Microeconomics: Test 1

Réussis tes devoirs et examens dès maintenant avec Quizwiz!

Which of the following statements is correct?

A shortage occurs when the quantity demand it is greater than the quantity supplied at a price below the market clearing price

which of the following will cause the demand curve for beer to shift right?

A successful advertising campaign linking beer consumption to lower cholesterol

when the current market price is greater than the market clearing price

A surplus Will exist and the price of the product for fall

What's the following would likely cause an increase in the supply of espresso coffee makers?

A widespread expectation that the price of espresso makers will fall in the future

which of the following is a non-price determinant of demand?

Income, tastes and preferences, prices of related goods and services. all of the above

If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then

Irina has the comparative & absolute advantage in the production of chairs.

In economics, physical capital includes

Machinery

The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?

Microeconomics

The supply curve shows the relationship between the

Price of a product and the quantity supplied

suppose new research shows that soymilk and other products derived from soybeans provide more health benefits than previously thought. At the same time, drought conditions result in extensive damage to the soybean crop. What will be the combined impact of these two factors on the equilibrium price and quantity of soybeans?

Price will increase but the effect on quantity is indeterminate

people consume more fresh fruit in the summer than during the rest of the year, yet the prices of fresh fruit are lower in the summer than in other seasons. What accounts for this?

The supply of fresh fruit increases in the summer

all the following reduce a transaction cost for consumers except

The supreme court decisions regarding the second amendment

which of the following is a positive statement?

The unemployment rate is 5.8%

The value of a model is determined by

The usefulness of its predictions in the real world

The high opportunity cost of voting in the United States is due to

The value of time devoted to casting a ballot

what would lead an economist to conclude that theory A is superior to theory B

Theory A predicts real-world events better than does Theory B

Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.

This is an example of a negative incentive for students to attend class.

The imposition of a per-unit tax on a product

Will cause the supply curve to shift upward and to the left

"My brother is better at cooking, better at cleaning, and better at fixing the car than I am ". Relative to his sister, this brother has

absolute advantage in cooking, cleaning, and car repair

Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?

aggregates

The price rationing mechanism of a freely functioning market is efficient because

all gains from mutually beneficial trade are exhausted

The term "labor" for an economist includes

all productive contributions of humankind.

suppose that Canadian farmers can grow wheat more cheaply than can US farmers. In the interest of efficiency what is the most desirable outcome

allow the Canadian farmers to sell their wheat for a lower price

Deciding whether to go to school or go to the beach is

an economic decision

how does an economy represented by a straight line production possibilities curve differ from one represented by traditional production possibilities curve with a bowed shape

in the economy represented by a straight line production possibilities curve, the law of increasing realtive cost does not apply

if the demand for a product rises and the supply says the same

both the market clearing price and equilibrium quantity will rise

The rationing function of prices means that

buyers and sellers synchronize their decisions through the price system

inefficient use of resources is shown on the production possibilities curve

by a point inside the curve

The publication consumer reports reduces transaction costs on many purchases

by providing reliable information on products quality so consumers don't have to spend time doing the research themselves

your local grocery store reduces transaction costs to the consumer

by reducing the consumers need to travel from food producer to food producer (or manufacturer to manufacturer) to purchase the food staples that the consumer desires

how does the science of economics deal with the fact that we all have different values?

by using positive analysis

All of the following are examples of macroeconomic problems EXCEPT:

consumers deciding to buy more fish and less beef because of concerns about a healthier diet

transaction costs are

costs associated with exchange

if the government offers to reduce your property taxes by 10% if you install solar heating for your home, this would be an example of

incentives

what is meant by saying that economics is an empirical science?

economic theories will be tested by seeing how well they correspond to real world phenomena

Ceteris Paribus means

economists isolate one or two factors that change when analyzing human decisions

You have the option of consuming one cup of coffee or two donuts or three oranges. You picked a cup of coffee. Therefore the opportunity of this cup of coffee is

either the donuts or the oranges, whichever you like more.

economics may be referred to as a ________ Science, meaning that data is looked at to see whether assertions are correct

empirical

The principle of comparative advantage implies that

everyone can benefit from international trade

The bowed shape of the traditional production possibilities curve reflects the

fact that not all resources are equally well-suited to producing all goods

Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume

factory B can take advantage of division of labor and produce more efficiently.

economic bads are goods

for which the desired quantity is less than what nature provides at a zero price

Using productive resources to make capital goods requires that we

forgo some level of current consumption

according to the law of demand, an increase in the price of an item

generates an upward movement along the demand curve for the item

One of the benefits of specialization is

greater output

by using the ceteris paribus assumption in conjunction with a model, economists can

hold certain factors constant

Total market demand can be calculated by

horizontally summing individual demand curves at each and every price level

Total market supply can be derived by

horizontally summing individual supply curves at each and every price level.

Because resources are scarce relative to wants, the study of economics concerns

how individuals, businesses, and governments make choices

Economics does NOT concern itself with

how people think

Education increases the stock of which factor of production?

human capital

The accumulated training and education that you have is

human capital

education and training of workers would best be categorized as

human capital

Scarcity exists because

humans have unlimited wants and limited resources

Economic analysis is used

in all decision making

positive economics

is objective

to an economist the term "needs"

is objectively undefinable

The law of demand

is supported by observations of human behavior in the marketplace

Technology

is the recipe for combining land, labor, physical capital, and entrepreneurship to produce a good.

why do most people choose to specialize in a narrow set of skills for their work, rather than to learn a little bit about several varied fields of endeavor?

it allows them to earn more income by being more productive

The country is currently producing inside its production possibilities curve

it can increase the production of both goods by putting unemployed resources to work

why is efficiency desirable?

it makes the best use of the finite resources we have

which factor of production include water?

land

Oil found in Alaska is an example of

land or natural resource.

The fact that when the price of a good goes up, people buy less of it is known as the

law of demand

when the Price of Nintendo GameBoy's goes up and fewer Nintendo GameBoy's are purchased, this is representative of the

law of demand

The direct relationship between changes in price and changes in quantity supplied is

law of supply

The production possibilities curve illustrates economic growth by

outward shift of the PPC

rationality assumption states that

people do not intentionally make decisions that would leave them worse off.

rent controls primarily benefit

people who already occupy rental units

ceteris paribus, as the price of a good or service increases

people will buy less of it

comparative advantage is the ability to

perform an activity at a lower opportunity cost

The following products are likely to be complementary goods?

portable CD players and batteries

The supply curve has a

positive slope

The slope of a nonlinear curve is ____ when the curve is rising, and ____ when the curve is falling.

positive, negative

The demand curve shows the relationship between quantity demanded and

price

An incentive is a

reward for desired behavior

When the quantity supplied is greater at each price, there is a

rightward shift in the supply curve

The market system is also called the price system because

rising prices are the signal to producers to offer more of a particular good

The basic economic problem is

scarcity

The most basic concept in economics is

scarcity

opportunity cost exist because of

scarcity

economists assume that people are motivated by

self-interest

to enhance their prestige, some country clubs like to point to the fact that they have a waiting list for new members. Even at clubs with high initiation fees, it is common that prospective members have to wait three or more years before there is room for them on the membership rolls. How do these country clubs set the price for membership to ensure they have a waiting list?

set the membership price below the market clearing price

when income increases, the demand curve for an inferior good

shift to the left

economic models

simplified representations of the real world

economic models are used to

simplify reality to predict outcomes

microeconomics is concerned primarily with

smaller units of the economy such as firms and households.

Economics is a

social science

The supply curve will shift to the left when

some producers leave the industry.

International trade between two nations increases the standard of living in both nations due to

specialization and gains from comparative advantage.

if a decrease in the price of good A causes a decrease in the demand for good B, the two goods are

substitutes

If producers must receive a higher price to be induced to produce any quantity, we can conclude that

supply decreased

which of the following would most likely be considered complements?

tennis rackets and tennis balls

Economics is a study of

the allocation of scarce resources to satisfy unlimited wants

as an economy moves from point to point along its production possibilities curve, which one of the following variables changes

the amount of each good or service produced

opportunity cost is best defined as

the amount of one product that must be given up to produce one more unit of another product.

macroeconomics might study which of the following?

the causes of domestic unemployment

when a shortage exists in a market

the current price is below the market clearing price and the price will rise

during periods of unemployment

the economy operates at a point inside the production possibilities curve

Macroeconomics is primarily concerned with

the entire economy

when a market clearing price is determined

the exchange between buyers and sellers is voluntary.

Which of the following is NOT studied in microeconomics?

the impact of an increase in the unemployment rate on economic production

buyers and sellers receive information about the markets

through the price system

which of the following would be categorized as "land"?

timber

High gasoline prices give people all of the following incentives EXCEPT

to buy a new SUV

which of the expressions below best describes the aim of economic theory?

to predict the choices people will make

an improvement in technology will shift the production possibilities curve

to the right

which of the following is not a voluntary exchange

tom's car is stolen from the front of his house

Tom is better than his sister at mowing the lawn and delivering papers. However, he earns $10 per hour delivering papers and zero dollars mowing his parents lawn.

tom's opportunity cost for mowing the lawn is the money he could've earned delivering papers.

when productive activities are organized according to the principle of the division of labor,

total output increases due to the advantages of specialization

which of the following is an aggregate?

total production of all goods and services

The production possibilities curve shows all possible combinations of

two goods that can be efficiently produced with a given set of resources.

The idea of bounded rationality is used to address all of the following characteristics except

unbounded selfishness

if Joey go surfing for 4 hours instead of earning $10 per hour for those 4 hours, his opportunity cost is

$40

suppose that on average there are five more car accidents for every extra inch of snow fall in a certain region. is snowfall is graft on the Y axis in car accidents on the X axis, then if we graph this relationship, the slope of the line will be

1/5

you cannot buy either movie tickets or DVDs. If one movie ticket cost $10 and a DVD costs $15, what is the opportunity cost of buying 10 DVDs?

15 movie tickets

which of the following will not change the supply of a good?

A change in the price of a good

which one of the following would cause an increase in the demand for hotel rooms in Hawaii?

A decrease in airfares to Hawaii

which factor would cause a movement along the demand curve for pizza

A drop in the price of pizza

which of the following is assumed when constructing a production possibilities curve?

A fixed amount of resources, efficient use of resources, resources of a given quality. all of the above.

The tasks performed by the chef at your favorite restaurant could be categorized as

A good, and economic code, & a service or intangible good. all of the above

which of the following would cause a change in the quantity demanded of a product?

A higher price, a higher income, expectations of future price increases.

The relationship between beers consumed the night before an exam and a test grade will be graphed as

A line sloping down from upper left to lower right

The difference between positive statements and normative statements is

A positive statement is a statement of fact and a normative statement involves value judgments

which of the following is not a factor of production?

A product

A graphical representation which shows the trade off that occurs when more of one output is obtained at the sacrifice of another is called

A production possibilities curve

which of the following will shift the supply curve for laptop computers to the left?

A reduction of the number of firms that make laptop computers

demand is defined as

A schedule of how much an item people will purchase at any particular price of the item during a specified time period, other things being constant.

Demand is a schedule showing

A set of possible prices for a good and the quantities of the good that will be purchased at each of those prices

which of the following is not considered to be an economic resource?

a view of the stars on a clear night

The author of the book "An inquiry to the nature and causes of the wealth of Nations" is

Adam Smith

suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts this suggests that

Admission prices for other types of entertainment, such as live shows and sporting events, have also declined.

regarding the law of supply, which of the following statements is correct?

As the price of a good or service rises, the quantity supplied will increase.

if vice president Smith is a better typist then his assistant, he said to have an ______ advantage in typing over the assistant

absolute

"Wants" as an economic concept includes

both material and nonmaterial desires

in order for a production possibilities curve to shift to the right, which of the following must occur?

economic growth

if the demand for a product falls and supply stays the same

both the market clearing price and equilibrium quantity will fall

The reason that most of the coffee that is consumed in the United States comes from Columbia is that

Columbia has a comparative advantage in producing coffee relative to the united states

which of the following would cause an increase in demand for digital cameras?

Digital cameras become easier to use

which of the following statements about economic models is true?

Every economic model is based on a set of assumptions.

The law of increasing relative cost exists because

resources are not perfectly adaptable to both production processes

which of the following is a non-price determinant of supply

Technological advances in production

when Adam Smith's ten pin workers specialized, they were able to increase output of pins in a day from 200 to 48,000. One reason for the increase in pin output was due to

The Time saved when workers do not need to shift from one task to another

which of the following is a microeconomic topic?

The advertising strategy of a particular company

Suppose that because of unseasonable cold weather in Brazil, their husbands substantial decline in Brazilian coffee crop. This statement means that

The amount of coffee beans available at various prices will decline

which of the following is example of a positive statement?

The amount of financial assistance given to farmers is higher this year than it was 10 years ago

which of the following is held constant when constructing a production possibilities curve?

The amount of total resources used

all of the following are aspects of microeconomics EXCEPT:

The average level of prices of all goods and services produced in a country in a year

how could Adam Smith's comment about the butcher, the Brewer, and the baker be accurately rephrased in modern terms?

The butcher, the Brewer, and the baker give us our dinner because they each earn a living by doing so.

what situation gives rise to a surplus?

The current price of the good is above its market clearing price.

economic growth appears on a production possibilities curve as

The curve shifting out away from the origin

if one day it was discovered that lime juice cause cancer, which of the following would likely result?

The demand curve for lime juice would shift to the left

we know the product G & H are related goods, because when the price of G increases

The demand for H decreases

The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is a ferry service across the English channel. What would happen in the market for ferry service if the fees for using the Chunnel were increased

The demand for ferry service would increase

what would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?

The demand for prescription medications will decrease

The making and selling of a pencil for $.10 would likely not be possible, but for

The division of labor

suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains the situation?

The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase.

A student has a job that pays a wage rate of $10 per hour. The night before the economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost of her work is

The extra 15 points she estimates she could've earned on the exam if she had studied for the extra three hours.

in a market system, how are the terms of exchange established?

The forces underlying supply and demand interact to determine a market clearing price

The trade off between the present and future consumption is measured by

The foregone present consumption

The opportunity cost of going to college full-time away from home is

The income you would've earned from a full-time job. The fund you would've saved if you had not paid the tuition. The time you would've spent with friends back home.

and outward bowed production possibilities curve illustrates all of the following except

The law of decreasing relative cost

When a society takes increasing amounts of resources and applies them to the production of a specific good, resulting in increasing opportunity costs for each additional unit produced, which of the following applies?

The law of increasing relative costs

suppose that, at an official ticket price of $80, there are 6000 David gray fans waiting to attend his concert, but only 4000 ticketed seats are available. Which one of the following statements is true?

The market clearing price of the tickets is more than $80

if the demand for a product remains the same and the supply increases

The market clearing price will fall and the equilibrium quantity will rise

if the demand for a product remains the same and the supply falls

The market clearing price will rise and the equilibrium quantity will fall

suppose that, at a rental rate of $700 per month, 350 residents wish to rent apartments and that landlords offer 500 apartments available for rent. Which one of the following statements is true?

The market clearing rental price of apartments is less than $700 per month

which of the following is NOT a positive statement?

The national debt is too high

John and Mary work at a bakery. John can decorate either 10 ice cream cakes or 4 wedding cakes; Mary can decorate either 8 ice cream cakes or 2 wedding cakes. According to this scenario,

The opportunity cost of decorating a wedding cake for Mary is 4 ice cream cakes. The opportunity cost of decorating an ice cream cake for John is 2/5 wedding cake.

an example of an entrepreneur would be

The owner of a new Indian food restaurant

which of the following is not a non-price determinant of demand?

The price of a good or service

which of the following would likely be considered as falling into the domain of microeconomics?

The price of apples

all of the following are non-price determinants of demand except

The price of raw materials used in the production of a good

The relative price of a textbook is

The price of the textbook compared with the price of some other good sold in the same year.

division of labor means that

The production process is divided into smaller tasks

The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as

The rationality assumption

which of the following statements is true

The relative price of a good refers to the opportunity cost of purchasing it

in constructing a production possibilities curve, all the following are assumed except

The state of technology is improving.

If a teacher tells a student that those who attend the study session typically score higher on the final exam,

The student has a positive incentive to attend the study session because she may get a higher grade.

which of the following is an example of a normative statement?

a camera makes a good wedding gift

A movement along a demand curve

a change in the quantity demanded of a good that is the result of a change in that good's price

The law of supply states that there is

a direct relationship between price and quantity supplied, ceteris paribus.

The impact of an increase in the gasoline tax on SUV sales is:

a microeconomics topic because it deals with one industry

market clearing price is in a market system act as

a signaling device

Scarcity, by definition, means

a situation where the inputs for producing the things we desire are insufficient to satisfy all of our wants

Economic analysis is

a tool that can aid all decision making

aggregate measures are

a total measure of a variable across the economy

which of the following would cause an increase in the supply of cardboard?

an improvement in the technology used to produce cardboard

which of the following will not cause market supply to increase

an increase in the costs of resources used to produce the product

what are the following would cause an increase in the market supply of mountain bikes?

an increase in the number of firms making mountain bikes

when the price of a good rises there is

an increase in the quantity supplied

A production possibilities curve will shift outward or to the right for all of the following reasons except

an increase in the unemployment rate

The law of demand states that there is

an inverse relationship between price and quantity demanded, ceteris paribus

economists argue that unhindered international trade leads to an efficient outcome. What is meant by "in efficient outcome" in this context

an outcome in which the resources are devoted to their most efficient use

economic growth is shown by

an outward shift of the production possibilities curve

rational behavior for an economist means that individuals

are motivated by self-interest

normative economic statements

are statements of "what ought to be"

Resources

are used to produce goods and services to satisfy people's wants

the production possibilities curve for two products is bowed out because

as the production of a good increases, opportunity cost increases

The text argues that if avocado growers in Mexico can produce avocados cheaper than avocado growers in the United States, this will not reduce total jobs available in the United States. The logic underlying this argument is that

avocado growers in the United States will switch to specializing in a crop in which they have the comparative advantage

consider the statement, "the number of beers consumed the night before a test affects the grade." In this statement

beer is the independent variable and the test grade is the dependent variable

The combination of psychology and economics to determine individual decision making is known as

behavioral economics

which of the following is a microeconomic concern?

consumer behavior

charitable donations to the Red Cross

can be explained by the rational self-interest theory

A positive economic statement is one that

can be refuted

comparative advantage implies that you

can produce a good or service at a lower opportunity cost

if an economy produces only steel in wheat, a new fertilizer will

cause the production of wheat to increase at every point on a production possibilities curve but not affect the production of steel, that is the curve moves out word on the wheat axis only

in building a model the assumption that allows economists to study only the factors being analyzed is the

ceteris paribus assumption

The slope of the line is the

change in the values along the y-axis divided by the change in the values along the x-axis

slope of a nonlinear curve

changes along the various points of the curve

Economics is the study of how people make

choices

opportunity costs arise from

choices

Underlying economic theory is the idea that

choices are affected by both positive and negative incentives

The market system is efficient because

choices are based on individuals self interest

Assuming Vice President Smith has to sacrifice more than his assistant in order to engage in full-time typing, we would say that his assistant has a(n) ________ advantage in typing versus Mr. Smith.

comparative

When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region, it is practicing

comparative advantage

you should specialize in the production of a good if you have

comparative advantage

in economics international trade is based on the existence of

comparative advantage between countries

Microeconomics studies

decisions made by individual consumers and businesses

If the price of margarine falls, the demand for butter will

decrease

which of the following will not affect the supply of cars?

decrease in the price of cars

trading off capital goods for increasing amounts of consumer goods today will most likely result in

decreased long-term growth.

assumptions are necessary to

define a set of circumstances where a model is most likely to apply

which of the following situations could generate a shortage?

demand for a good increases, but the price is not permitted to rise

suppose you observe that the price of a good increases and that the quantity of those goods sold also increases. If only the demand curve or the supply curve shifts this suggest that

demand increased over time while supply remained the same

The newspaper headline asserts: "rising demand pushes up housing prices." this headline

directly implies that an increase in demand will increase the market clearing price

according to the concept of comparative advantage, a good should be produced in the nation in which

domestic opportunity cost is the smallest

according to economists, when two people make exactly the opposite decision,

each person evaluates the situation according to his/her individual self-interest

If the price of milk falls, The supply of ice cream is likely to

increase

if a good is a normal good, an increase in income will

increase in the demand for the good

if the price of oil rises, producers of oil will likely

increase the quantity of oil supplied

A subsidy to carrot farmers will be

increase the supply of carrots

A bowed outward production possibilities curve demonstrates the concept of

increasing opportunity cost as production shifts from the production of one good to the production of another good.

A relationship between two variables in which one variable increases at the same time as the other decreases is called

inverse

what type of relationship does the law of demand demonstrate

inverse

normative economics

involves value judgments

"the US government should not use my tax dollars to subsidize people on welfare"

is a normative statement because it involves a value judgment about an economic policy

A theory or model

is a simplified, abstract view of reality

when we say that an individual behaves according to the "rational self-interest," we mean that this individual

is making choices that they believe will leave him/her better off

Resources are

limited

what type of economics would most likely deal with aggregates?

macroeconomics

The study of economics can be divided into two areas, which are

macroeconomics and microeconomics

In constructing models, economists:

make simplifying assumptions

what of the following are substitute goods

margarine and butter

another term for intermediaries who specialize in reducing transaction costs is

middlemen

Internet companies attempt to make ordering and paying for items as easy as possible in order to

minimize opportunity costs for the consumer

opportunity cost is illustrated on the production possibilities curve (PPC) by a

movement along the PPC.

an increase in the quantity demanded is shown by

movement down along a demand curve

if the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid rate of economic growth, then the economy should produce at a point

near the horizontal axis concentrating on the production of capital goods

if a straight line crosses the Y axis at five and crosses the X axis at 10 we can conclude that the slope of the line is

negative

The saying that "you cannot have your cake and eat it too" illustrates the economic concept of

opportunity cost

ceteris paribus means

other things being equal

To have more consumer goods in the future we must

produce more capital goods today.

if a country wants to promote future growth, it should

produce more capital goods today.

if there is a surplus

producers will lower their prices

activities designed to convert resources into goods and services is known as

production

efficiency is defined as

production of output at minimum cost

which of the following is not a determinant of demand?

production technology

all of the following are methods of rationing goods except

profit motive

economic seeks to use only positive analysis to

provide a value free analysis

economic goods are items that

provide satisfaction to users

A five-cent deposit on beer bottles

provides a positive incentive because it rewards people for recycling, and provides a negative incentive because it punishes people who do not recycle. both A and B

Rational self-interest means

pursuing what makes you better off

The idea that people will not consciously make decisions that make them worse off is known as

rationality assumption

assuming that turkey, chicken, pork, and beef are substitutes, suppose that the price of turkey has fallen. This will, other things being equal,

reduce demand for chicken, pork, and beef

markets tend to

reduce transaction costs

intermediaries, known as a middleman, specialize in

reducing transaction costs

The price of one product in terms of another commodity is called its

relative price

a negative slope

represent an inverse relationship, such as beers consumed and test score

Scarcity

requires individuals to make choices

assumptions in models tend to make

the model more applicable to specific circumstances

which of the following is a macroeconomic concern?

the national output of the United States

The market clearing price of a good is

the price at which there is no surplus and no shortage.

all of the following cause a shift of the demand curve except a change in the

the price of a good or service

If the slope of a curve is 1/5, we know that

the relationship is linear, and the line moves from lower left to upper right.

when producers anticipate that the price of their product will increase in the future,

the supply curve will shift to the left

A direct relationship occurs when

the two variables being compared change in the same direction, or when one goes up the other also goes up.

all of the following are assumptions of the production possibilities curve except

there is a fixed demand for the products

if the price of a product increases

there is an increase in quantity supplied in a decrease in quantity demanded

happens as the result of a surplus

there is downward pressure on prices

what happens as the result of a shortage?

there is upward pressure on prices

when McDonald's runs a special for hamburgers reducing the price of big Macs to $.99 with all other factors held constant

there's likely to be a decrease in demand for burger kings whoppers assuming big Macs and whoppers are substitutes

The opportunity cost of a decision is the

value of the best alternative not chosen

The following is the least scarce

weeds

A production possibilities curve will shift inward

when a war destroys the capital goods of a country

efficiency is achieved

when producers are getting the maximum possible output from the available resources

when are black markets likely to arise

when the government enforces a price ceiling

If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ______ and the equilibrium quantity ____.

will fall, cannot be predicted

If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that the market clearing price ______ and the equilibrium quantity ____.

will rise, cannot be predicted

The "paired observation" of (14, 6) means

x = 14, y = 6

Based on your understanding of your roommates preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. how do you describe this event in terms of economic theory?

you constructed a model that made a prediction, and the prediction was refuted.


Ensembles d'études connexes

Earth Science Chapter 17 questions

View Set

Anatomy & Physiology — Unit 3: "The Integumentary System."

View Set

African-American History: Chapters 2 and 3 Test

View Set

ATI Older Adults Post Assignment

View Set

Chapter 8 -- Cellular Respiration

View Set