Econ test 1

the equilibrium price will rise.

When the supply curve shifts to the left and there is no change in demand:

wants are unlimited and resources are scarce, so trade-offs have to be made.

Whether studying the output of the U.S. economy or how many classes a student will take, a unifying concept is that:

excess supply.

If price is above the equilibrium price, then there will be:

macroeconomics

Which branch of economics is most likely to study differences in countries' growth rates?

positive; uncertain

If demand increases and supply decreases, the change in the equilibrium price will be ______, and the change in the equilibrium quantity will be ______.

sellers, dissatisfied with growing inventories, will lower their prices.

In a free market, if the price of a good is above the equilibrium price, then;

people must make trade-offs.

An implication of scarcity is that:

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

Economics is best defined as the study of:

they have to make trade-offs.

Economists recognize that because people have limited resources:

economic surplus; $3,000

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.

$30

Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the total economic surplus from this transaction was:

an increase in supply of laptops.

Suppose that the technology used to manufacture laptops has improved. The likely result would be:

$75.

Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is:

marginal benefit

The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity.

complements

If the demand for cucumbers falls when the price of tomatoes rises, then we know that tomatoes and cucumbers are:

will have no effect on the market.

A price ceiling that is set above the equilibrium price:

with well-defined goals who tries to fulfill those goals as best as he or she can

A rational person is someone:

$35

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:

the substitution effect of a price change

As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:

more firms can cover their opportunity cost of producing the good.

As the price of a good rises:

$4.

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:

the income effect of a price change.

You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:

the wage for teachers in that district is lower than the equilibrium wage.

You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:

the seller's opportunity cost of producing an additional unit.

A seller's reservation price is generally equal to:

market for the good.

Buyers and sellers of a particular good make up the:

centralized economy

If a country's economic decisions are made by an individual or small number of individuals, then it has a:

inferior good.

If an increase in income leads to a decrease in the demand for ground beef, then ground beef is a(n):

predict how people will behave.

Positive economic principles are those that:

largest price the buyer would be willing to pay for it.

The buyer's reservation price for a particular good or service is the:

more of a good as its price falls

The demand curve illustrates the fact that consumers tend to purchase:

the next-best alternative that must be foregone.

The opportunity cost of an activity includes the value of:

An increase in the price of a substitute.

What might cause a demand curve to shift to the right?

largest economic surplus.

If individuals are rational, they should choose actions that yield the:

an excess demand for bananas.

The price of bananas will increase in response to:

increase; upward

The quantity that sellers wish to sell tends to ______ as price increases, and so the supply curve is ______ sloping.

change in quantity demanded.

A movement along a demand curve from one price-quantity combination to another is called a:

the benefits of seeing the movie are greater than the costs of seeing the movie.

According to the Cost-Benefit Principle, you should go see the latest Star Wars movie with your friends this week-end if:

the benefits of studying for an additional hour exceed the costs of studying for an additional hour.

According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:

normal good.

If the demand for a good decreases as income decreases, then the good is a(n):

substitutes

If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:

buyers, hoping to ensure they acquire the good, will bid the price higher.

In a free market, if the price of a good is below the equilibrium price, then;

a black market might develop.

In a market in which the government has set a price ceiling below the equilibrium price:

the choices made by individuals the implications of those choices

Microeconomics differs from macroeconomics in that microeconomics focuses on:

normative principles tell us how people should behave, and positive principles tell us how people will behave.

One thing that distinguishes normative economic principles from positive economic principles is that:

5

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is:

its benefits exceed its costs.

The Cost-Benefit Principle indicates that an action should be taken if, and only if:

a positive economic principle.

The Cost-Benefit Principle is:

consistent with the cost-benefit model because most people intuitively weigh costs and benefits.

The fact that most people make some decisions based on intuition rather than calculation is:

there is neither excess demand nor excess supply.

When a market is in equilibrium:

at least $1.75 but less than $2.

When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:

equilibrium quantity will rise.

When the demand curve shifts to the right and supply doesn't change:

It reflects sellers' reservations prices.

Which of the following is NOT true of a demand curve?

Whether the federal budget should be balanced.

Which of the following would not be studied in microeconomics?