ECON1101

You can spend $100 on either a new economics textbook or a new CD player. If you choose to buy the new economics textbook, the opportunity cost is: a) your enjoyment of the new CD player. b) impossible to determine. c) $100. d) both the $100 and the your enjoyment of the new CD player.

your enjoyment of the new CD player.

Suppose the accompanying graph represents the Canadian production possibilities frontier between producing maple syrup and timber. Place point A at a location that is obtainable but inefficient. Place point B at a location that is unobtainable. Place point C at a location that is efficient.

A- below B- above C- on PPF

Various forms of capital are used in the production of final goods and services. However, the term financial capital market refers to a market where households with intangible capital and firms which demand intangible capital interact. a market where savers and borrowers interact. a market where firms with investment advice and households which demand investment advice interact. a market where households with physical capital and firms which demand physical capital interact.

a market where savers and borrowers interact.

If disequilibrium exists in a market: a) no individual will be better off doing something different. b) it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium. c) there will be opportunities available to people to make themselves better off. d) it will continue unless there is government intervention.

there will be opportunities available to people to make themselves better off.

If the market for grapefruit is in equilibrium without any outside intervention to change the equilibrium price:

consumer and producer surplus are maximized.

An outward parallel shift of the production possibility frontier signals: the employment of previously unused resources into production. an ability to produce more of one but not both goods represented by the PPF. an expansion of the productive capacity of the economy. a shrinkage of the economy due to rising opportunity costs.

an expansion of the productive capacity of the economy.

(Figure: The DVD Rental Market) Look at the figure The DVD Rental Market. At a rental price of $6, there will be: a) an excess demand of 20 DVD rentals. b) a decrease in demand. c) an excess supply of 20 DVD rentals. d) equilibrium in the rental market for DVDs.

c) an excess supply of 20 DVD rentals.

Point A in the diagram represents a production situation that is: a) too expensive. b) unattainable. c) efficient. d) inefficient.

d) inefficient.

Manny is attending college and majoring in economics. Manny is improving his: a) land. b) labor. c) capital. d) human capital.

human capital.

Fiscal policy is conducted by ____________ and involves __________

the federal government government spending and taxes.

One of the ways rent control is inefficient is that it leads to:

high opportunity costs associated with wasted time searching for apartments.

Use the table to answer questions about the demand forand supply of Blu-ray movies. What is the equilibrium price per movie? At a price of $12 per movie, a shortage of 20 movies occurs. a surplus of 70 movies occurs. equilibrium in the market for movies is reached. a surplus of 20 movies occurs. a shortage of 50 movies occurs.

$10 a surplus of 2o movies occurs

Instead of attending class, one could have worked an extra hour at the café for $10 or watched a neighbor's child for $15. The opportunity cost of attending class is: $25. $5. $15. $10.

$15

The graph represents a labor market. a. What is the equilibrium hourly wage? b. What is the equilibrium number of hours worked? c. Identify all the factors that would cause the equilibrium wage to increase. It would increase withan increase in labor demanded.a decrease in labor demanded.an increase in labor supplied.a decrease in labor supplied.

$5 12 A & D

Below is the market for maple syrup. Draw the total producer surplus (PS) on the graph using the shaded area labelled PS.

(along Y axis from equilibrium to bottom left of S line)

Below is the market for nonfat decaf lattes. Shade total consumer surplus (CS) on the graph by correctly placing the CS shaded area.

(along Y axis from top left corner to equilibrium)

Scarcity exists when: A) making choices among two or more alternatives is not necessary. B) individuals can have more of any good. C) individuals can have more of one good but only at the expense of another .D) resources are unlimited.

.C) individuals can have more of one good but only at the expense of another

College students often borrow money to attend school. Generally, the plan is to pay loans back through future earnings. In this way, capital and labor markets are intimately connected. Assume that the market for education and college educated labor are perfectly competitive. Use the accompanying graphs to show what happens to the market for education and college educated labor if the government increases the number of very low interest loans. A. college graduates B. employers of college graduates C. producers of schooling D. consum

1. Market for College Education - Demand will increase but supply stays the same. Market for college educated labor- Supply increases but demand stays the same 2. Gains - B and C Loses - A and D

1. ___________ are laws that set a wage minimum in the labor market.2. When is it a nonbinding floor?A. the equilibrium wage rate is below the minimum wage rateB. it is always nonbindingC. it is never nonbindingD. the equilibrium wage rate is above the minimum wage rate

1. Minimum wage laws 2. D. the equilibrium wage rate is above the minimum wage rate

If you receive 10 units of utility from consuming one cup of coffee and 16 units of utility from consuming two cups of coffee, which of the following is the likely amount of utility you will receive from consuming three cups of coffee? 18 units of utility 6 units of utility 22 units of utility 26 units of utility

18 units of utility

Select the correct type of price control law described and then choose from the multiple choice when it is binding or nonbinding.1. ______________ are laws that set a price maximum in the financial capital markets.2. When is it a binding ceiling? A. the equilibrium interest rate is higher than the law permitsB. it is never bindingC. it is always bindingD. the equilibrium interest rate is lower than the law permits

1. Usury Laws 2. A. the equilibrium interest rate is higher than the law permits

The opportunity cost of one ton of steel in Germany is two PCs.one-half of a PC.one-quarter of a PC.four PCs . The opportunity cost of one ton of steel in South Korea isfour PCs.one-half of a PC.one-quarter of a PC.two PCs. Which country has a comparative advantage in steel production?GermanySouth Korea

1/4 1/2 germany

Suppose that the economy of El Paso creates only cowboy boots and pecans. The production possibilities frontier (PPF) per year for El Paso is illustrated in the graph and is currently producing at the point labeled A. Move point B to show the economy efficiently producing one thousand more cowboy boots. Now, determine the opportunity cost of producing an additional 1,000 cowboy boots, i.e., shifting from point A to point B. Enter your answer specified to one decimal place. opportunity cost:______ pecans Shift point C to indicate El Paso increasing production of cowboy boots from point B by another thousand. Determine the opportunity cost of shifting from point B to point C. Enter your answer specified to one decimal place. opportunity cost: _________ pecans This PPF exhibits what kind of opportunity costs?constantdecreasingincreasing

1400/3600/ increasing A (5000,2000) B (3500,3000) C (0,4000)

Consider the table below. Assuming the law of demand holds, the cell labeled "?" could be which of the following quantities? Price of a movie Quantity of movies Demanded$15/173 $7? 173 175 189 181 161

161

This year is expected to be a great one for selling walking shoes in Georgia. At very low prices, only the most efficient shoemakers are able to sell. There are two shoe producers that operate with the most cost-effective equipment and skilled personnel, each of which can put 1000 pairs of shoes in the market at $10.00. At a higher price, eight more shoemakers will enter the market. Each producer makes 1200 pairs of shoes at $25.00 per pair. If the price goes to $40.00 per pair, the existing firms increase production to 1400 pairs of shoes each, plus four small shops open, each of which produces 500 pairs of shoes. Using the information above, graph the supply curve for walking shoes by dragging the provided red points to the correct coordinates of price and quantity.

2,000, 10 12,000, 25 16,000,40

The graph shows the market for milk when the government imposes a price floor of $5. Fill in the blanks with the correct terms and numbers up to two decimal places. After the price floor is in place, how many units of milk are bought or sold? The market does not clear after the price floor is imposed. Rather, there is a _________ of how many gallons?

2.93 gal: units of miilk surplus 3.66 gal

The graph shows the market for corn with a price ceiling of $7. Fill in the blanks with the correct terms and numbers. After the price ceiling is in place, how many bushels of corn are bought or sold? The market is not in equilibrium after the price ceiling is imposed. Rather, there is a _______ of how many units?

5 bushels shortage 5.86 bushels

Jack has $60 to spend on lunch each week. He eats either at the Taco Hut, which costs $10, or the Pizza Shack, which costs $12. Which of the following combinations is on Jack's budget line? 3 lunches at Taco Hut and 3 lunches at Pizza Shack. 0 lunches at Taco Hut and 6 lunches at Pizza Shack. 6 lunches at Taco Hut and 0 lunches at Pizza Shack. 4 lunches at Taco Hut and 2 lunches at Pizza Shack.

6 lunches at Taco Hut and 0 lunches at Pizza Shack.

Mauricio has a circus act, and he has a budget of $720 to spend on monkeys and unicycles. The cost of a unicycle is $120, and the cost of a monkey is $90. Please graph Mauricio's budget constraint on the graph.

6 unicycles/ 8 monkeys

Suppose the demand and supply schedules shown in the table represent the labor market for carpenters. a. What is the equilibrium number of carpenters who will be hired? b. What is the equilibrium hourly wage for carpenters?

7000 $14

Lisa is choosing between three alternatives: a) working at her job that pays 60 dollars; b) writing a term paper which she values at 40 dollars; or c) going out with a friend, which she values at 80 dollars. The opportunity cost of writing the term paper is: 80 dollars. 0 dollars. 140 dollars. 20 dollars.

80 dollars

The graph shows a market where the government has imposed a price floor. For each of the three questions, select the area or areas described after the floor is in place. Which of the areas is the consumer surplus? E+FE+F AA B+EB+E B+C Which of the areas is the producer surplus? AA E+FE+F B+EB+E C+F What is the deadweight loss of the price floor? DD HH B+EB+E C+F

A B+E C+F

the accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before?

A (70,80) 20 more horses per day20 y- 160 x- 90

The graph shows a market where the government has imposed a price ceiling. For each question, select the area or areas described after the ceiling is in place. What is the consumer surplus? A + B + E A + B + C C + F J What is the producer surplus? E + F + J B + E C + F J What is the deadweight loss of the price ceiling? G H C + F K + L

A + B + E J C+F

________ illustrates an inverse relationship between price and quantity. a) A demand curve b) Equilibrium c) A supply curve d) A production possibility frontier

A demand curve

Which of the following is an example of marginal analysis? a) A hungry person uses a coupon to save $2 on a pizza. b) A hungry person orders a pizza rather than eating leftover meatloaf. c) A hungry person writes a check to pay for the pizza rather than using a credit card. d) A hungry person decides whether to eat one more slice of pizza.

A hungry person decides whether to eat one more slice of pizza.

Economists define an efficient use of resources as a situation where: A) one person can be made better off but only by making another person worse off. B) all persons can be made better off without making anyone worse off. C) all persons receive an equal share of the resources. D) all persons are made worse off when one person is made better off

A) one person can be made better off but only by making another person worse off.

Mr. Freezee operates a fleet of ice cream trucks that drive around neighborhoods selling ice cream. He is trying to decide whether he should buy another ice cream truck to add to his fleet. He determines that one more truck will add $750 to his revenue but that the truck will also increase his costs by $1,000. Based on marginal analysis, Mr. Freezee decides: A) that he should not purchase the truck, since the costs outweigh the benefits. B) that he should purchase the truck, since the benefits outweigh the costs. C) that he should purchase the truck, since his profits will rise by $250. D) to purchase several trucks with the same costs and benefits

A) that he should not purchase the truck, since the costs outweigh the benefits.

Economics is the study of how individuals choose to use scarce resources to fulfill their unlimited wants. Decisions require information. Advancements in technology have increased the speed at which information is spread. Choose the answer that describes the impact increased access to information has on an individual's ability to allocate scarce resources.Access to greater amounts of information increases an individual's ability to efficiently allocate scarce resources.Access to greater amounts of information decreases an individual's ability to efficiently allocate scarce resources.Access to information does not impact decision making.Access to smaller amounts of information increases an individual's ability to efficiently allocate scarce resources.

Access to greater amounts of information increases an individual's ability to efficiently allocate scarce resources.

Practice multiple choice questions and problems for chapter 1 (35 questions)

Answer Key Given on D2L

Practice multiple choice questions and problems for chapter 2 (35 questions)

Answers Given on D2L

Which of the following is the best definition of the opportunity cost of a decision? Actual financial cost of a decision. The difference between the benefits of the first and second best choices. Benefits from the best foregone alternative. The sum of all benefits from all foregone alternatives.

Benefits from the best foregone alternative.

Which is not an example of a resource? A) land B) labor C) capital D) production

D) production

One consequence of equilibrium is that when trying to figure out which checkout line at the college bookstore is the fastest: A) choose the line nearest the door. B) choose the line farthest from the door. C) choose the middle line. D) randomly choose a line—if one line were truly faster, everyone would move to it and it would no longer be faster

D) randomly choose a line—if one line were truly faster, everyone would move to it and it would no longer be faster

Which of the following is a decision that follows the net marginal benefit principle? Choosing to give up eating meat due to concerns regarding the treatment of animals. Deciding to order a dessert at a non-buffet restaurant more often than you have dessert at a buffet. Choosing among different roller coasters based on their distance from the theme park entrance. Deciding whether to spend one more hour studying for an exam

Deciding whether to spend one more hour studying for an exam.

What is the main problem addressed with scarcity? Determining how to address unlimited wants with limited resources. Ensuring that an adequate standard of living is achieved. Trying to satisfy the basic needs of everyone to eliminate poverty. Making sure that critical resources such as oil and forests are not depleted.

Determining how to address unlimited wants with limited resources.

Determine how the equilibrium price and equilibrium quantity in the market for coffee changes if the price of tea, a substitute for coffee, decreases, and due to better weather, the price of coffee beans also decreases.

Equilibrium price decreases. Equilibrium quantity may increase, decrease, or stay the same.

In Europe, the minimum wage has led to all of the following except:

European governments hiring the surplus of workers

Why is there no such thing as a completely "free" market? Scarcity dictates that one must give up something to get something else. Every market is subject to the restrictions imposed by those who have the authority to do so. Free markets do exist, since politicians talk about them all the time. The division of labor makes trade necessary.

Every market is subject to the restrictions imposed by those who have the authority to do so.

Determine which individuals face scarcity and which do not. the President of the United States factory workers chief executive officers babysitters Wall Street investors college students your professor children

Faces scarcity: All of the above

Sort the following items into boxes based on whether they are examples of monetary or fiscal policy. You are currently in a sorting module. Fiscal Policy Monetary Policy Increase taxes Decrease taxes Increase education spending Cut infrastructure spending Construct monuments like Mt. Rushmore Increase interest rates Increase the money supply Decrease interest rates

Fiscal Policy Increase taxes Decrease taxes Increase education spending Cut infrastructure spending Construct monuments like Mt. Rushmore Monetary Policy Increase interest rates Increase the money supply Decrease interest rates

(Table: Fish and Coconut Production Possibilities) Look at the table Fish and Coconut Production Possibilities. The table shows the maximum amount of fish and coconuts that Tom and Hank can produce if they produce only one good. Tom produces and consumes 9 fish and 2 coconuts, and Hank produces and consumes 3 fish and 2 coconuts. Now they decide to engage in trade. Which of the following statements is incorrect? a) For both to become better off, each should specialize in the production of some good. However, since Hank is equally productive in both goods, it doesn't matter which good each specializes in. b) After trade it is possible for Tom to consume 9 fish and 2.5 coconuts and for Hank to consume 3 fish and 2.5 coconuts. c) For both to become better off, each should specialize completely in the production of the good in which he has a comparative advantage. d) For each individual, the consumption point after trade will lie outside that individual's production possibility frontier.

For both to become better off, each should specialize in the production of some good. However, since Hank is equally productive in both goods, it doesn't matter which good each specializes in.

The graphs show the market labor supply (LS) curve for the country of Littleland. The two graphs show different shifts in the LS curve, from LS1 to LS2. Most of the items cause a shift in the labor supply (LS) curve. Place the statements under the graph that represents the appropriate shift.A. an increase in immigration from LittlelandB. an increase in immigration to LittlelandC. the government introduces a free childcare policyD. a decrease in the birthrateE. an increase in the birthrateF. decrease in equilibrium wage rateG. increase in equilibrium wage rate

Graoh A: B, C, D, G Graph B: A, E, F

Maynard, Jonny, Flea, and Sheila are trying to form a band. They each have some basic skills on most instruments, so their current plan is for each of them to rotate among vocals, guitar, bass, and drums. After a year of practice and rehearsals the band still sounds awful. Maynard cannot keep a steady beat when on bass or drums, Flea sounds terrible on everything except the bass, nobody except Jonny can remember all the chords on guitar, and even Sheila's own mother thinks her singing sounds like a dying cow. At their current rate, they expect it will be several years before they are good enough to land their first paid performance. None of them have enough money saved up to last that long. They all know you are taking economics and ask your advice. What would you say to them? Change the rotation to be random rather than equal to take advantage of heteroskedasticity. Continue with the current plan, as economies of scale should eventually kick in. Abandon the band, as continued practice is doomed to suffer diminishing marginal returns. Invest their remaining savings in new instruments, as they are at a point where the marginal product of capital exceeds the marginal product of labor. Have each member specialize in the role that they are best in to take advantage of benefits from specialization.

Have each member specialize in the role that they are best in to take advantage of benefits from specialization.

Opportunity costs are a large factor in individual decision-making. Please sort the statements according to whether or not they have an opportunity cost.

Having a "lazy afternoon." Working an 8 hour shift. Cooking dinner. Eating out. Reading your favorite book. Catching up with an old friend.

The last roll of sushi gave Enrique 20 units of utility and cost $5, while the last plate of sashimi gave Enrique 30 units of utility and cost $10. To maximize utility, how should Enrique change his consumption? He should consume more sushi and less sashimi. He should not change his consumption because sashimi, the more expensive good, is giving him more utility. He should consume less sushi and more sashimi. He should not change his consumption because his marginal utility per dollar is equal.

He should consume more sushi and less sashimi.

Which of the following would be most closely related to microeconomics? The effect of improving consumer confidence on economic growth. The extent to which people leaving the labor force affects unemployment. How rising wages affect the choice of working instead of going to school. How rising prices cause standards of living to fall.

How rising wages affect the choice of working instead of going to school.

Katherine has a physics exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Katherine decides to attend the lecture instead of studying for her exam. Which is a correct statement? a) Katherine's opportunity cost is the time spent getting to the lecture. b) Katherine's opportunity cost is the time spent listening to the lecture. c) Katherine's opportunity cost is the cost of getting to the lecture event itself plus the reduction in her physics exam grade by not studying tonight. d) Katherine's opportunity cost is not relevant, since no money is involved.

Katherine's opportunity cost is the cost of getting to the lecture event itself plus the reduction in her physics exam grade by not studying tonight.

Order each of the statements with regard to whether the economic activities in each statement are more market oriented (laissez-faire) or command oriented (centrally planned).

Market-oriented activities Buyers and sellers make all production and consumption decisions. The government attempts to induce certain production and consumption decisions using monetary incentives. The government regulates some production and consumption decisions. The government makes all production and consumption decisions. Command-oriented activities

Which is true of the minimum wage in the United States?The minimum wage acts as a binding price floor in the labor market in most cities.The living wage rate is set by the federal government while the minimum wage rate is set voluntarily by certain cities.Only about 1% of the United States population receives the minimum wage rate.Most countries have a lower minimum wage rate than the United States, relative to overall wage rates for that country. Which has been shown to be true in the United States about changes in the minimum wage rate?Changes in the minimum wage always have had some effect on employment.Changes in the minimum wage have historically had a small impact on employment.Because a large percentage of the United States population receives the minimum wage rate, changes in the rate tend to greatly impact the demand for low‑skilled workers.Changes in the rate tend to greatly impact the demand for high‑skilled workers.

Only about 1% of the United States population receives the minimum wage rate. Changes in the minimum wage have historically had a small impact on employment.

(Figure: Consumer Surplus I) Look at the figure Consumer Surplus I. If the price rises from P1 to P2, consumer surplus decreases by the area:

P1P2BF.

(Figure: The Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. If there were a binding price ceiling in the market for hybrid cars, one possible price would be equal to ________, consumers would demand ________, and producers would supply ________.

P3; Q3; Q1

Which of the following is not a reason why negative consequences can result from efforts to control prices? Controlling prices interferes with the forces of supply and demand. Manipulating price does not change the fundamental characteristics of supply and demand. Prices of goods, services, labor, and financial capital link different markets together; controlling one market can affect the nature of other markets. Market equilibrium indicates the optimal or efficient amount of goods, services, labor, or financial capital. Prices reflect the amount of profit that producers want to gain for providing goods, services, labor, or financial capital to the market.

Prices reflect the amount of profit that producers want to gain for providing goods, services, labor, or financial capital to the market.

For each example, determine how the market for the good in bolded text will respond to the described change. You are currently in a labeling module. Turn off browse mode or quick nav, Tab to items, Space or Enter to pick up, Tab to move, Space or Enter to drop. a. Due to increases in hay prices, an input for raising cattle, the price of a gallon of 2% milk increases from $2.98 to $3.25. b. A company offers a coupon for $6 off the price of laser tag. c. A sharp increase in the price of wood causes increases in prices for dressers and desks. d. At a week‑long special at the grocery store, pork shoulder is on sale at $1.99/lb, down from $3.99/lb .e. A website offers a buy‑one‑get‑one‑free special for digital music albums. Answer Bank quantity demanded remains unchanged quantity demanded increases quantity demanded decreases

QDD QDI QDD QDI QDI

The graph depicts two possible changes in the financial capital scenarios for country X. Note that point 0 is the initial condition, scenario A is represented by point A, and scenario B is represented by point B. In either scenario, either only supply or demand changes, whereas other factors remain stationary. Match each scenario with the possible cause or causes. A. The enthusiasm of foreign investors diminished for investing their money in this economy. B. A new usury law was passed C. Country X companies are certain that their investments will result in higher profits in the future D. Consumers are less confident that they will repay loans in the future

Scenario A- A Scenario B- D Not shown in graph - B and C

Sort the following scenarios according to whether they would cause a shift in the demand curve or movement along a demand curve.

Shift of the Demand Curve: Out-N-In, a burger joint with an absurd national following in the U.S., sells more burgers as the price of chicken increases. After it earns 1st prize in the spicy category of a ramen tasting competition, college students buy more Lamian brand ramen noodles. Movement Along the Demand Curve: Nettoyer raises the price for its laundry detergent, which results in less sales and strange scents around college dorm floors. Le Bureau et Chaise offers a one w weekend clearance sale on its old model of desks, which causes students to rush to upgrade their dorm furniture.

Sort the following scenarios into whether the change in quantity described is caused by a shift in the supply curve or movement along a supply curve.

Shift of the supply curve: More cans of tuna hit the shelves at all major grocers after it was discovered that flash steaming tuna before using mechanical processes to extract meat allows for the removal of more tuna flesh. Amplitude decides to join the smartphone market. Movement along the supply curve: Americans put up their gold and silver jewelry for sale as a result of rising prices. A local fight club supplies less of its premium quality soap as a result of lower prices.

In the graph of the labor market for high‑skill workers, move the appropriate curve or curves to reflect a change in technology that increases worker productivity and is a complement to labor. Then, complete the statement about the results of this change.

Supply: no shiftDemand: shift right Firms; increase; demand for, increase

When the price of a good on one's budget line decreases, how does this affect the budget line? The budget line pivots outward. There is a parallel shift outward. The budget line does not change. There is a parallel shift inward.

The budget line pivots outward.

Consider the market for iPods. What happens if a fantastic new alternative MP3 player is developed and at the same time a boat carrying a large shipment of iPods is attacked by pirates and sunk? a) Price decreases and quantity increases. b) Price increases and the change in quantity is indeterminate. c) The change in price is indeterminate and quantity decreases. d) Price increases and quantity increases.

The change in price is indeterminate and quantity decreases.

Consider the labor market for engineers specializing in microchip technology. What happens to the graph if the demand for microchips increases. What if, at the same time, the union for microchip engineers implements a policy forcing companies to only hire engineers with a doctorate degree?

The demand for microchips increasing will increase demand (shift to the right).The new union policy will decrease supply (shift to left)

Which of the following is likely to cause a rightward shift in the demand for home-delivered pizza? a) a lower price of pizza b) a higher price of pepperoni c) a larger population d) a lower price of fast-food hamburgers

a larger population

Suppose Indiana produces only steel and corn, with fixed amounts of land, labor, and capital resources. Which of the following best creates potential economic growth? a) The unemployment rate in Indiana rises from 5% to 6%. b) The percentage of Indiana residents with a college degree rises from 25% to 30%. c) The United States imports more and more low-cost steel from Asian countries. d) The Midwestern United States has a devastating drought

The percentage of Indiana residents with a college degree rises from 25% to 30%.

If an economy moves from a point on a production possibility frontier line to a point to the right of that production possibility frontier, what event might have occurred? The economy has recovered from a downturn and unemployment is dropping. The government has placed new restrictions on energy production. A tornado that has caused tremendous damage. There has been a discovery of new technology that expands production possibilities.

There has been a discovery of new technology that expands production possibilities.

Let's say that you are in the market to purchase an already built house. Sort the items below into the correct bin based on whether the statement reflects something you need to know in order to purchase a house. Things you need to know Things you don't need to know Your monthly income, expenses, and savings. The price of the house. How to place anchor bolts into the house's foundation. How to make the kitchen plumbing work. How to wire the house for electricity. How to keep the living room's color from clashing with the bathroom's.

Things you need to know Your monthly income, expenses, and savings. The price of the house. Things you don't need to know How to place anchor bolts into the house's foundation. How to make the kitchen plumbing work. How to wire the house for electricity. How to keep the living room's color from clashing with the bathroom's.

Why is the shape of the production possibilities frontier (PPF) often curved instead of straight? To take a potential sunk cost into account, the PPF is curved to distribute the burden of the sunk cost based on allocative effieciency. Because the production possibilities frontier is based on the productive capabilites, and of a nation overall, rather than the productive capacity of an individual. The productive efficiency of an economy decreases as it moves from left to right along the PPF. Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for.

Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for.

An inward shift in the U.S. economy's production possibility frontier could represent which of the following? a) U.S. economic growth b) U.S. economic growth as workers move to different states c) U.S. workers moving from New Jersey to Massachusetts d) U.S. workers moving to Canada

U.S. workers moving to Canada

Which of the following can result from overly burdensome regulations on markets? Underground economies that operate outside of the law. Lower cost of production of the regulated good or service. Stimulation of private enterprise within the regulated industry. Guaranteed availability of the regulated good or service.

Underground economies that operate outside of the law.

Which of the following questions would be studied in the area of microeconomics? Will an increase in government spending cause inflation? What portion of total spending comes from households? What determines the number of hours an individual works? Do interest rates affect net exports? Does hosting the Olympics decrease the unemployment rate?

What determines the number of hours an individual works?

The likely result of a price floor is:

a surplus of the good at a price above the market equilibrium price

Can a production possibility frontier ever shrink inwards? No, economic growth is always a positive value. No, but an economy can produce at a point inside of its PPF. Yes, if new regulations restrict a country's capacity to produce goods. Yes, if it has underutilized resources.

Yes, if new regulations restrict a country's capacity to produce goods.

Suppose that at a baseball game, you consumed three hot dogs (each priced at $5) and four sodas (each priced at $3). The third hot dog provided a marginal utility of 20, while the fourth soda provided a marginal utility of 15. Could you have maximized your utility with a different consumption bundle? No, you had maximized your utility. Yes, you should have consumed fewer of both hot dogs and sodas. Yes, you should have consumed more sodas and fewer hot dogs. Yes, you should have consumed more hot dogs and fewer sodas.

Yes, you should have consumed more sodas and fewer hot dogs.

Andrew, a college student, loves drinking coffee late at night to study for exams. Having no income, he is used to buying cheap, bad-tasting coffee, such as Beanlightened, that he needs to grind and brew himself. The coffee tastes putrid but, with enough cream and sugar, Andrew is able to tolerate it. Occasionally, he does go out to Starbucks when he has spare money. After graduation, Andrew gets a job working at a database firm as a programmer. His income is now a healthy $75,000 a year, and he decides he has had enough bad-tasting coffee. He ends up buying coffee daily from Starbucks, even though it costs significantly more than Beanlightened. Andrew's demand for Starbucks coffee changed as a result ofa change in the number of consumers.a change in income.a change in expectations.a change in technology.a change in a related good or service. Beanlightened coffee is for Andrew a(n) In economic terms, Starbucks coffee is for Andrew a(n)

a change in income. inferior good normal good

In the market for wheat, what would happen if the price of ethanol (which is made from corn) increases dramatically? a) an increase in supply of wheat b) an increase in demand for wheat c) a decrease in demand for wheat d) a decrease in supply of wheat

a decrease in supply of wheat

(Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price ceiling of $0.50 per can of soda, there will be:

a shortage of 3 cans.

When four roommates agree to specialize in the chores they are most efficient at, this can lead to: a situation in which less time is spent on chores by every roommate. some roommates doing many more chores than others. one roommate who is most efficient doing all of the chores. no chores getting done at all.

a situation in which less time is spent on chores by every roommate.

Table: The Market for Soda) Look at the table The Market for Soda. If the government imposes a price floor of $1.00 per can of soda, there will be:

a surplus of 3 cans.

If they spend all night writing computer programs, Laurence can write 10 programs while Carrie Anne can write 5. If they spend all night making sunglasses, Laurence can make 6 while Carrie Anne can make 4. Given this information and supposing Laurence and Carrie Anne have constant opportunity costs, we know that: a) Laurence has an absolute advantage in both programs and sunglasses. b) Carrie Anne has an absolute advantage in programs but not in sunglasses. c) Carrie Anne has an absolute advantage in both programs and sunglasses. d) Laurence has an absolute advantage in programs but not in sunglasses

a) Laurence has an absolute advantage in both programs and sunglasses.

Scarcity in economics means: a) We do not have sufficient resources to produce all of the goods and services we want. b) The wants of people are limited. c) There must be poor people in rich countries. d) Economists are clearly not doing their jobs.

a) We do not have sufficient resources to produce all of the goods and services we want.

A trade-off between equity and efficiency may exist because of all of the following except that: a) allocating resources fairly may cause efficiency. b) allocating resources fairly may cause inefficiency. c) an efficient allocation of resources may lead to an outcome that most people consider unfair. d) policies that promote equity often come at a cost of decreased efficiency.

a) allocating resources fairly may cause efficiency.

Roommates Sarah and Zoe are hosting a Halloween party and have to make food for their guests and costumes for themselves. To finish both tasks as quickly as possible, Sarah and Zoe know that each of them should focus on just one task, but they don't know who should do what. To decide which roommate should do the cooking, Sarah and Zoe should determine which roommate: a) has the comparative advantage in cooking. b) has the largest production possibility frontier in cooking. c) has the absolute advantage in cooking. d) can complete the cooking in the least amount of time.

a) has the comparative advantage in cooking.

If disequilibrium exists in a market: a) there will be opportunities available to people to make themselves better off. b) no individual will be better off doing something different. c) it must be because the government has intervened in the market, resulting in the market's failure to reach equilibrium. d) it will continue unless there is government intervention.

a) there will be opportunities available to people to make themselves better off.

When the economy suffers a downturn and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. Which of the following provides one possible explanation for this phenomenon? a) Air travel is a normal good and vacation travel by car is an inferior good. b) Air travel is an inferior good and vacation travel by car is a normal good. c) Air travel and vacation travel by car are complementary goods. d) Air travel and vacation travel by car are both normal goods.

a) Air travel is a normal good and vacation travel by car is an inferior good.

Of all the points in the diagram, ________ represents a situation where the opportunity cost of producing one more unit of Good X is highest.

a) Point A GREAT JOB! As an economy produces more of Good X, point A shows the greatest amount of Good Y that must be given up, as this is the point where the PPF is the steepest.

(Figure: The Supply of DVD Rentals) Look at the figure The Supply of DVD Rentals. A decrease in the price of DVDs sold by movie producers to rental stores would result in a change illustrated by the move from: a) n to o in panel A. b) p to q in panel B. c) u to v in panel D. d) s to t in panel C.

a) n to o in panel A.

(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose the technology for producing snowboards improves. Which panel best describes how this will affect the market for winter parkas, a complement of snowboards? a) panel A b) panel D c) panel B d) panel C

a) panel A

Suppose you have a choice between studying one more hour for your history exam or studying one more hour for your psychology exam. Your decision on what to study should be based on: a) the additional benefits of studying for each class. b) which class you like the most. c) how much time you have already studied for each class. d) your current average scores in each class.

a) the additional benefits of studying for each class.

Jon enjoys fishing (which costs $20) and golf (which costs $30) and has $140 to spend each month on these activities. Last month, Jon fished four times and golfed twice. The last fishing outing provided Jon a marginal utility of 50, and the last round of golf provided a marginal utility of 120. What is Jon's marginal utility per dollar spent on the last time fishing? What about the last round of golf?a) 𝑀𝑈𝑃MUP fishing = 2.5 and 𝑀𝑈𝑃MUP golfing= 4b) 𝑀𝑈𝑃MUP fishing = 4 and 𝑀𝑈𝑃MUP golfing= 2.5c) 𝑀𝑈𝑃MUP fishing = 0.4 and 𝑀𝑈𝑃MUP golfing= 0.25d) 𝑀𝑈𝑃MUP fishing = 0.25 and 𝑀𝑈𝑃MUP golfing= 0.4

a) 𝑀𝑈/𝑃 fishing = 2.5 and 𝑀𝑈/P golfing= 4

Select all examples of a market. the free‑agent signing period in the NFL where players hoping to sign with a team interact with teams looking for additional players the New York Stock Exchange Trader Joe's: a grocery store frequented by "foodie" types a local farmer's market

all of the above

From an economic context, select the correct definition of a market. the process of using advertising to convince potential buyers to purchase a product an institution that brings together buyers and sellers of goods or services an institution where stocks or bonds are purchased a place where groceries and other household items are bought and sold

an institution that brings together buyers and sellers of goods or services

A friend comes up to you and offers to give you a free ticket to the local professional team's baseball game that night. You decide to attend the game. The game takes five hours and costs you $15 for transportation. If you had not attended the game, you would have worked at your part-time job for $8 an hour. What is the cost to you of attending the game? a) $40 b) $55 c) $65 d) The cost is zero—the ticket is free.

b) $55

(Figure: Wine and Wheat) Look at the figure Wine and Wheat. What is the opportunity cost of moving from only producing wheat to producing at point D? a) 9 tons of wheat b) 3 tons of wheat c) 6 tons of wheat d) 15 tons of wheat

b) 3 tons of wheat

(Figure: Producer Surplus III) Look at the figure Producer Surplus III. If the price of the good is $4, producer surplus will equal:

b) $80.

Each month, you have $15 to spend on toys and treats for your cat. Cat toys cost $3 each, and cat treats cost $1.50 each. Which of the following combinations of toys and treats would appear on your budget line? a) 5 cat toys and 10 cat treats b) 3 cat toys and 4 cat treats c) 2 cat toys and 5 cat treats d) 1 cat toy and 6 cat treats

b) 3 cat toys and 4 cat treats

(Figure: Shifts in Demand and Supply III) Look at the figure Shifts in Demand and Supply III. The figure shows how supply and demand might shift in response to specific events. Suppose a spring frost destroys one-third of the nation's artichoke crop. Which panel best describes how this will affect the market for mayonnaise, which is a complement to artichokes? a) panel A b) panel D c) panel B d) panel C

b) panel D

One of the consequences of the minimum wage has been:

b) workers offering to work off the books for less than the minimum wage.

Suppose the accompanying graph depicts the labor market for bullet train conductors. Initially, the market was in equilibrium at the intersection of the demand curve and the initial supply curve, S1. Then, suppose that more people have chosen to train as bullet train conductors which causes the supply curve to shift right to a new location , S2. Suppose that, simultaneously, you observe an increase in the wages of bullet train conductors. On the graph, demonstrate how the labor demand curve must have changed so that conductors' wages increased. If, in general, all high-skilled industries have also performed in a similar way, of the following predictions, which is the most likely to occur? A government tax increases to subsidize salaries of traditional train conductors. An increase in union membership. An increase in the retirement age. An increase in income inequality.

blue line all the way to the right An increase in income inequality

In the graph, place the usury line at a location that indicates a binding usury law.

bottom dot straight across

If the price of gasoline falls and stays low for an extended period, we expect people to: a) reduce their reliance on gasoline-powered cars. b) buy larger and less fuel-efficient cars. c) use more public transportation. d) ride bicycles.

buy larger and less fuel-efficient cars.

(Figure: Market for Hybrid Cars) Look at the figure The Market for Hybrid Cars. What area represents deadweight loss if there is a binding price floor at P1?

c + e

Which of the following principles underlie the economics of individual choices? a) Markets move toward equilibrium. b) Resources should be used as efficiently as possible to achieve society's goals. c) People usually exploit opportunities to make themselves better off. d) There are gains from trade.

c) People usually exploit opportunities to make themselves better off.

(Figure: Bicycles and Radishes I) Look at the figure Bicycles and Radishes I. It shows production possibility frontiers for two countries that produce only radishes and bicycles. The axes of both graphs are measured in equivalent units. Country A is now operating at point M, and country B is now operating at point N. Suppose country A discovered a new technology that greatly increased its ability to produce bicycles. This would: a) have no effect on the opportunity cost of producing radishes in country A. b) lower the opportunity cost of producing radishes in country A. c) increase the opportunity cost of producing radishes in country A. d) increase the opportunity cost of producing radishes in country B.

c) increase the opportunity cost of producing radishes in country A.

(Figure: Wine and Wheat) Look at the figure Wine and Wheat. If this economy is producing at point A and it wants to produce at point B, it needs to: a) decrease production. b) increase its resources. c) use its existing resources efficiently. d) trade with another country.

c) use its existing resources efficiently.

Table: The Market for Chocolate-Covered Peanuts) Look at the table The Market for Chocolate-Covered Peanuts. A surplus of 210 bags of chocolate-covered peanuts exists if the price is ________ per bag. a) $0.80 b) $0.40 c) $0.90 d) $0.60

c) $0.90

Which phrase do we use to indicate that we are trying to study the relationship between two variables while the values of all other variables are held unchanged? ceteris paribus de facto et cetera quid pro quo Why is this restriction so useful in economic analysis? If every variable is allowed to change, it would be impossible to isolate the impact of one variable on another. Because one of the two variables might have a larger impact on a third variable than the other one being examined. If other variables that do not interact with these two variables are not held fixed, the true relationship between the two variables would be hidden. To fully understand the relationship between two variables, it is necessary to change each of the variables sequentially while holding the others constant.

ceteris paribus If every variable is allowed to change, it would be impossible to isolate the impact of one variable on another.

Which of the following words best describes what economics is about? Choices Growth Money Happiness

choices

Table: Coffee and Salmon Production Possibilities II) Look at the table Coffee and Salmon Production Possibilities II. This table shows the maximum amounts of coffee and salmon that Brazil and Alaska can produce if they just produce one good. Brazil has a comparative advantage in producing: a) both coffee and salmon. b) neither coffee nor salmon c) coffee only. d) salmon only.

coffee only.

Match the economic system with the correct description. North Korea is a country ruled by the dictator Kim Jong‑un. All resources in the economy are owned by the state and allocated based on his wishes. Australia's economy is marked by the private ownership of resources, along with prices directing their allocation. The economy of a small village in the Amazon rainforest is based on past methods of production and tradition. command economy market economy traditional economy

command economy market economy traditional economy

You are analyzing a trade-off when you compare the ________and ________ of doing something. a) direct costs; opportunity costs b) marginal benefits; total benefits c) costs; benefits d) direct costs; total costs

costs; benefits

Which of the following demonstrates how people respond to incentives to make themselves better off? a) Students and faculty are encouraged to wear college apparel to support the college athletic teams. b) Students are assigned dorm rooms through a lottery system. c) Students are encouraged to donate blood because it is the "right thing to do." d) More students major in economics when they hear that salaries for economists are rising.

d) More students major in economics when they hear that salaries for economists are rising.

If the state government allocates additional spending on education, the opportunity cost is: a) zero. b) considered only if additional taxes need to be raised to fund the spending. c) the dollar amount of the additional spending. d) measured in terms of the best alternative uses for that money.

d) measured in terms of the best alternative uses for that money.

Mountain River Adventures offers whitewater rafting trips down the Colorado River. It costs the firm $100 for the first raft trip per day, $120 for the second, $140 for the third, and $160 for the fourth. If the market price for a raft trip is $150, Mountain River Adventures will offer ________ trips per day and will have producer surplus equal to ________.

d) 3; $90

Which of the following situations represents an economic problem? a) A student trying to decide how to spend his weekly allowance. b) A country choosing to sacrifice some privacy in order to gain more security. c) Neither situation is an example of an economic problem. d) Both situations are examples of an economic problem.

d) Both situations are examples of an economic problem.

In much of the country, homeowners choose to heat their houses with either natural gas or home heating oil. Which of the following would cause a change in the demand for natural gas? a) a change in the price of home heating oil b) a change in income c) an increase in consumer tastes for natural gas as an energy source d) all of the above

d) all of the above

If goods A and B are substitutes, a decrease in the price of good B will: a) increase the demand for good B and decrease the demand for good A. b) increase the demand for good A. c) increase the demand for good B. d) decrease the demand for good A.

d) decrease the demand for good A.

Suppose you are trying to understand the effect that an increase in the price of grapes will have on the market for wine. An effective model to determine this effect is one that evaluates the change in the price of grapes on the market quantity of wine assuming: a) buyers' incomes also change. b) buyers' preferences and incomes also change. c) some wines use different grapes. d) no other change takes place.

d) no other change takes place.

Suppose you and your roommate have the following agreement when it comes to cleaning your apartment: each person washes her or his own dishes after each meal. The principle of trade you just learned tells you that it would be more efficient if: a) both of you wash your own dishes after each meal. b) neither of you wash the dishes after eating. c) each of you wash half of all the dirty dishes. d) one of you wash all the dishes while the other does a different chore.

d) one of you wash all the dishes while the other does a different chore.

(Figure: Shifts in Demand and Supply) Look at the figure Shifts in Demand and Supply. The graph shows how supply and demand might shift in response to specific events. Suppose a new machine is developed that allows restaurants and fast-food outlets to produce french fries at a lower cost. Which panel best describes how this will affect the market for french fries? a) panel C b) panel D c) panel B d) panel A

d) panel A

Tyrone has three options on how to spend his Saturday afternoon: to go out with friends, watch a movie, or wash his car. Tyrone's opportunity cost of washing his car would be:

d) the value of going out with friends OR watching a movie.

For which of the following decisions is marginal analysis least beneficial? deciding whether to do more sit-ups at the gym deciding whether to take a lunch break or knock on another door as a door-to-door salesperson deciding which college to attend deciding how fast to go on the freeway deciding between watching another episode of your favorite TV series and going to bed

deciding which college to attend

Consider the supply curve for cotton shirts. An increase in the price of cotton will: a) increase the quantity supplied of cotton shirts. b) decrease the demand for cotton shirts. c) decrease the supply of cotton shirts. d) increase the supply of cotton shirts.

decrease the supply of cotton shirts.

In the market for local coffee, the price will ________ and the quantity will ________ if new coffee shops open and consumers' incomes decrease due to a recession. a) be indeterminate; increase b) decrease; be indeterminate c) be indeterminate; decrease d) increase; be indeterminate

decrease; be indeterminate

The law of diminishing marginal utility means that that as person receives more of a good, the added utility from each additional unit decreases. stays the same. increases. is negative.

decreases

The figure shows the supply and demand for online music. Suppose that an economic downturn decreases household wealth and erodes consumer confidence. Move the supply and/or demand curves to reflect the primary effect this would have on the market for online music. You can assume that online music is a normal good. Also select the end result of equilibrium price and quantity. Equilibrium price increases.decreases.remains constant.change is ambigous. Equilibrium quantity increases.decreases.remains constant.change is ambiguous.

decreases decreases (move demand curve down and to the left)

Suppose the cost of lithium-ion batteries, an input into the production of electric vehicles, has dropped more steeply than expected. The accompanying graph depicts a market for electric vehicles. Demonstrate the effect of a reduction in the price of lithium-ion batteries by adjusting the accompanying diagram. Market for Electric VehiclesPrice ($)QuantityDS Equilibrium price may increase or decrease, but it is impossible to now for sure.does not change.decreases.increases. Equilibrium quantity does not change.decreases.may increase or decrease, but it is impossible to now for sure.increases.

decresases increases (move supply line down to the right)

What key economic concept is the graph demonstrating? comparative advantage economies of scale opportunity costs absolute advantage

economies of scale

The price that results when quantity demanded equals quantity supplied is most correctly called the equitable price .non-surplus price. stable price. equilibrium price. A surplus exists when quantity demanded exceeds quantity supplied. when quantity supplied exceeds quantity demanded. anytime the market is out of equilibrium. at the market clearing price.

equilibrium price when quantity supplied exceeds quantity demanded

The accompanying production possibilities table shows the combinations of space missions and school classrooms that can be produced by the nation of Northumbia. Using the information in the table, move points A, B, C, and D order to graph Northumbia's production possibilities curve.

graph the table: x-axis is space missions y-axis is classrooms

Hugo Chávez is the president of Venezuela. Venezuela is a major producer of oil products, which remain the keystone of Venezuela's economy. Suppose President Chávez enacts a government policy that reduces the customer price of gasoline sold at state-owned gas stations to 50% of the previous price. In theory, this policy will result in the quantity of gasoline demanded to be ________ the quantity of gasoline supplied.

greater than

An economic theory seeks to explain and predict real‑world outcomes, often within the context of a formalized mathematical model. Which statement is a major reason why such a theory may not be successful in this pursuit?The economy is far too complex to be accurately described by a simplified theory.The mathematical techniques needed to express the theory have not been developed.The difficulty in gathering data on economic phenomena leaves economists to propose their theories "in the dark."The model's assumptions are unrealistic and do not adequately describe how agents behave in the real world.

he model's assumptions are unrealistic and do not adequately describe how agents behave in the real world.

Identify whether the given items are examples of imports, exports, or neither. Assume the United States is considered the domestic country. Heath lives in the United States and purchases a video game produced in Japan.neitherexportimport Tanesha lives in Tennessee and buys an orange grown in Florida.exportimportneither A Chinese consumer purchases a television produced in China.importexportneither A farmer in Iowa sells corn to a food processing plant in China.exportimportneither ConocoPhillips drills for oil in the United States and sells this oil to refineries in Brazil and Mexico.exportimportneither

heath- import tanesha- neither chinese consumer- neither farmer- export conocophillips- export

Christine has a linear demand curve for candy. If she wants to see her consumer surplus ________, she would like to see a ________ in the market price of candy.

increase; decrease

Suppose you have a very efficient study system. Then, as you increase the hours that you study for an economics exam, the opportunity cost of studying for the exam: stays the same. increases. decreases. may increase or decrease.

increases

Suppose the market for dodgeballs is competitive and in equilibrium. What will happen in the market if: games using dodgeballs become hugely popular the price of rubber, an input into the production of dodgeballs, increases Assume that all dodgeballs are made of rubber and there are no close substitutes. The competitive equilibrium price changes ambiguously increases decreases The competitive equilibrium quantity decreases changes ambiguously increases

increases changes ambiguously

Stone and brick are substitutes in home construction. Consider the market for bricks depicted in the graph. Suppose the price of stone increases due to new regulations for the stone quarrying industry. Illustrate the impact this will have on the market for bricks. Market for BricksPriceQuantityDS Equilibrium price may increase or decrease, but it is impossible to know for sure.remains constant.increases.decreases. Equilibrium quantity may increase or decrease, but it is impossible to know for sure.remains constant.decreases.increases.

increases increases (move demand curve up and to the right)

Price controls encourage black markets because:

individuals can profit by illegal exchanges.

Assume that you buy non-refundable tickets to a baseball game for $40. After the 3rd inning, your team is losing 20-0, and you are no longer enjoying the game. You realize that if you left the game, you could go to work early and pickup an extra $25. Should you leave or stay at the game? Not enough information Stay because you paid $40 Leave and work

leave and work

When trading with more developed countries,less developed countries have a comparative advantage in the production of all goods or services.less developed countries do not have a comparative advantage in the production of any goods or services.less developed countries have a comparative advantage in the production of some goods or services.

less developed countries have a comparative advantage in the production of some goods or services.

If an economy has not achieved efficiency, there must exist ways to: a) increase the incentives for its citizens to follow their own self-interest. b) eliminate inequity. c) make some people better off without making others worse off. d) increase opportunity costs.

make some people better off without making others worse off.

The economic way of thinking uses: a) making choices at the margin. b) making the distinction between microeconomics and macroeconomics. c) the analysis of costs but not benefits. d) the analysis of benefits but not costs.

making choices at the margin.

Some baseball fans leave the game in the seventh or eighth inning to avoid the post-game traffic. The fans are: a) underestimating the value of staying for the rest of the game. b) not considering they have already paid the cost of their tickets. c) thinking only about the benefits of avoiding traffic. d) making marginal decisions by comparing the cost of leaving early to the benefit of leaving early.

making marginal decisions by comparing the cost of leaving early to the benefit of leaving early.

Each scenario illustrates a principle of economics. Classify each scenario according to the principle that best fits it. a. An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. The company compares how much adding another worker will improve the product to the additional cost. b. Ava finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time. c. On Black Friday, there are huge sales for electronics at many retail stores. David must decide between buying a camera at one store or a flat screen TV at another store, and buying one means losing out on the ability to purchase the other.

marginal decisions/ resource scarcity/ opportunity cost

The graph of a labor market is shown. Place the endpoints of the minimum wage line to indicate a binding minimum wage in this market.

minimum wage at top

Select the best choice that completes each sentence. statements say something about how the world ought to be. statements say something that describes how the world currently is.

normative/ positive

Zoe's grandparents are excited about finally paying off their mortgage, because, as they say, "Our cost of housing is now zero." Zoe should explain to them the economic principle of: a) opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference. b) efficiency: if their cost of housing is now zero, they should let Zoe move in without charging her any rent. Zoe is better off, and her grandparents aren't hurt. c) marginal analysis: if the additional cost of housing is zero, then their additional benefit is also zero. d) equity: it is unfair that some people are still paying off their mortgage.

opportunity cost: by living in the house, they are giving up the opportunity to sell the house, buy a smaller one, and pocket the difference.

identify whether each of the following statements are positive or normative.

positive statement: The unemployment rate in 2009 was lower than it was in 2018. The unemployment rate in 2009 was higher than it was in 2018. If a company pays closer attention to its opportunity costs, this should result in higher profits. normative statement: The price of oil should be increased because burning it has a negative impact on the environment. Economics courses ought to increase the amount of positive content they cover. It is right for the government to continue to financially support third world countries through foreign aid programs.

In a competitive market, all of the choices along the production possibility frontier display ________________ efficiency, while the specific choice on the frontier that society picks is the one with _______________ efficiency. productive; allocative allocative; productive allocative; allocative productive; productive

productive; allocative

You see a large group of stranded passengers standing next to a disabled bus, and you have only three seats in your car. You have to decide which three passengers to rescue because of: scarcity. trade. macroeconomics. efficiency.

scarcity

When an economic model is used, it tends to: start with many details and then become simpler over time. start with very few details in order to simplify the model. use a case study approach by focusing on one specific real-life example. include many caveats to ensure that the model is realistic.

start with very few details in order to simplify the model.

Consider the maximum amount of a product that sellers are willing and able to provide for sale over a relevant range of prices, holding all other factors constant. Economists call this profit maximization. supply. maximal output. sales volume. When the market price of a good increases, the amount that sellers are willing to offer for sale increases. Economists call this the price-quantity principle. the maximal quantity curve. the law of supply. the law of large numbers.

supply the law of supply

A county's labor market is depicted in the graph below. The government believes that college students are not receiving enough real world experience before graduating. The government decides to pay for the final two years of college for any student who works at least part-time while attending college. Change the graph below to demonstrate the government subsidy's impact on the labor market.

supply will increase demand stays the same

Suppose the graph represents the labor market for low wage workers.A minimum wage of $8 per hour is being considered.1. If imposed, the minimum wage will result in a...A. SurplusB. Shortage2. ofA. 200 workersB. 100 workersC. 300 workersD. 0 workers

surplus 200 workers

Select the correct definition of the term "comparative advantage."a nation offering more favorable trade policy with its allies than with other countriesthe ability to produce a good or service at a higher opportunity cost than anotherthe ability to produce more of a good or service than another over a specified time periodthe ability to produce a good or service at a lower opportunity cost than anotherthe ability to produce less of a good or service than another over a specified time period

the ability to produce a good or service at a lower opportunity cost than another

Daniel is a baker who has decided to create his own brand of chain restaurants, Short and Sweet. He negotiates with three suppliers for weeks and ultimately signs contracts with these suppliers. Francis, who owns a new sugar plantation, agrees to sell Daniel freshly refined sugar on the condition that Daniel helps him advertise his brand of sugar. Diana runs an orchard and provides Daniel with fruit. She enters into the partnership knowing that she can dramatically increase her profits if she can sell fruit to Daniel. Lastly, Ryan, who owns a mill, decides to purchase a new piece of machinery so that he can sell Daniel flour at a lower price than his competitor. The end result of Daniel's interactions with his suppliers is that folks in his neighborhood have a chance to buy delicious baked goods at reasonable prices. Daniel's situation with his suppliers is an example ofa command economy.the invisible hand.market failure.a recession.

the invisible hand

a. Producer surplus is the difference between the market price and the minimum price a buyer is willing to pay. the market price and the minimum price a seller is willing to accept. the maximum price a seller is willing to accept and the market price. the maximum price a buyer is willing to pay and the market price. b. Producer surplus is shown graphically as the area under the demand curve and below the market price. above the supply curve and below the market price. above the supply curve and above the market price. under the demand curve and above the market price.

the market price and the minimum price a seller is willing to accept. above the supply curve and below the market price.

a. Consumer surplus is equal to the difference between the maximum price a seller is willing to accept and the market price. the minimum price a seller is willing to accept and the market price. the maximum price a buyer is willing to pay and the market price. the minimum price a buyer is willing to pay and the market price. b. Consumer surplus is shown graphically as the area under the demand curve and below the market price. above the supply curve and below the market price. above the supply curve and above the market price. under the demand curve and above the market price.

the maximum price a buyer is willing to pay and the market price. under the demand curve and above the market price.

The law of supply explains the positive relationship between price and quantity demanded. the negative relationship between price and quantity demanded. the negative relationship between price and quantity supplied. the positive relationship between price and quantity supplied.

the positive relationship between price and quantity supplied.

Demand is best described as the quantity of a good or a service that people will offer for sale at different possible prices. the total satisfaction that consuming a good provides people at different prices. the quantity of a good or a service that people are willing and able to purchase at different possible prices. the additional satisfaction derived from a quantity of goods and services obtained when income increases. the quantity of a good or service that consumers will substitute when the price of a good changes. The law of demand says that as the price of a good increases, buyers are willing and able to purchase less. higher prices cause less demand. buyers demand lower prices. higher prices cause buyers to demand more. as the price of a good decreases, buyers are willing and able to purchase less. In a market economy, there is _______ relationship between the price of a good and the amount of a good that buyers are willing and able to purchase.

the quantity of a good or a service that people are willing and able to purchase at different possible prices .as the price of a good increases, buyers are willing and able to purchase less. an inverse or negative

Utility is the measure of

the relative satisfaction, enjoyment, or contentment a person receives from consuming a good or service.

In the market for financial capital, the demand for financial capital comes from savings, and the supply goes to making loans. those who demand financial capital receive interest on loans. those who supply financial capital pay interest on loans. the supply of financial capital comes from savings, and the demand goes to making loans.

the supply of financial capital comes from savings, and the demand goes to making loans.

The price of gasoline is $2.50 per gallon at the closest gas station, but is only $2.30 per gallon at a gas station two miles away. By driving to the farther gas station, the opportunity cost is: non-existent because gas is cheaper at the farther station. the cost of filling one's tank at the original price of $2.50 per gallon. the value of one's time and expenses to go to the farther gas station. $0.20 per gallon, the difference in price between the two gas stations.

the value of one's time and expenses to go to the farther gas station.

Determine if the statements are true or false. a. Along a particular budget line, the prices faced by the consumer and the consumer's income are held constant. b. The budget line shows possible production bundles. c. Judi has $50$50 to spend. If movies cost $8$8 and books cost $5$5, Judi can purchase five movies and three books. d. A budget line slopes downward because, to buy more of Good 1, a consumer has to buy less of Good 2. e. The budget line depicts the combinations of two goods a consumer can buy given her income and the current prices.

true/false/ false/ true/ true

Because of scarcity: choices are unlimited. resources are limitless. wants are limited. we face tradeoffs in nearly every choice we make.

we face tradeoffs in nearly every choice we make.

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is: a) zero—the tickets were free. b) whatever Khalil would have done had he not gone to the opera. c) the price listed on the ticket or whatever Khalil would have done had he not gone to the opera. d) the price listed on the ticket.

whatever Khalil would have done had he not gone to the opera.

Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is: a) whatever she would have earned had she not been in college. b) whatever she would have purchased with the $10,000 instead. c) whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college. d) $10,000.

whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college.

Place the answer options in the associated axes of the graph so that it reflects the major components of the financial capital market. There is more than one correct answer for each axis, but not all of the answer options will be used.

x axis- quantity of money borrowed/ invested y axis- interest rates/ rate of return