Micro Test 1

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

A change in the price of the good or service

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

Along which of these segments of the supply curve is supply most elastic?

AB

Which of the following demonstrates the law of demand?

Ashlyn buys more donut holes at $0.25 per donut hole than at $0.50 per donut hole, other things equal.

When the government implements programs such as progressive income tax rates, which of the following is likely to occur?

Equality is increased and efficiency is decreased.

A hair stylist currently cuts and colors hair for 50 clients per week and earns a profit. He is considering expanding his operation in order to serve more clients. Should he expand?

It depends on the marginal cost of serving more clients and the marginal revenue he will earn from serving more clients.

Suppose the United States had a short-term shortage of farmers. Which market mechanisms would adjust to remove the shortage?

The prices of food and the wages of farmers would adjust.

Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see

a decrease in the demand for energy drinks.

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

a market

The movement from point A to point B on the graph is caused by

an increase for the price of the good

Using the midpoint method, if the price falls from $160 to $120, the price elasticity of demand is

elastic

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that

equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.

Large or persistent inflation is almost always caused by

excessive growth in the quantity of money.

Suppose the cross-price elasticity of demand between peanut butter and jelly is −2.50. This implies that a 20 percent increase in the price of peanut butter will cause the quantity of jelly purchased to

fall by 50

Instead of conducting laboratory experiments to generate data to test their theories, economists often

gather data from historical episodes of economic change.

Microeconomics is the study of

how individual households and firms make decisions.

A gardener has the ability to grow either apples or pears or some combination of the two. Given no other information, it follows that the gardener's opportunity cost of a pound of apples multiplied by his opportunity cost of a pound of pears

is equal to 1

Another term for goods and services is

output

In the circular-flow diagram, which of the following is not a factor of production?

output

market power

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

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?

scarcity

In a market economy, economic activity is guided by

self-interest and prices.

A monopoly is a market with one

seller, and that seller sets the price

Under what conditions might government intervention in a market economy improve the economy's performance?

there is a market failure, such as an externality or monopoly, government regulation might improve the well-being of society by promoting efficiency. If the distribution of income or wealth is considered to be unfair by society, government intervention might achieve a more equal distribution of economic well-being.