SCLP5Z Macroeconomics 1042

The observation that the higher the price of a good, the more that good sellers will make it available over a specified period of time other things being equal.

law of supply

The study of how people allocate their limited resources to satisify their unlimited wants

Economics

The case in which a given level of imputs is used to produce the maximum output possible. In other words the situation in which a given output is produced at minimum cost.

Efficiency

Relying on real-world data in evaluating the usefulness of a model.

Emperical

The accumulated training and education of workers.

Human capital

Reward for engaging in a particular activity.

Incentives

A variable whose value is determined independently of, or outside the equation under study.

Independent variable

Any point below the ppc (production possiblities curve) at which the use of resources is not generating the maximum possible output.

Inefficient point

Goods for which demand falls as income rises. Goods whose demand drops when people's incomes rise.

Inferior goods

A relationship between two variables that is negative meaning that an increase is associated with a decrease in the other and a decrease in one variable is associated with an increase in the other

Inverse relationship

The observation that there is a negative or inverse, relationship between the price of any good or service and the quantity demanded holding other factors constant.

Law of Demand

The fact that opportunity cost of additional units of a good generally increases as scarcity attempts to produce more of that good this accounts for the bend in the ppc

Law of increasing additional cost

The study of the behavior of the economy as a whole

Macroeconomics

The demand of all consumers in the marketplace for a particular good or service. The summation at each price of the quantity demanded by each individual.

Market Demand

The price that clears the market at which quantity demanded equals qantity supplied; the price where the demand curve intersects the supply curve.

Market clearing or equilibrium price

The study of decision making undertaken by individuals (or households) and by firms.

Microeconomics

Simplified representations of the real world used as the baisis for predictions or explanations

Models or theories

The price expressed in today's dollars; also called the absolute or nominal price.

Money Price

The cross-price of elasticity of demand measures how responsive the: a) demand for one good is to change in the price of another good b)demand for one good is to a change in the demand of another good c)price of a good is to a change in the price of another good d)supply of one good is to a change in the price of another good

a) demand for one good is to change in the price of another good

The change in the y value divided by the corresponding change in the x value of a curve

Slope

The orginization of economic activity so that what each person or region consumes is not identical to what another person or region consumes.

Specialization

A binding price ceiling leads to: a) a shortage b) a surplus c) an equilibrium d) a high price

a) a shortage

Chin purchases 5 protein bars at a price of $3 each. The marginal benefit he receives from each bar is $5 for the first bar, $4.50 for the second bar, $4.00 for the third bar, $3.50 for the fourth bar, and $3.00 for the fifth bar. The marginal cost of producing the bars is $2 each. What is Chin's consumer surplus on the fifth bar? $0 $0.50 $1 $2

$0

a legal maximum price that may be charged for a particular good or service

price ceiling

goverment mandated minimum or maximum prices that may be charged for goods and services.

price controls

A legal minimum price below which a good or service may not be sold

price floor

an economic change in which relative prices are constantly changing to reflect changes in supply and demand for different commodities. These commodities are signals to everyone within the system to what is relatively scarce and what is abundant.

price system

The difference between the total amount that producers actually recieve for an item and the total amount that they would have been willing to accept for supplying that item

producer surplus

Total amounts or quantities

Aggregates

Price ceilings on rents.

rent control

Instead of attending class, one could have worked an extra hour at the café for $10 or watched a neighbor's child for $15. The opportunity cost of attending class is:$15.$10.$25.$5.

$15

Lisa is choosing between three alternatives: a) working at her job that pays 60 dollars; b) writing a term paper which she values at 40 dollars; or c) going out with a friend, which she values at 80 dollars. The opportunity cost of writing the term paper is:0 dollars.140 dollars.20 dollars.80 dollars.

$80

What are the 4 core principles that together provide a systematic framework for analyzing individual decisions?

1) cost-benefit principle 2) opportunity cost principle 3) marginal principle 4) interdependence principle

Consider the demand for socks. What would cause a movement from one point on the demand curve to a point further down the curve? A. A big sale on socks. B. An increase in the price of socks. C. Increased demand for a kind of shoe typically worn without socks. D. Decreased demand for a kind of shoe typically worn without socks.

A. A big sale on socks

Which of the following would cause the demand curve for ice cream to shift to the right? A. A rise in the price of popsicles, a substitute for ice cream .B. An unexpected cold and rainy summer season. C. A reduction in the cost of producing ice cream D. A reduction in the price of ice cream.

A. A rise in price of the popsicles, a subset for ice cream.

Which of the following would cause the demand curve for ice cream to shift to the right?A. A rise in the price of popsicles, a substitute for ice cream. B. An unexpected cold and rainy summer season. C. A reduction in the cost of producing ice cream. D. A reduction in the price of ice cream.

A. A rise in price of the popsicles, a subset for ice cream.

The opportunity cost principle states that the true cost of something is the A. Next best alternative you have to give up to get it B. least desired alternative you have to give up to get it C. economic surplus you give up to get it D. economic surplus you receive from getting it

A. Next best alternative you have to give up to get it

When four roommates agree to specialize in the chores they are most efficient at, this can lead to: A. a situation in which less time is spent on chores by every roommate. B. some roommates doing many more chores than others. C. one roommate who is most efficient doing all of the chores. D. no chores getting done at all.

A. a situation in which less time is spent on chores by every roommate.

Quantity demanded is on the horizontal axis when you plot a demand curve and shows the: A. amount of a good that a person is willing to buy at each price B. amount of a good that a person actually buys at the market price C. amount of a good that a seller is willing to sell at a particular price D. amount where opportunity cost is equal to the marginal benefits

A. amount of a good that a person is willing to buy at each price

The marginal principle breaks quantity decisions into iterative (repetative or occurring frequently) decisions that use the... A. cost-benefit principle B. opportunity cost principle C. interdependence principle D. sunk cost evaluation

A. cost-benefit principle

The ability to produce more units of a good or service using a given quantity of labor or resource imputs. Equivently the ability to produce the same quantity of a good or product using fewer units of labor or resources.

Absolute advantagwe

Which of the following is a decision that follows the net marginal benefit principle? A. Choosing to give up eating meat due to concerns regarding the treatment of animals. B. Deciding whether to spend one more hour studying for an exam. C. Deciding to order a dessert at a non-buffet restaurant more often than you have dessert at a buffet. D. Choosing among different roller coasters based on their distance from the theme park entrance.

B. Deciding whether to spend one more hour studying for an exam.

The supply curve is upward-sloping because higher prices ________. A. encourage customers to switch to substitute goods B. are needed to cover higher marginal costs C. make customers willing to pay more for a good D. are needed to reflect higher marginal utility

B. are needed to cover higher marginal costs

The Rational Rule for Buyers A. compares the total benefit of all units to the total price of all units purchased B. compares the benefit of buying an additional unit of the item to the cost of that item C. only applies to buyers who are buying necessities as opposed to luxury items D. compares the cost of production of an item to the price of the item

B. compares the benefit of buying an additional unit of the item to the cost of that item

College students often buy cheap pizza because it is more affordable. Suppose after graduating, college students find high-paying jobs. The demand for cheap pizza will likely: A. increase because demand for cheap pizza is negatively related to income. B. decrease because demand for cheap pizza is negatively related to income .C. increase because demand for cheap pizza is positively related to income. D. decrease because demand for cheap pizza is positively related to income.

B. decrease because demand for cheap pizza is negatively related to income.

The hypothesis that people are nearly but not fully rational, so that they cannot examine every possible choice avilable to them but instead use simple rules of thumb to sort out among the alternatives that happen to occour to them.

Bounded rationality

The opportunity costs of a decision may include each of the following types of costs EXCEPT which of the following? A. out-of-pocket financial costs B. forgone financial costs C. sunk costs D. nonfinancial costs

C) sunk costs

Which of the following is most likely to shift the supply curve for pet grooming services leftward? A. An increase in the number of pet groomers seeking employment. B. A decrease in the number of owners taking their pets to be groomed. C. An increase in the cost of pet grooming supplies. D. A rise in the price of pet grooming services.

C. An increase in the cost of pet grooming supplies.

Which of the following factors would most likely cause a shift in the demand curve for candles? A. Improved technology that makes candles less costly to produce. B. An increase in the price of wax used to make candles. C. Falling incomes, due to a weakening economy. D. A decrease in the number of factories making candles.

C. Falling incomes, due to a weakening economy

If the price of copper rises, which of the following may occur? A. The quantity of copper supplied falls. B. The government increases the copper content of pennies. C. The profits of copper producers increase. D. Thefts of copper wire decline.

C. The profits of copper producers increase.

If the government offers a tax deduction to companies producing solar panels, what will happen in the market for solar panels? A. The supply curve will shift to the left, decreasing supply. B. The supply curve will shift to the left, increasing supply. C. The supply curve will shift to the right, increasing supply. D. The supply curve will shift to the right, decreasing supply.

C. The supply curve will shift to the right, increasing supply.

determinants of the relationship between price and quantity that are unchanged along a curve. changes in these factors cause the curve to shift

Cateris paribus conditions

The assumption that nothing changes except for the factor or factors being studied.

Ceteris Paribus

The ability to produce a good or service at a lower opportunity cost compared to the other producers.

Comparative advantage

Which of the following scenarios depicts a rational buyer? A. Mary values a bag of salad at $2, but she buys the bag of salad even when the price is $4. B. John walks into a grocery store and purchases monthly groceries without paying attention to the prices of groceries. C. Darwin buys a can of shoe polish at $4.50 when his marginal benefit from it is $3.75 D. Damien chooses to buy a sandwich for $5 when the marginal benefit of the sandwich to him is $7

D. Damien chooses to buy a sandwich for $5 when the marginal benefit of the sandwich to him is $7

If more states legalize recreational marijuana, what is the likely effect on the supply of marijuana? A. It would not change B. It would increase because prices will rise. C. It would decrease as the risk of prosecution rises. D. It would increase as the risk of prosecution falls.

D. It would increase as the risk of prosecution falls.

Which of the following is NOT a demand shifter? A. The price of a substitute good B. The price of a complementary good C. The number of buyers in the market D. The price of the market

D. The price of the market

Diminishing marginal benefit: A. is when buying an additional item yields a larger marginal benefit than the previous item. B. is when consumers do not follow the rational rule C. is not important in determining a consumer's purchase decision D. is when buying an additional item yields a smaller marginal benefit than the previous item.

D. is when buying an additional item yields a smaller marginal benefit than the previous item.

Let's say you want to watch a 2 hour movie on Netflix.But you also have an hour of Econ work to do and have to do laundry (which also takes 1 hour).You are trying to figure out what to do.You are also sleepy and could just go to bed early but you won't do that.What's the opportunity cost of watching the movie? A. laundry B. sleeping C. sleeping, studying econ, and doing laundry D. studying econ, AND doing laundry E. studying econ

D. studying Econ and doing laundry(Weren't going to sleep anyway)

On a hot sweltering day, you feel thirsty and buy an ice-cold soft drink, which you gulp down. Whether you buy the second drink or not, will depend on.... A. how you feel about soft drinks B. the total amount of soft drinks that you have consumed that week C. the price of the soft drink D. that marginal benefit from the second soft drink and if it will outweigh the price of the soft drink

D. that marginal benefit from the second soft drink and if it will outweigh the price of the soft drink

Shifts in the market demand can result from a change in A. the price of a product B. the cost of production for an item C. the number producers of an item in the market D. the type and number of buyers

D. the type and number of buyers

The price of gasoline is $2.50 per gallon at the closest gas station, but is only $2.30 per gallon at a gas station two miles away. By driving to the farther gas station, the opportunity cost is: A. the cost of filling one's tank at the original price of $2.50 per gallon. B. $0.20 per gallon, the difference in price between the two gas stations. C. non-existent because gas is cheaper at the farther station. D. the value of one's time and expenses to go to the farther gas station.

D. the value of one's time and expenses to go to the farther gas station.

Your friend tells you the following:"The law of demand does not work ALL the time. For example, think about the demand for luxury cars (e.g., BMWs, Porshe, etc.). Demand for such cars increases when the price of the car increases."Your friend is: A. correct; luxury cars are superior goods. B. correct; luxury cars give people a higher status. C. wrong; aggregate demand is not the same as regular demand. D. wrong; demand is not the same as quantity demanded.

D. wrong; demand is not the same as quantity demanded.

A schedule showing how much of a good or service people will purchase at any price during a specified time period, other things being constant.

Demand

a negatively sloped line showing the inverse relationship between the price and the quantity demanded (other things being equal).

Demand Curve

A variable whos values change according to changes in the value of one or more independent variables.

Dependent variable

A relationship between two variables that is positive, meaning that an increase or decrease is associated with an increase or decrease in the other.

Direct relationship

A society's institutional mechanism for determining the way in which scarce resources are used to satisify human desires.

Economic system

Goods for which demand rises as income rises. Most goods are these type of goods.

Normal Goods

Analysis involving value judgements about economic policies; relates to weather outcomes are good or bad. A statement of what ought to be.

Normative economics

The highest-valued, next best alternative that must be sacrificed to obtain somthing or to satisfy a want.

Opportunity Cost

Suppose that it takes Pat 15 min to shampoo and 60 min to cut hair. Suppose it takes Alex 10 min to shampoo and 50 min the cut hair. Who should cut hair? Pat? Alex? Neither? Both?

Pat!

All manufactured resources, including buildings, equipment, machines and improvements to land that are used for production.

Physical capital

Analysis that is strictly limited to making either purely descriptive statements or scrientific perdictions... if A, then B. A statement of what is.

Positive economics

An activity that results in the conversion of resources into products that can be used in consumption.

Production

A curve representing all possible combinations of maximum outputs that could be produced assuming a fixed amount of productive resources of a given quality.

Production possibilities curve (PPC)

The assumption that people do not intentionally make descisions that would leave them worse off

Rationality assumption

The money price of one commodity divided by the money price of another commodity. the number of units one commodity that must be sacrificed to purchase one unit of another commodity.

Relative Price

Things used to produce goods and services to satisfy people's wants.

Resources

A situation in which the ingredents for producing the things that people desire are insufficent to satisify all wants at a zero price.

Scarcity

What is it called when economists consider the costs and benefits of a choice?

The cost-benefit principle

Economists are particularly attuned to understanding how different decisions depend on each other. What is this principle called?

The interdependence principle

What people would buy if their incomes were unlimited

Wants

If income rises by 20% and the quantity demanded of a good falls by 20%, the income elasticity of demand for this good is _______, and this good is an ________ good .a)-1;inferior b)-1; norma c)1; inferior d)1; normal

a) -1; inferior

A buyer gains consumer surplus when they purchase a good: a) At a price below the value of the benefit they receive from the good b) at an equitable price c) At a price above marginal revenue but lower than the cost of production d) With a marginal benefit below the price of the good

a) At a price below the value of the benefit they receive from the good

Which of the following statements is true? a) Economically efficient outcomes hold the possibility of making everyone better off b) Economically efficient outcomes will make everyone better off c) Economically efficient outcomes will increase equity d) Economically efficient outcomes will always reduce equity

a) Economically efficient outcomes hold the possibility of making everyone better off

Which of the following lists only factors that would cause an increase in supply of an item? a) a decrease in input prices; a technological innovation, a fall in the price of a substitute-in- production b)A rise in the price of a substitute-in-production, an increase in the price of a complement-in-production; an expectation that the price of the item will increase in the future. c) a decrease in the number of sellers in the market; a fall in the price of a complement in production, a technological setback. d) an increase in input prices, a decrease in the number of sellers in the market, an increase in the price of a substitute in production.

a) a decrease in input prices; a technological innovation, a fall in the price of a substitute-in- production

The market supply is... a) a graph that plots the total quantity of an item supplied by the entire market at each price b) a graph that plots the quantity supplied at each price by one seller c) a graph that plots the total quantity demanded of an item by the entire market at each price d) the total cost of production of the item for the entire market

a) a graph that plots the total quantity of an item supplied by the entire market at each price

An individual supply curve is... a) a graph with quantities of a product that a seller is willing to supply at different price points b) a graphs that plots how much a seller produces at different points in time c) a graph that plots the quantities of an item that a buyer plans to buy at different prices. d) the quantity a seller is willing to supply at one particular price

a) a graph with quantities of a product that a seller is willing to supply at different price points

The statutory burden of a tax is the: a) government-designated burden to send a tax payment b) burden created by the change in after-tax prices faced by buyers and sellers c) percentage increase in the tax on an item d) laws governing sales taxes in a country

a) government-designated burden to send a tax payment

Suppose that it takes you 2 hours to complete your econ homework and 4 hours to complete your philosophy homework. What is the opportunity cost of completing your econ homework? a) half of your philosophy homework b) 2 philosophy homeworks c) half of your econ homework d) two econ homeworks

a) half of your philosophy homework

Suppose the price of gasoline rises. As time passes, people adjust to the higher price, and the demand for gasoline becomes: a) more elastic b) more inelastic c) steeperd) higher

a) more elastic

Income elasticity of demand measures how responsive the: a) quantity demanded of a good is to change in income b) quantity demanded of one good is to changes in demand for another good c) price of good is to price changes of another good d) quantity supplied of one good is to price changes of another

a) quantity demanded of a good is to change in income

A tax on sellers can shift a) supply curve to the left b) supply curve to the right c) demand curve to the left d) demand curve to the right

a) supply curve to the left

Which of the following is NOT a factor that can shift supply? a) The price of the product b) The cost of the raw materials used in the production process c) The state of technology used for production d) The change in the price of a complement in production

a) the price of the product

The Rational Rule for Sellers says that a seller should sell one more unit of an item if the price is: a) less than the marginal cost b) greater than or equal to the marginal cost c) less that the marginal benefit d) greater than or equal to the marginal benefit

b) greater than or equal to the marginal cost

Rising marginal costs imply a) falling variable costs b) rising fixed costs c) downward sloping demand curve d) an upward sloping supply curve

an upward sloping supply curve

Which of the following sellers will achieve their desired result for total revenue? a) A pharmacy raises the price of its store brand pain medication in order to raise revenue from sales. The store brand medication had many brand-name substitutes. b) A florist raises the price of roses before and on Valentines Day and hopes to raise total revenue. The florist is the only flower shop in town c) An airline maintains higher prices in the hopes of maintaining sales. However, a new low-cost competing airline had just entered the market d) In a market with a relatively inelastic demand curve, a coffee shop lowers coffee prices in the hopes of raising total revenue.

b) A florist raises the price of roses before and on Valentines Day and hopes to raise total revenue. The florist is the only flower shop in town

Which of the following is an example of market failure? a) The market price is too high for some people to pay, so they are unable to purchase the good b) A monopolist sets a price above its marginal cost of production, reducing the quantity sold below that of a market c) The market price is too low for some firms to produce, so they do not produce the good d)Some people don't like the good, so they choose not to purchase it

b) A monopolist sets a price above its marginal cost of production, reducing the quantity sold below that of a market

Which of these determines what the most efficient economic outcome is? a) lowest cost b) Largest surplus c) Smallest Inequality d)Highest total benefit

b) Largest surplus

The economic burden of a tax is the: a) government-designated burden of a tax payment b) burden created by the change in after-tax prices faced by buyers and sellers c) percentage increase in the tax on an item d) laws governing sales taxes in a country

b) burden created by the change in after-tax prices faced by buyers and sellers

Price elasticity of demand measures how responsive ________ are to __________ changes. a) buyers; quantity b) buyers; price c) buyers; income d) sellers; quantity

b) buyers; price

Assuming everything else stays the same, an increase in the price of smartphones will __________ of smartphones. a) increase the supply b) increase the quantity supplied c) decrease the quantity supplied d) decrease the supply

b) increase the quantity supplied

If demand is _______ , a higher price yields _______ total revenue. a) inelastic; lower b) inelastic; higher c) elastic; higher d) elastic; no change

b) inelastic; higher

A market consists of ten similar suppliers that are making the same supply decisions. To find the market supply of these ten suppliers, you: a) find the average quantity produced by the ten suppliers b) multiply the individual supply of one of the suppliers by ten c) take the individual supply of one supplier d) take one-tenth of the individual supply of each supplier and add it up.

b) multiply the individual supply of one of the suppliers by ten

Ian's research indicates that at a price of $12, his firm would sell 100,000 units of output. He determines that sales of 100,000 units is too low for his preferences. He then explores his options to increase sales. In order, what types of analysis are used in this three-step chain of events? a) positive, positive, normative b) positive, normative, positive c) normative, positive, normative d) normative, positive, positive

b) positive, normative, positive

Suppose the government has created a price ceiling BELOW the equilibrium price. How does producer surplus change a result of this policy? a) producer surplus increases b) producer surplus decreases c) producer surplus stays the same d) There is not enough information

b) producer surplus decreases

Price elasticity of supply measures how responsive: a) sellers are to changes in the prices of competing goods b) sellers are to price changes c) buyers are to price changes d) sellers are to changes in cost of production

b) sellers are to price changes

The large amount of harvested grain used to make flour grows mold due to flooding. How will this affect the supply of flour in the market?a) The supply of flour will increase in the market b) the supply of flour will decrease in the market. c) the supply of flour will remain unchanged in the market d)Suppliers of flour will switch to supplying grain

b) the supply of flour will decrease in the market.

An upward sloping supply curve shows that a) there is an inverse relationship between price and quantity supplied b) there is a positive relationship between price and quantity supplied c) there is no relationship between price and quantity supplied d) sellers are willing to sell less when the prices are higher in the market

b) there is a positive relationship between price and quantity supplied

The percent change in insulin demanded for any price change is zero. This demand curve for insulin is _______, and the price elasticity of demand is _______. a) vertical: perfectly elastic b) vertical; perfectly inelastic

b) vertical; perfectly inelastic

If Taylor Swift concert tickets are sold out within 5 minutes of being released, then we can conclude that.... a) There is a control on how high the ticket prices can go b)There is a shortage of Taylor Swift concert tickets in the market c) The price of the tickets is above the equilibrium price in the market d)The quantity supplied of Taylor Swift concert tickets is more than the quantity demanded.

b)There is a shortage of Taylor Swift concert tickets in the market

An approach to the study of consumer behavior that emphasizes psychological limitations and complications that potetially interfere with rational decision making.

behavioral economics

A market in which goods are traded at prices above their legal maximum prices or in which illegal goods are sold.

black market

A binding price floor is: a) the maximum price that a seller can charge in a market b) always at the equilibrium price c) always above the equilibrium price d) always below the equilibrium price

c) always above the equilibrium price

Which of the following best explains why your favorite brand of popsicles had gone up in price? a) other consumers have decided that you have bad taste and that they should buy different popsicles than you. b) the store you buy your popsicles from got an unexpected shipment of that brand's popsicles that they need to sell quickly c) one of the freezers in the store malfunctioned and melted most of that brands popsicles d) it is getting colder outside, and people buy less popsicles when it is cold.

c) one of the freezers in the store malfunctioned and melted most of that brands popsicles

Buyers bear all the economic burden of a tax if the demand is ______ given an upward sloping supply curve. a) perfectly elastic b) relatively inelastic c) perfectly inelastic d) downward sloping

c) perfectly inelastic

If an item is a necessity rather than a luxury, its demand curve will be:a) perfectly elasticb) perfectly inelasticc) relatively steepd) relatively flat

c) relatively steep

Suppose the government has created a price ceiling ABOVE the equilibrium price. How does total surplus change as a result of this policy? a) total surplus increases b) total surplus decreases c) total surplus stays the same d) There is not enough information

c) total surplus stays the same

Economic surplus measures the value of a decision's a) total costs minus its net benefits b) net benefits plus externalities c) absolute value of total costs d) Total benefits minus total costs

d) Total benefits minus total costs

Two goods are ___________________ when a change in the price of one causes an opposite shift in the demand for the other.

complements

The difference between the total amount that consumers would have been willing to pay for an item and the total amount they actually pay.

consumer surplus

The use of goods and services for personal satisfaction.

consumption

Which of the following lists only the factors that would cause a decrease in the supply of an item? a) A fall in the input prices; an increase in productivity, a fall in the price of a substitute in production b) A rise in the price of a substitute-in-production; a rise in the price of a complement in production; an expectation that the price of the item will rise in the future. c)A decrease in the number of sellers in the market; a fall in the price of a complement in production; an increase in productivity d)A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in- production

d) A rise in input prices; a decrease in the number of sellers in the market; a rise in the price of a substitute-in- production

Which of the following is NOT a way that the government can intervene in markets? a) The government can set minimum wages b) The government can raise taxes on a particular item c) The government can pass laws on sales taxes d) The government can stop the forces of demand and supply from working on markets

d) The government can stop the forces of demand and supply from working on markets

A subsidy is a a) form of tax b) government regulation of the quantity sold in a market c) a tax designed to encourage particular purchases or productive activities d) a government payment designed to encourage particular purchases or productive activities

d) a government payment designed to encourage particular purchases or productive activities

If farmers begin using better fertilizers to grow corn, we would expect a(n) __________ in the supply of corn. a) small decrease b) no change c) large decrease d) increase

d) increase

When the price of elasticity of supply is ________ relative to the price elasticity of demand, then sellers bear _________ of the economic burden of a tax. a) small, all b) small, none c) large, a bigger share d) large, a smaller share

d) large, a smaller share

Price elasticity of demand is calculated by dividing the ________ by the __________. a) percent change in price; percent change in quantity demanded b) percent change in price; percent change in quantity supplied c)percent change in quantity demanded; percent change in income d) percent change in quantity demanded; percent change in price

d) percent change in quantity demanded; percent change in price

If a certain item had any substitutions, its demand curve will be: a) perfectly elastic b) perfectly inelastic c) relatively steep d) relatively flat

d) relatively flat

If a firm produces a product that had easily available variable inputs, its supply curve will be..... a) perfectly elastic b) perfectly inelastic c) relatively steep d) relatively flat

d) relatively flat

Two products have a cross-price elasticity of demand of 1.5 based on this value of cross-price elasticity, which of the following products are they most likely to be? a) a brand of tea and a brand of sugar b) a brand of hot dog and a brand of hot dog buns c) a brand of juice and a brand of computer d) two competing brands of soft drinks

d) two competing brands of soft drinks

The segregation of resources into different specific tasks

division of labor

The situation when quantity supplied equals quantity demanded at a particular price.

equilibrium

The atom is the basic unit of matter, and so physicists begin by trying to understand the atom, and from that, build their insights into the functioning of our physical world. Biologists start with the cell, the basic building block of all living things, and build from there to understand how different organisms live. What is the foundation for economists?

for economists, individual decisions—choices—are the foundation of all economic forces. Your decisions, and those of others, collectively determine what's made, who gets it, and whether it yields fair outcomes. Because these broad economic outcomes are the product of many individual choices, economic analysis always begins by focusing on individual decisions.

The sum of consumer and producer surplus.

gains from trade

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost.A. go, greaterB. not go, lessC. go, lessD. not go, greater

go; greater

Economists think at the margin and are always asking whether a bit more or a bit less of something would be an improvement. What do we cal this principle?

the marginal principle

A situation in which quantity demanded is greater than quantity supplied at a price below the market clearing price.

shortage

A negative tax; a payment to the producer form the goverment; usually in the form of a cash grant per unit.

subsidy

Two goods are __________________ when a change in the price of one causes a shift in demand for the other in the same direction as the price change.

substitutes

costs that have already been incurred and cannot be recovered or refunded

sunk costs

the relationship between price and quantity supplied for a specified period of time, other things being equal

supply

a line showing the supply schedule. which generally slopes upward other things being constant.

supply curve

A situation in which quantity supplied is greater than quantity demanded at a price above the market clearing price

surplus

Before making a choice, economists consider the alternatives, asking: "Or what?" What is this principle called?

the opportunity cost principle

All of the costs associated with exchange

transaction cost

An act of trading, done on elective basis in which both parties to the trade expect to be better off after the exchange.

voluntary exchange