Micro Test 1

Equilibrium price and quantity are, respectively,

$25 and 400 units

Which of the following events could cause an increase in the supply of ceiling fans?

The number of sellers of ceiling fans increases.

If a surplus exists in a market, then we know that the actual price is

above the equilibrium price, and quantity supplied is greater than quantity demanded.

At a price of $35, there would be a

surplus of 400 units.

Suppose roses are currently selling for $40 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a

surplus to exist and the market price of roses to decrease.

If Arturo and Dina both spend all of their time producing tacos, then total production is

800 tacos and 0 burritos.

Which of the following changes would not shift the supply curve for a good or service?

A change in the price of the good or service

If a seller in a competitive market chooses to charge more than the going price, then

buyers will make purchases from other sellers.

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?

Both the equilibrium price and quantity would increase.

Coal is considered to be a nonrenewable energy source. Which of the following statements is correct?

Coal is a scarce resource.

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

Iowa has a comparative advantage in the production of corn.

Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children?

Point A to Point D

Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

There is widespread unemployment in the economy.

If muffins and bagels are substitutes, a higher price for bagels would result in

an increase in the demand for muffins.

A popular celebrity that is paid highly for her time should probably not mow her own lawn because

her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her.

Microeconomics is the study of

how individual households and firms make decisions.

The "invisible hand" refers to

how the decisions of households and firms lead to desirable market outcomes

Goods produced abroad and sold domestically are called

imports

An increase in the overall level of prices in an economy is referred to as

inflation

Another term for factors of production is

inputs

The business cycle is the

irregular fluctuations in economic activity

An economy's production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other.

Resources are

scarce for households and scarce for economies

Suppose that when the price of a 16 oz. to-go cup of gourmet coffee is $4.25, students purchase 750 cups per day. If the price decreases to $3.75 per cup, which of the following is the most likely outcome?

Students would purchase more than 750 cups per day.

What would happen to the equilibrium price and quantity of lattés if the cost of producing steamed milk, which is used to make lattés, rises?

The equilibrium price would increase, and the equilibrium quantity would decrease.

Which of the following is an example of a normative, as opposed to a positive, statement?

Universal healthcare would be good for U.S. citizens.

Which of the following demonstrates the law of supply?

When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.

The law of supply states that, other things equal, when the price of a good

rises, the quantity supplied of the good rises.

Fundamentally, economics deals with

scarcity

In a market economy, economic activity is guided by

self-interest and prices.

Efficiency means that

society is getting the most it can from its scarce resources.

Ashley bakes bread that she sells at the local farmer's market. If she purchases a new convection oven that reduces the costs of baking bread, the

supply of Ashley's bread will increase.

A rational decisionmaker

takes an action only if the marginal benefit of that action exceeds the marginal cost of that action.

Productivity is defined as the

the amount of goods and services produced from each unit of labor input

If the supply of a product increases, then we would expect equilibrium price

to decrease and equilibrium quantity to increase.

Assume for the United States that the opportunity cost of each airplane is 50 cars. Which of these pairs of points could be on the United States' production possibilities frontier?

(200 airplanes, 12,500 cars) and (150 airplanes, 15,000 cars)

Who gets scarce resources in a market economy?

whoever is willing and able to pay the price

Laws that restrict the smoking of cigarettes in public places are examples of government intervention that is intended to reduce

externalities

Economists make assumptions to

focus their thinking on the essence of the problem at hand

Pizza is a normal good if the demand

for pizza rises when income rises

Soup is an inferior good if the demand

for soup falls when income rises.

Assume that Jamaica and Norway can switch between producing coolers and producing radios at a constant rate Refer to Table 3-11. Jamaica's opportunity cost of one cooler is

0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios.

If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one pound of cashews?

1/10 hour

Ken and Traci are two woodworkers who both make tables and chairs. In one month, Ken can make 3 tables or 18 chairs, whereas Traci can make 8 tables or 24 chairs. Given this, we know that the opportunity cost of 1 chair is

1/6 table for Ken and 1/3 table for Traci.

If Dina must work 0.25 hour to produce each taco, then her production possibilities frontier is based on how many hours of work?

100 hours

f these are the only two sellers in the market, then the market quantity supplied at a price of $4 is

14 units.

Assume that England and France each has 40 labor hours available. If each country divides its time equally between the production of cheese and wine, then total production is

24 units of cheese and 15 units of wine.

If these are the only four sellers in the market, then the market quantity supplied at a price of $4 is

28 units.

If the production possibilities frontier shown is for 24 hours of production, then how long does it take Brazil to make one pound of peanuts?

3 hours

If the production possibilities frontier shown is for two months of production, then which of the following combinations of peanuts and cashews could Brazil produce in two months?

3 pounds of peanuts and 150 pounds of cashews

What is the opportunity cost to Footville of increasing the production of shoes from 400 to 600?

300 socks

If these are the only four buyers in the market, then the market quantity demanded at a price of $1

31 units.

If the production possibilities frontier is bowed outward, then which of the following could be the maximum number of tennis balls produced when 300 tennis rackets are produced?

4,500

Arturo's opportunity cost of one burrito is

4/3 tacos and Dina's opportunity cost of one burrito is 2 tacos.

What is the opportunity cost of increasing the production of corn from 400 bushels to 800 bushels?

400 bushels of wheat

If Alice produces only lemonade, she can produce

400 pitchers per day

If Arturo and Dina each divides his/her time equally between the production of tacos and burritos, then total production is

400 tacos and 250 burritos.

If point A represents Alice's production and point B represents Betty's production,

Alice produces 200 pitchers of lemonade and 100 pizzas while Betty produces 180 pitchers of lemonade and 180 pizzas.

If point A represents Alice's current production and point B represents Betty's current production, under what circumstances can both Alice and Betty benefit from specialization and trade?

Alice produces more lemonade and Betty produces more pizzas.

All else equal, an increase in the income of buyers who consider turkey to be an inferior good would cause a move from

Da to Db.

Which of the following statements best represents the principle represented by the adage, "There ain't no such thing as a free lunch"?

Dani must decide between going to Florida or Brazil for spring break.

Consider two individuals, Marquis and Serena each of whom would like to wear sweaters and eat tasty food. The gains from trade between Marquis and Serena are most obvious in which of the following cases?

Marquis's skills are such that he can produce only sweaters, and Serena's skills are such that she can produce only tasty food.

If the government were to intervene and set a wage for unskilled labor above the market wage, then we would expect, relative to the market outcome,

a decrease in the number of unskilled jobs available.

A group of buyers and sellers of a particular good or service is called

a market.

If a decrease in income increases the demand for a good, then the good is

an inferior good.

Today, producers changed their expectations about the future. This change

can affect today's supply.

Positive statements are

claims about how the world is

The most obvious benefit of specialization and trade is that they allow us to

consume more goods than we otherwise would be able to consume.

Suppose you like to make, from scratch, pies filled with bananas and vanilla pudding. You notice that the price of bananas has increased. As a result, your demand for vanilla pudding would

decrease

If these are the only four buyers in the market, then when the price increases from $1.00 to $1.50, the market quantity demanded

decreases by 7 units.

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. However, redistributing income from rich to poor reduces the reward for working hard. Therefore, society faces a tradeoff between

efficiency and equality.

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that sellers are willing and able to sell.

Market power refers to the

power of a single person or small group to influence market prices

A demand schedule is a table that shows the relationship between

price and quantity demanded.

A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his

production possibilities frontier.