Economics Final
The table represents a demand curve faced by a firm in a competitive market. Refer to table 14-2. For this firm, the marginal revenue from selling the 3rd unit is
$3
Refer to figure 3-2. If the production possibilities frontier shown is for 32 hours of production, then how long does it take Peru to make one pound of cashews?
2/15 hour
What is the increasing opportunity cost of increasing the production of rye from 700 bushels to 1200 bushels?
500 bushels of corn
In the short run, which of the following rates of growth in the money supply is likely to lead to the lowest level of unemployment in the economy?
8% a year
The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to a desirable market outcome comes from whose 1776 book?
Adam Smith
Refer to Table 4-9. Which combination would produce an increase in equilibrium quantity and an indeterminate change in equilibrium price?
B (decrease in supply, increase in demand)
Senator Fujita argues that replacing the federal income tax with a national sales tax would increase the level of output. Senator Watson objects that this would benefit the rich at the expense of the poor.
Senator Fujita's argument is primarily about efficiency, while Senator Watson's argument is primarily about equality
Refer to figure 4-19. If there is currently a shortage of 20 units of the good, then the law of
Supply and demand predicts that the price will rise by $2 to eliminate the shortage
Trade between countries
allows each country to consume at a point outside its production possibilities frontier
Which of the following might cause the demand curve for an inferior good to shift to the left?
an increase in the price of a complement
In a market economy, supply and demand determine
both the quantity of each good produced and the price at which it is sold
If a seller in a competitive market chooses to charge more than the going price, then
buyers will make purchases from other sellers
Which of the following statements about comparative advantage is NOT true?
comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources
Making rational decisions at the margin means that people
compare the marginal costs and marginal benefits of each decision
The unique point at which the supply and demand curves intersect is called
equilibrium
In a market economy, who makes the decisions that guide most economic activity?
firms and household
Central planning refers to
government guiding economic activity. Today many countries that had this system have abandoned it
If farmer Brown plants no seeds on the farm, he gets no harvest. If he plants 1 bag of seeds, he gets 5 bushels of wheat. If he plants 2 bags, he gets 9 bushels of wheat. If he plants 3 bags, he gets 12 bushels. A bag of seeds costs $120, and seeds are his only cost. Refer to Scenario 13-14. Farmer Brown's total-cost curve is
increasing at an increasing rate
If the demand for a good falls when income rises, then the good is called a(n)
inferior good
The term used to describe a situation in which markets do not allocate resources efficiently is
market failure
If Max experiences a decrease in his income, then we would expect Max's demand for
normal goods to decrease
When recommending specific policies to undertake, economists make
normative statements
Production at point Q is (point Q is inside the production line, not on it)
possible but inefficient
The law of demand states that, other things equal, when the price of good
rises, the demand for that good falls
Which of the following industries has a marginal cost that is close to zero?
software
Economics is the study of how society manages its
unlimited wants and limited resources
If a shortage exists in a market, then we know that the actual price is
below the equilibrium price, and quantity demanded is greater than quantity supplied
