change
The marginal cost of a potato is the number of lemons that ______ to get one more ______.
must be foregone; potato
The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded.
other things remaining the same; higher
In a market system, which of the following provided the information that individuals need to make decisions about resource allocation
prices
Absolute advantage is the ability of an individual, firm, or country to:
produce more of a good or service than competitors using the same amount of resources
At market equilibrium price
quantity demanded equals quantity supplied
a shortage is the amount by which the ----- exceeds the -----
quantity demanded; quantity supplied
A decreases in the supply of donuts brings a ---- of donuts at the original price and a ---- in their price
shortage; rise
An increase in the demand for ski trips together with a decreases in the supply of ski trips brings a ----- of ski trips at the original price and a ---- in their price
shortage; rise
A demand curve that illustrates the law of demand
shows that the quantity demanded increases as the price falls
The principle of increasing opportunity cost states that the more resources devoted to any activity, the ----- the payoff to devoting additional resources to that activity
smaller
Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.
social science that studies; cope with scarcity
In a high-income country like the United States _______.
technological advances release labor from industrial production and move the labor into service production
Assume that the U.S. PPF measures oil and gas production on the x-axis and production of other goods and services on the y-axis. If fracking" is the only technological advance, _________.
the U.S. PPF rotates outward, increasing the x-axis intercept with no change in the y-axis intercept
Given linear demand curves, if demand increases and supply decreases, then
the equilibrium price will increases but the effect on the equilibrium will be ambiguous
Firms are institutions that organise _____ of goods and services.
the production
The relative price of a jar of pasta sauce is an opportunity cost because ______.
the relative price tells us how many boxes of ramen noodles we must give up to get
Which of the following is critical to the success of the market system
to allow individuals or firms to have exclusive use of their property
Zach is a math student who is considering taking an extra course in history. An incentive that might encourage him to take the history course is _______.
tougher grading in math
What is the fundamental fact of life from which all economic problems arise?
wants cannot be satisfied with the available resources
Every day, we make many choices. We can't avoid having to make choices because ________.
we can't afford to buy all the things we'd like
The what, how, and for whom questions in economics are questions about ______.
what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced
Failure to specialize and reap the games from trade is _______ because _______.
inefficient; production is at a point inside the economy's PPF
