Principles of Microeconomics - Quiz 1
Suppose an airline determines that its customers traveling for business have inelastics demand and its customers traveling for vacations have an elastic demand. If the airline's objective is to increase total revenue, it should
decrease the price charged to vacationers and increase the price charged to business travelers
Which two groups of decision makers are included in the circular flow diagram?
households and firms
Resources are
scarce for households and scarce for economies
The production possibilities frontier illustrates
the combinations of output that an economy can produce
The opportunity cost of going to college is
the value of the best opportunity a student gives up to attend college
Factors of Production
used to produce goods and services
Which of these statements best represents the law of demand?
when the price of a good decreases, buyers purchase more of a good
Which of the following statements is NOT correct?
absolute advantage is the driving force of specialization
In a competitive market, the quantity of a product produced and the price of the product are determined by
both buyers and sellers
Demand is said to be price elastic if
buyers respond substantially to changes in the price of the good