Test 1 microeconomics

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

inferior good

demand decreases as income rises and increases as income falls

normal good

demand increases as income rises and decreases as income falls

the quantity of smartphones demanded by consumer falls. therefore the demand curve for smartphones

downward sloping

financial capital

is not part of a country's capital stock

Microeconomics

is the study of how households and firms make choices

why is economics considered a social science

it is the study of the interactions of people

physical capital

machinery and tools

which of the following covers the study of topics such as inflation and unemployment

macroeconomics

the stock of computers, factory buildings, and machine tools used to produce goods better are known as

physical capital

Which of the following involves an estimation of the benefits and costs of a particular action

positive analysis

the statement "A minimum wage actually reduces employment" would be considered what type of statement

positive statement

which of the following is used to describe how changes in price effect a consumer's purchasing power

the income effect

what does the term quantity demanded refer to

the quantity of a good or service that a consumer is willing and able to purchase at a given price

quantity supplied

the quantity of a good or service that a firm is willing and able to supply at a given price

Which of the following explains why there is an inverse relationship between the price of a product and the quantity of the product demanded

the substitution effect

which of the following is used to explain why consumers buy other goods when the price of a good rises

the substitution effect

Which of the following is critical to the success of a market system

to allow individuals or firms to have exclusive use of their property

what is the purpose of an economic hypothesis

to establish a casual relationship

In economics, how do rational people behave?

They decide on an action only if its benefits outweigh its costs

which of the following would not shift the demand curve for a good or service

a change in the price of the good or service does not shift, it would cause a movement

demand curve

a curve that shows the relationship between the price of a product and the quantity of the product demanded

which of the following is the correct definition of demand schedule

a table showing the relationship between the price of a product and the quantity of the product demanded

supply schedule

a table that shows the relationship between the price of a product and the quantity of the product supplied

when a good or service is produced up to the point where the marginal benefit to consumers is equal to the marginal cost of producing it

allocative efficiency

law of supply

an increase in price causes an increase in the quantity supplied, and a decrease in price causes a decrease in the quantity supplied

What is the name given to the development of a new good or a new process for making a good

an invention

optimal decisions are made

at the margin

In what type of economy does the government decide how economic resources will be allocated

centrally planned economies

economists refer to the necessity of holding all variables other than price constant in constructing a demand curve

ceteris paribus condition

A fair distribution of economic benefits

equity

law of demand

holding everything else constant, when the price of a good falls, the quanity demanded will increase, and when the price of a good rises, the quantity demanded will decrease

which of the following compromises the two key groups of participants in the circular flow of income

households and firms

An example of a positive question

if the college increased tuition, would class sizes decline?

what is the outcome of enforcing contracts and property rights in a market system

increased economic activity

When you think of an arrangement or institution that brings buyers and sellers of a good or service together, what are you thinking of?

market

which of the following is the best classification for the economies of the United States, Canada, Japan and Western Europe

mixed economies

which of the following best describes the characteristics of models used in economics

models are simplifications of reality that include only essential elements and exclude less relevant details

what type of economic analysis is concerned with the way things ought to be

normative analysis

what type of assessment is one in which a person's values and political views form part of that assessment

normative assessment

what is the term for the highest valued alternative that must be given up to engage in any activity

opportunity cost

what does an economy achieve by producing a good or service at the least possible cost

productive efficiency

what are copyrights designed to do

protect intellectual property rights

A question that can be answered using economic reasoning

should a college cut tuition to stimulate enrollments

Generally speaking, for a market system to work, individuals must

take risks and act in rational, self interested ways

a firms process to produce goods and services

technology

human capital

the accumulated training and skills that workers possess

what happens if a country produces a combination of goods that uses all of the resources available in the economy

the country is operating on its production possibilities frontier

market demand

the demand by all the consumers for a given good or service

the situation in which a buyer and seller exchange a product in a market and as a result both are made better off by the transaction

voluntary exchange