Exam 1

Suppose a university raises its tuition by 8 percent and as a result the enrollment of students decreases by 4 percent. The absolute value of the price elasticity of demand is

0.5

It is impossible to:

Avoid fixed costs in the short run.

If the price of battery-powered flashlights falls and the demand for flashlight batteries rises, then flashlights and batteries are:

Complements

Sociopsychiatric explanations of consumer behavior include the

Desire for ego and status

When the additional satisfaction from a good declines as more of it is consumed, that illustrates the law of:

Diminishing marginal utility

Marginal physical product is:

The additional output from using one more unit of labor

Microeconomics is the study of

The behavior of households as consumers and business as producers

Macroeconomics focuses on:

The economy as a whole

Opportunity cost is best defined as

The highest valued alternative that is sacrificed in making a choice

Which of the following refers to the satisfaction a consumer receives from the consumption of a good?

Utility

The demand for ______ is relatively elastic

Vacation travel

The factors of production include

land, labor, capital, entrepreneurship

The factors of production include all of the following except:

Money

Suppose during a year an economy produces $6 trillion of consumer goods, $1 trillion of investment goods, $2 trillion in government services, and has $3trillion of exports and $2 trillion of imports. GDP would be:

10 Trillion

If the price elasticity of demand is 2.5, then a 40 percent decrease in the price of the good will lead to a ______ percent increase in the quantity demanded

100.00

Laissez Faire refers to:

A belief of nonintervention by government in the market mechanism.

An externality is:

A cost or benefit of a market activity that impacts a third party

Which of the following is relatively inelastic with respect to demand?

A good with few substitutes

Which of the following is most likely to be elastic with respect to demand

Airplane travel in the long run

Which of the following is a factor of production for Cathy's cookies?

Flour

In economics, capital refers to:

Goods that can be used to produce other goods.

The study of economics focuses on:

How best to allocate scarce resources

People find it difficult to get along with necessities, therefore demand for necessities:

Is relatively inelastic

Which of the following is most likely a variable cost in the short run?

Labor

The production possibilities curve can be used to illustrate the concept of:

Opportunity cost

The inflation -adjusted value of final goods and services produced in the United States measures:

Real GDP

When producing jeans, which of the following is not a variable cost in the short run?

Rent for the factory

All points on the production possibilities curve:

Represent the use of all available resources.

The most complete definition of an comic system includes

Resource allocation arrangements, property rights and incentives

The central problem of economics is the:

Scarcity of resources relative humans want

Consumers _______ factors of production in the _______ market.

Sell; Factor

Which of the following is not a determinant of demand for a good?

Technological advances

Income transfers include all of the following except:

Wages

Economic and accounting costs will differ

Whenever any factor of production is not paid an explicit factor payment equal to its market value.

In virtual markets,

each buyer has access to the same information