ChandlerMicro1

Which of the following is a positive economic statement?

If the price of IPhones falls, a larger quantity of IPhones will be purchased

Which of the following statements about scarcity is true?

Scarcity refers to the situation in which unlimited wants exceed limited resources

The three fundamental questions that any economy must address are

What goods and services to produce; how will these goods and services be produced; and who receives them?

Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?

a decrease in the price of cattle

The revenue received from the sale of _________ of a product is a marginal benefit to the firm.

an additional unit

Which of the following is a factor of production?

an oven in a bakery

Comparative advantage means the ability to produce a good or service

at a lower opportunity cost than any other producer

Which of the following is a common mistake made by consumers

being overly optimistic about their future behavior

We can derive the market demand curve for gold earrings

by adding horizontally the individuals demand curve of each gold earring consumer

You have an absolute advantage whenever you

can produce more of something than others with the same resources

The observation that people tend to value something more highly when they own it than when they don't is called the

endowment effect

All of the following are critical functions of the government in facilitating the operation of a market economy except

ensuring an equal distribution of income to all citizens

Marginal utility is the

extra satisfaction received from consuming one more unit of a product

If a commercial dairy farm wants to purchase feeding throughs, it does so in the

factor market

In the circular flow model, producers

hire resources sold by households in the factor market

Microeconomics is the study of

how households and firms make choices

The production possibilities frontier model shows that

if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

A supply schedule

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

If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.

linear

Economists assume that the goal of consumers is to

make themselves as well off as possible

Economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost

The demand by all the consumers of a given good or service is the _______ for the good or service.

market demand

The slope of a production possibilities frontier

measures the opportunity cost of producing one more unit of a good.

In their surveys of consumers,Daniel Kaheman, Jack Knetsch and Richard Thaler found that

most people considered an increase in price by firms following an increase in their costs to be fair but believed it was unfair for firms to raise their prices because of an increase in demand

All of the following are part of an economic model except

opinions

The highest valued alternative that must be given up to engage in an activity is the definition of

opportunity cost

Economic models do all of the following except

portray reality in all its minute details

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

price; quantity; price

If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe

should buy more apples and fewer oranges

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources

Macroeconomics is the study of

the economy as a whole

When the price of audio books, a normal good, falls causing your purchasing power to rise, you buy more of it due to

the income effect

If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of

the law of diminishing marginal utility

In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change

the price of the product and hold everything else constant

Adams Smith's invisible hand refers to

the process by which individuals acting in their own self - interest bring about a market outcome that benefits society as a whole

The law of demand implies, holding everything else constant, that as the price of bagels increases,

the quantity of bagels demanded will decrease

What is behavioral economics?

the study of situations in which people act in ways that are not economically rational

A network externality occurs when

the usefulness of a good is affected by how many others use the good

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

trade-off

Economists have used the ultimatum game and the dictator game in experiments designed to determine

whether consumers care about fairness when they make decisions

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake?

2/5 of a cappuccino

Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?

25 silk leaves

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve

What is the difference between an 'increase in supply' and an 'increase in quantity supplied"?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Which of the following is the correct way to describe equilibrium in a market?

At equilibrium, quantity demanded equals quantity supplied

Which of the following is a normative economic statement?

The price of gasoline is too high

Which of the following is a microeconomics question?

What factors determine the price of carrots