Economics Chapter 1-3

Managerial economics is considered part of the ____ discipline

social science

Efficiency means that

society is getting the maximum benefits from its scarce resources

There are two universities,A and B, in a city. Tuition rises at University A and, as a result, the demand for attending University B rises. It follows that educational services at the two universities are

substitues

The law of diminishing marginal utility

tells us that an additional dollar of income is worth less than the preceding dollar of income

People(and all resources)

tend to specialize in those activities in which their opporuntity costs are minimized

In economics, the term marginal refers to?

the change or difference from a current situation

Demand refers to

the different quantities of a good people are willing and able to buy at a different prices

what do you mean by the term "free market"

the process whereby buyers and sellers voluntarily interact or trade without any interference or restrictions

when an economist talks about utility, she is talking about

the satisfaction that results from the consumption of a good

_____ is measure of the total satisfaction derived from consuming a quantity of some good or service

total utility

_______ is the measure of the total satisfaction derived from consuming a quantity of some good or service

total utility

On the production possibilities frontier shown, points that are located OUTSIDE the curve are?

unattainable and efficient

Choices need to be made because of all of the following, expect limited

wants

Major macroeconomic questions include all of the following EXCEPT

what causes differences in wages between men and women?

Opportunity Costs best described as

what must be given up to get more of something else

Points located outside a production possibilities curve (PPC) represent

where production is possible, but after utilizing other available resources

When the price of a goos is $5, the quantity demanded of a good is 30 units, and the quantity supplied of the good is 50 units. For every $1 decrease in the price of the good, quantity demanded rises by 5 units and quantity supplied falls by 5 units. The equilibrium price of this good is ______ and the equilibrium quantity of this good is _____ units

3,40

Which of the following resources are considered factors of production

Entrepreneurship Land Capital labor

The demand to attend a certain college is represented by a downward-sloping demand curve. The supply of spots at the college is represented by vertical supply curve.At the tuition that students are charged, there is a shortage of spots at the college rises, but the tuition stays constant, it follows that the

GPA required to attend the college will probably rise

Which of the following is related to the concept of trade-off used in economics

Giving up one good or activity in order to obtain some other good or activity

Major macroeconomic questions include the following EXCEPT

How do monopoly firms set prices and determine quantities to produce

Which of the following actions is most likely to cause a rightward shift in a production possibilities curve (PPC)

Increasing the technological know how to used in production

Which of the following would be studied by macroeconomists?

Inflation in developing countries

Which of the following illustrates the law of demand

Jorge buys fewer pencils at $2 per pencil than at $1 per pencil, ceteris paribus

In economics, the concept opportunity cost is

defined to be the highest-valued alternative that must be forgone when a choice is made

If potential buyers of goods X expect the price of good X will soon fall, then the current

demand for good X will fall

Good Y is an inferior good. If the average income of those who but good Y rises, the ______ curve for good Y will shift ____ resulting in a(n) ______ in the equilibrium price of Y and a(a)n _____ in the equilibrium quantity of Y .

demand, leftward, decrease, decrease

Good X is a normal good. If the average income of those who buy good X rises, the _____ curve for good X will shift _____ resulting in a(n)____ in the equilibrium price of X and a(n) ____ in the quantity of X.

demand; rightward; increase; increase

One reason that helps to explain the law of demand is the law of

diminishing marginal utility

A combination of two goods which lies beyond the production possibilities curve indicates

a combination that cannot be produced with existing resources

A point inside a nation's production possibilities curve can represent

a recession

Opportunity cost is best defined as the

highest-valued alternative given up when a choice is made

if the price of a goof or service falls, then the demand curve for a complementary good or service will?

increase

The slope of the normal demand curve is

negative

If the demand for computer software rises as incomes rise, then computer software is a

normal good

When people make choices that (at the time and with the info they have at their disposal) give them the greatest amount of satisfaction, they are said to be

acting in their own self- interest

The market demand curve is derived by

adding up the quantities that consumers in a market are willing and able to purchase at each price

The major economic problem is to

allocate limited resources among unlimited uses

An economy's resources

are limited in quantity

A good or service is said to be scarce when

at a price of zero is not enough to satisfy everyones desire for it

To an economists, scarcity means that

at a zero price, the available quantity of a good is insufficient to meet people's wants.

On the production possibilities frontier shown, points that are located ON the curve are?

attainable and efficient

On the production possibilities frontier shown, points that are located INSIDE the curve are?

attainable and inefficient

The reward for land as factor of production

rent

the reward for land as a factor production is

rent

A point outside the production possibilities curve (PPC)

represents more resources than are currently available

Utility is most closely defined as _____

satisfaction

A demand schedule is a numerical tabulation of the ___ of a good at different

quantity demanded, prices

what does the study of economics deal with?

- How goods are produced -Scarcity -How goods are exchanged -How goods are exchange

When the price of a good is $65, the quantity demanded of a good is 80 units, and the quantity supplied of the good is 40 units. For every $10 increase in the price of this good, quantity demanded falls by 10 units and quantity supplied rises by 10 units. The equilibrium price of this good is ______ and the equilibrium quantity of this good is _____ units

85, 60

Which of the following best describes a tradeoff

A college student sacrificing a few hours of study study time to work at the town cafeteria

Which of the following will bring about an inward shift of production possibilities curve (PPC)

A decrease in the availability of natural resources

Which of the following will result in an outward shift of the production possibilities curve (PPC)

An improvement in the quality of resources

If price is on the vertical axis and quantity demanded is on the horizontal axis, why is a demand curve downward sloping (left to right)

Because a demand curve is the graphical representation of the law of demand, which specifies an inverse relationship between price and quantity demanded, ceteris paribus

What is the best way to describe the differences between microeconomics and macroeconomics?

Microeconomics focuses on the spending behavior and resource allocation decisions of individual households and business, while macroeconomics deals with all resource- allocation decisions in an economy

A good whose demand increases as income increases is a

Normal good

When economists seek to provide insight into how policy changes should be implemented on the basis of the value judgment, this is an example of what kind of economics?

Normative Economics

what accounts for specialization

People specialize in the activity in which their opportunity costs are lowest

_____ is the number of units that individuals are ____ to buy at a particular price during some time period

Quantity demanded; wiling and able

Which of the following is a macroeconomics topic?

The economy's annual growth rate

Which of the following is not microeconomic subject matter?

The national economy's annual rate of growth

The study of decision making that assumes people are rational in a board sense, even if they do not have complete and perfect info is called _____

behavioral economics

human wants

can never be completely satisfied

A factory is an example of

capital

The law of demand states that price quantity demanded are

inversely related, ceteris paribus

An example of opportunity cost

is the Chinese food that gave up when you chose to eat Italian food

A skilled worker is an example of

labor resources

Oil found underground in Texas is an example of

land or natural resources

Economists believe that scarcity forces everyone to?

make choices

The basic difference between macroeconomics and microeconomics?

microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy

The phrase in the text" human beings are self- interested, not selfish" means that

people contribute to charities and they help others.

The term self-interest, as view by economists, means that

people make choices that, given the information available, gives them the greatest amount of satisfaction

One major reason for the law of demand is that

people substitute relatively lower- priced goods for relatively higher- priced goods

The law of demand states that ____ and quantity demanded are _____ related, ceteris paribus

price, inversely