Unit 1 Econ Exam

Refer to Table 4-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. $4; 11 $4; 16 $6; 13 $8; 15

$4; 16

Refer to Table 4-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are __________ and __________, respectively. $8; 15 $10; 17 $12; 9 $12; 10

$8; 15

In the United States, a typical credit card interest rate ranges from ______________ per year. .2% to .8% 2% to 8% 12% to 18% 22% to 28%

12% to 18%

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options. marginal utility sunk costs marginal analysis budget constraints

sunk costs

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income. budget constraint opportunity set utility production possibilities frontier

utility

Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is: 8 points on the history exam. 15 points on the history exam. 14 points on the history exam. 17 points on the history exam.

15 points on the history exam.

In countries like _____________ the command economy predominates. China and Vietnam Cuba and North Korea South Africa and Kenya Germany and France

Cuba and North Korea

Which of the following statements most likely lies within the realm of macroeconomics? An increase in the price of automobiles will lead to a decrease in the quantity of automobiles demanded. Due to process innovations in computer chip manufacturing, the market supply of computers increased. Due to an economic recession, manufacturing firms began implementing layoffs of their workforces. Anticipating that the benefits would outweigh costs involved, an undergraduate student purchases the course textbook.

Due to an economic recession, manufacturing firms began implementing layoffs of their workforces.

Which would cause a shift in the supply curve to the right (increase)? Improved technology Higher product taxes Rise in unit prices Increased government regulation

Improved technology

What do economists call the inverse relationship between price and quantity demanded? Law of demand Demand curve Demand schedule Demand

Law of demand

Which factor corresponds to the curving slope of a production possibilities frontier (PPF) graph? Allocation efficiency Law of diminishing returns Comparative advantage Utility

Law of diminishing returns

For both the U.S. economy and global economy, what are the primary social mechanisms for answering the basic questions about what is produced, and for whom it is produced? Markets—that is, demand and supply Social surplus Price floors Price ceilings

Markets—that is, demand and supply

What do economists call a product whose demand rises when income rises, and falls when income falls? Inferior good Complement Substitute Normal good

Normal good

What type of price control is enacted in an attempt to keep prices low for those who demand the product? Price floor Price ceiling Market equilibrium level Price support

Price ceiling

Which scenario exemplifies the concept of the invisible hand? The combination of approving the new museum and postponing expansion of the airport has been dictated by the city's voters. The city cannot make improvements to its infrastructure without making cuts in another area. Susan feels that despite the economic hardship it will mean to her, all of her children should go to college to achieve their very best. When Carl purchases local products because they are cheaper, he is not thinking of the advantage it has on his area's manufacturing sector.

When Carl purchases local products because they are cheaper, he is not thinking of the advantage it has on his area's manufacturing sector.

A change in price of a good or service typically causes ___________________________ for that specific good or service. a new equilibrium price a change along the supply curve the supply curve to shift a decreased demand

a change along the supply curve

Which of the following lies primarily within the realm of macroeconomics? a study of the demand for gasoline a study of how tax cuts stimulate aggregate production an analysis of supply and demand conditions in the electricity market a study of the impact of "mad cow" disease on the price of beef worldwide

a study of how tax cuts stimulate aggregate production

The term "ceteris paribus" means that: everything is variable. all variables except those specified are constant. no one knows which variables will change and which will remain constant. what is true for the individual is not necessarily true for the whole.

all variables except those specified are constant.

Which of the following will not result in a rightward shift of the market supply curve for labor? a decrease in non-wage income an increase in the working-age population an increase in labor productivity an increase in immigration

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor? a decrease in labor productivity a decrease in demand for the firm's product an increase in the wage rate a decrease in the firm's product price

an increase in the wage rate

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine: the equilibrium price will fall and the equilibrium quantity will fall. both the equilibrium price and quantity will rise. the equilibrium price will rise and the equilibrium quantity will decrease. the equilibrium price will rise, while the change to equilibrium quantity is indeterminate.

both the equilibrium price and quantity will rise.

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good. Opportunity cost productive efficiency budget constraint production possibilities frontier

budget constraint

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of: all consumers. buyers and sellers. producers and input suppliers. producers and government planning committees.

buyers and sellers.

Specialization: leads to greater self-sufficiency. can lead to an increase in overall production. allows workers to develop skills by working on a large number of tasks is always the result of an inefficient use of resources

can lead to an increase in overall production.

Refer to Figure 3-3. A change from Point A to Point E represents a(n): increase in supply. decrease in supply. increase in quantity supplied. decrease in quantity supplied.

decrease in supply.

Regardless of whether you are looking through the microeconomics microscope or the macroeconomics telescope, the fundamental subject material of the interconnected __________ doesn't change. market economy production firm

economy

The circular flow diagram of economic activity is a model of the: flow of goods, services, and payments between households and firms. influence of government on business behaviour. role of unions and government in the economy. interaction among taxes, prices, and profits

flow of goods, services, and payments between households and firms.

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending. business government household capital market

government

Which of the following best describes a fiscal policy tool? government spending bank lending financial capital markets household spending

government spending

Which of the following best describes a monetary policy tool? interest rates taxes household savings government spending

interest rates

Macroeconomics: is concerned with the expansion of a small business into a large corporation. is narrower in scope than microeconomics. analyzes mergers and acquisitions between firms. is concerned with the expansion and contraction of the overall economy.

is concerned with the expansion and contraction of the overall economy.

In the ____________, households work and receive payment from firms. financial investment market financial capital market labor market savings market

labor market

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines. law of trade-offs law of diminishing marginal utility production possibilities frontier law of increasing marginal utility

law of diminishing marginal utility

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase. higher demand lower costs of production equilibrium a shift in demand

lower costs of production

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good. utility marginal analysis the budget constraint consumption

marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines. utility sunk costs marginal utility budget constraint

marginal utility

The basic difference between macroeconomics and microeconomics is: microeconomics concentrates on individual markets while macroeconomics focuses primarily on international trade. microeconomics concentrates on the behaviour of individual consumers while macroeconomics focuses on the behaviour of firms. microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy. microeconomics explores the causes of inflation while macroeconomics focuses on the causes of unemployment.

microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

Many economists believe that the trend toward greater wage inequality across the U.S. economy was primarily caused by _____________. the recession new technologies the rise of global markets inflation

new technologies

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________s, which describe how the world should be. normative statement budget constraint trade-off opportunity cost

normative statement

Attending college is a case where the ________________ exceeds the monetary cost. budget constraint marginal analysis opportunity cost marginal utility

opportunity cost

In many cases, it is reasonable to refer to the ________________ as the price. budget constraint sunk cost opportunity cost budget constraint

opportunity cost

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible. opportunity set consumption choice time value of money risk premium

opportunity set

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________. demand schedule market price quantity supplied demand curve

quantity supplied

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________ . demand curve to the right supply curve to the left supply curve to the right demand curve to the left

supply curve to the right

As the __________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left. high-skill labor lower wage technology market

technology

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is: nothing, because he enjoys playing basketball more than studying. the increase in skill he obtains from playing basketball for that hour. the benefit to his grades from studying for an hour. nothing, because he had a free pass into the sports complex to play basketball.

the benefit to his grades from studying for an hour.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal: the quantity demanded at that price. the quantity supplied minus the quantity demanded. the quantity supplied at that price. (quantity demanded plus quantity supplied)/2.

the quantity supplied at that price.

According to the law of supply: there is a direct relationship between price and the quantity supplied. there is an inverse relationship between price and the quantity supplied. there is a direct relationship between price and quantity demanded. there is an inverse relationship between price and quantity demanded.

there is a direct relationship between price and the quantity supplied.

When quantity demanded decreases in response to a change in price: the demand curve shifts to the right. the demand curve shifts to the left. there is a movement down along the demand curve. there is a movement up along the demand curve.

there is a movement up along the demand curve.

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge. price ceiling laws usury laws price floor laws minimum interest rate

usury laws