eco quiz

Refer to Figure 4-2. What area represents producer surplus at a price of P2? B + D A + B + C A + B + C + D + E A + B

A + B + C

Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. Refer to Figure 4-9. How much of the tax is paid by buyers? $8 $5 $4 $3

$3

Figure 4-1 shows Kendra's demand for ice-cream cones curve. Refer to Figure 4-1. Kendra's marginal benefit from consuming the second ice cream cone is $6.50 $6.00 $3.00 $2.25

$3.00

Figure 4-9 shows the market for cigarettes. The government plans to impose a unit tax in this market. Refer to Figure 4-9. What is the size of the unit tax? $8 $5 $3 cannot be determined from the figure

$5

Paul goes to Sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus from the purchase is $325. $200. $125. $75.

$75.

Refer to Figure 4-7. What area represents consumer surplus after the imposition of the price floor? A + B + E A + B + E + D A A + B

A

Figure 4-7 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-7. What area represents the portion of consumer surplus that has been transferred to producer surplus as a result of the price floor? B + E B E B + C

B

Figure 4-7 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-7. What is the area that represents producer surplus after the imposition of the price floor? B + E B + C + D + E A + B + E B + E + F

B + E

Figure 4-7 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-7. What area represents the deadweight loss after the imposition of the price floor? C + D C + D + G C + D + F + G F + G

C + D

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.Refer to Table 2-3. If the two countries specialize and trade, who should export wheat? They should both be exporting wheat. There is no basis for trade between the two countries. South Korea China

China

Which of the following statements is true about competition in a market? Competition forces firms to undercut their selling price, thus benefiting consumers who will be able to purchase products at the lowest price possible. Competition forces firms to outsource the production of their labor-intensive products. Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production.

Competition forces firms to produce and sell products as long as the marginal benefit to consumers exceeds the marginal cost of production.

Which of the following is a normative economic statement? The federal government is considering raising the gasoline tax to promote the use of public transportation. Fashion designers should be allowed to copyright designs to promote innovation. Rising global demand for diesel and heating oil has led to increases in the price of crude oil. With falling home prices and rising mortgage interest rates, the amount of foreclosures has increased.

Fashion designers should be allowed to copyright designs to promote innovation.

Which of the following is a positive economic statement? Everyone should live at the same standard of living. The government should close income tax loopholes. U.S. firms should not be allowed to outsource production of goods and services. If the price of gasoline rises, a smaller quantity of it will be bought.

If the price of gasoline rises, a smaller quantity of it will be bought.

Assume that the graphs in this figure represent the demand and supply curves for almonds. Which panel best describes what happens in this market when there is an increase in the productivity of almond harvesters? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (a)

Assume that the graphs in this figure represent the demand and supply curves for women's clothing. Which panel best describes what happens in this market when the wages of seamstresses rise? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (b)

Assume that the graphs in this figure represent the demand and supply curves for bicycle helmets. Which panel best describes what happens in this market if there is a substantial increase in the price of bicycles? Panel (a) Panel (b) Panel (c) Panel (d)

Panel (d)

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea. Refer to Table 2-3. Does either China or South Korea have an absolute advantage and if so, in what product? South Korea has an absolute advantage in both products. China has an absolute advantage in wheat. South Korea has an absolute advantage in wheat. China has an absolute advantage in digital cameras.

South Korea has an absolute advantage in both products.

the three fundamental questions that any economy must address are How much will be saved; what will be produced; and how can these goods and services be fairly distributed? What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? Who gets jobs; what wages do workers earn; and who owns what property? What goods and services to produce; how will these goods and services be produced; and who receives them?

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

Economists refer a to a market where buying and selling take place at prices that violate government price regulations as a noncompetitive market. an outlaw market. a restricted market. a black market.

a black market.

If an increase in income leads to in an increase in the demand for peanut butter, then peanut butter is a normal good. a complement. a necessity. a neutral good.

a normal good.

The minimum wage is an example of a price floor. a black market. a price ceiling. a subsidy for low-skilled workers.

a price floor.

An example of a factor of production is the automobiles exported by an auto manufacturer. a loan granted to an auto manufacturer. a worker hired by an auto manufacturer. a car produced by an auto manufacturer.

a worker hired by an auto manufacturer.

The basic economic problem of scarcity a. has always existed and will continue to exist. b. is a problem only in developing economies. c.does not apply to the wealthy in society. d.will eventually disappear as technology continues to advance.

a. has always existed and will continue to exist.

By definition, economics is the study of a. the choices people make to attain their goals, given their scarce resources. b. how to make money in the stock market. c. supply and demand. d.how to make money in a market economy.

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

What does the term "marginal" mean in economics? a.an additional or extra b.illegal trivial the edge of a market secondary

a.an additional or extra

The term "market" in economics refers to a.an organization which sells goods and services. b. a group of buyers and sellers of a product and the arrangement by which they come together to trade. c. a legal institution where exchange can take place. d.a place where money changes hands.

b. a group of buyers and sellers of a product and the arrangement by which they come together to trade.

The study of economics arises due to a. money. b. resources. c. greed. d. scarcity.

d. scarcity.

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is George's opportunity cost of mowing a lawn? two-thirds of a garden cultivated. two lawns mowed one and a half lawns mowed half a garden cultivated

half a garden cultivated

Refer to Figure 2-1. Point A is the equilibrium output combination. unattainable with current resources. inefficient in that not all resources are being used. technically efficient.

inefficient in that not all resources are being used.

The revenue received from the sale of an additional unit of a product is called profit. is called a net gain. is called gross sales. is a marginal benefit to the firm.

is a marginal benefit to the firm.

Economic surplus is equal to the sum of consumer surplus and producer surplus. is the difference between quantity demanded and quantity supplied when the market price for a product is greater than the equilibrium price. does not exist when a competitive market is in equilibrium. is equal to the difference between consumer surplus and producer surplus.

is equal to the sum of consumer surplus and producer surplus.

Economic surplus is maximized in a competitive market when marginal benefit equals marginal cost. producers sell the quantity that consumers are willing to buy. demand is equal to supply. the deadweight loss equals the sum of consumer surplus and producer surplus.

marginal benefit equals marginal cost.

The slope of a production possibilities frontier is always varying. has no economic relevance or meaning. is always constant. measures the opportunity cost of producing one more unit of a good.

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

The branch of economics which studies how households and firms make choices, interact in markets and how government attempts to influence their choices is called normative economics. positive economics. microeconomics. macroeconomics.

microeconomics.

To affect the market outcome, a price ceiling must be set below the equilibrium price. must be set below the black market price. must be set below the legal price. must be set below the price floor.

must be set below the equilibrium price.

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is Jack's opportunity cost of cultivating a garden? one and a half lawns mowed two lawns mowed two-thirds of a garden cultivated. half a garden cultivated

one and a half lawns mowed

Refer to Table 4-2. The table above lists the marginal cost of polo shirts by Marko's, a firm that specializes in producing men's clothing. If the market price of Marko's polo shirts is $18 producer surplus from the first shirt is $18. Marko's will produce four shirts. producer surplus will equal $22. there will be a surplus; as a result, the price will fall to $7.

producer surplus will equal $22.

The difference between the lowest price a firm would have been willing to accept and the price it actually receives from the sale of a product is called profit. producer surplus. marginal revenue. price differential.

producer surplus.

Every society faces economic tradeoffs. This means society's output cannot be made available to all. producing more of one good means less of another good can be produced. not everyone can have enough goods to survive. some people live better than others do.

producing more of one good means less of another good can be produced.

When goods and services are produced at the lowest possible cost, ________ occurs. productive efficiency equity efficient central planning allocative efficiency

productive efficiency

Households purchase resources in the product market. purchase final goods and services in the factor market. purchase final goods and services in the product market. purchase resources in the factor market.

purchase final goods and services in the product market.

Households sell goods in the product market. have no influence on the circular flow in a market economy. purchase resources in the factor market. sell resources in the factor market.

sell resources in the factor market.

Scarcity can be eliminated by rationing products. can be overcome by discovering new resources. is a bigger problem in market economies than in socialist economies. stems from the incompatibility between limited resources and unlimited wants.

stems from the incompatibility between limited resources and unlimited wants.

The actual division of the burden of a tax between buyers and sellers in a market is called tax liability. tax incidence. tax bearer. tax parity.

tax incidence.

The principle of opportunity cost is that in a market economy, taking advantage of profitable opportunities involves some money cost. the cost of production varies depending on the opportunity for technological application. taking advantage of investment opportunities involves costs. the economic cost of using a factor of production is the alternative use of that factor that is given up.

the economic cost of using a factor of production is the alternative use of that factor that is given up.

Refer to Figure 2-1. Point B is the equilibrium output combination. unattainable with current resources. technically efficient. inefficient in that not all resources are being used.

the equilibrium output combination.

If a firm expects that the price of its product will be higher in the future than it is today the firm has an incentive to increase supply now and decrease supply in the future. the firm has an incentive to decrease quantity supplied now and increase quantity supplied in the future. the firm has an incentive to decrease supply now and increase supply in the future. the firm will go out of business.

the firm has an incentive to decrease supply now and increase supply in the future.

Which of the following is counted as "capital" in economics? the accumulated skills and training workers have the money people have the machines workers have to work with the wealth people have

the machines workers have to work with

Economic efficiency in a competitive market is achieved when consumers and producers are satisfied. the marginal benefit equals the marginal cost from the last unit sold. economic surplus is equal to consumer surplus. producer surplus equals the total amount firms receive from consumers minus the cost of production.

the marginal benefit equals the marginal cost from the last unit sold.

In a competitive market equilibrium total consumer surplus equals total producer surplus. consumers and producers benefit equally. marginal benefit and marginal cost are maximized. the marginal benefit equals the marginal cost of the last unit sold.

the marginal benefit equals the marginal cost of the last unit sold.

Consumer surplus in a market for a product would be equal to the area under the demand curve if marginal cost was equal to the market price. producer surplus was equal to zero. the market price was zero. the product was produced in a perfectly competitive market.

the market price was zero.

Suppliers will be willing to supply a product only if the price received is at least equal to the additional cost of producing the product. the price received is at least double the additional cost of producing the product. the price received is less than the additional cost of producing the product. the price is higher than the average cost of producing the product.

the price received is at least equal to the additional cost of producing the product.

Deadweight loss refers to the loss of economic surplus when the marginal benefit equals the marginal cost of the last unit produced. the reduction in economic surplus resulting from not being in competitive equilibrium. the sum of consumer and producer surplus. the opportunity cost to firms from producing the equilibrium quantity in a competitive market.

the reduction in economic surplus resulting from not being in competitive equilibrium.

If in the market for apples the supply has decreased then the supply curve for apples has shifted to the left. there has been a movement downwards along the supply curve for apples. there has been a movement upwards along the supply curve for apples. the supply curve for apples has shifted to the right.

the supply curve for apples has shifted to the left.

A demand curve shows the relationship between the price of a product and the demand for the product. the relationship between the price of a product and the total benefit consumers receive from the product. the willingness of consumers to substitute one product for another product. the willingness of consumers to buy a product at different prices.

the willingness of consumers to buy a product at different prices.

Marginal analysis involves undertaking an activity: until its marginal benefits equal marginal costs. only if its marginal costs are greater than its marginal benefits. until its marginal costs start declining. only when its marginal benefits are positive.

until its marginal benefits equal marginal costs.

The resource income earned by those who supply labor services is called wages and salaries. stock options. bonus. profit.

wages and salaries.

Making optimal decisions "at the margin" requires making decisions according to one's whims and fancies. making borderline decisions. weighing the costs and benefits of a decision before deciding if it should be pursued. making consistently irrational decisions.

weighing the costs and benefits of a decision before deciding if it should be pursued.

Refer to Figure 2-5. If the economy is currently producing at point Y, what is the opportunity cost of moving to point W? zero 16 million tons of paper 2 million tons of steel 9 million tons of paper

zero

Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews.Refer to Figure 2-7. What is the opportunity cost of producing 1 pound of cashews in Indonesia? 3/8 bolts of cotton 5/8 bolts of cotton 2 2/3 bolts of cotton 320 bolts of cotton

2 2/3 bolts of cotton

Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. What is the opportunity cost of one pound of vegetables? 3/4 pound of meat 1.2 pounds of meat 1 1/3 pound of meat 12 pounds of meat

3/4 pound of meat

Figure 2-7 shows the production possibilities frontiers for Pakistan and Indonesia. Each country produces two goods, cotton and cashews. Refer to Figure 2-7. What is the opportunity cost of producing 1 bolt of cotton in Indonesia? 3/8 pounds of cashews 5/8 pounds of cashews 2 2/3 pounds of cashews 120 pounds of cashews

3/8 pounds of cashews

Refer to Table 3-1. The table above shows the demand schedules for loose-leaf tea of two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be 51 lb. 63 lb. 76 lb. 146 lb.

63 lb.

Figure 2-2 above shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Refer to Figure 2-2. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also producing, assuming that resources are fully utilized? 45 pounds of meat 75 pounds of meat 80 pounds of meat 100 pounds of meat

75 pounds of meat

What is the difference between an "increase in demand" and an "increase in quantity demanded"? There is no difference between the two terms; they both refer to a shift of the demand curve. An "increase in demand" is represented by a movement along a given demand curve, while an "increase in quantity demanded" is represented by a rightward shift of the demand curve. There is no difference between the two terms; they both refer to a movement downward along a given demand curve. 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.

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.

Which of the following statements is true? An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply. If demand decreases and supply increases one cannot determine if equilibrium price will increase or decrease without knowing which change is greater. A decrease in supply causes equilibrium price to rise; the increase in price then results in a decrease in demand. If both demand and supply increase there must be an increase in equilibrium price; equilibrium quantity may either increase or decrease.

An increase in demand causes a change in equilibrium price; the change in price does not cause a further change in demand or supply.

Which of the following is the correct way to describe equilibrium in a market? At equilibrium, scarcity is eliminated. At equilibrium, quantity demanded equals quantity supplied. At equilibrium, market forces no longer apply. At equilibrium, demand equals supply.

At equilibrium, quantity demanded equals quantity supplied.

Which of the following is correct about the economic decisions consumers, firms, and the government have to make? Each faces the problem of scarcity which necessitates tradeoffs in making economic decisions. Governments may face the problem of shortages but not scarcity in making economic decisions. Firms and the government face scarcity, individuals only face shortages. Only individuals face scarcity; firms and the government do not.

Each faces the problem of scarcity which necessitates tradeoffs in making economic decisions.

Which of the following statements about economic resources is false? Economic resources are used to produce goods and services. Economic resources include financial capital and money. Economic resources are also called factors of production. Some economic resources are human-made while others are found in nature.

Economic resources include financial capital and money.

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. Which of the following statements is true? Jack has an absolute advantage in lawn mowing and George in garden cultivating. Jack has an absolute advantage in garden cultivating and George in lawn mowing. Jack has an absolute advantage in both tasks. George has an absolute advantage in both tasks.

George has an absolute advantage in both tasks.

A movement along the demand curve for toothpaste would be caused by a change in the price of toothbrushes. a change in the price of toothpaste. a change in population. a change in consumer income.

a change in the price of toothpaste.

If, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as a decrease in quantity demanded. a decrease in demand. a decrease in consumers' taste for chocolate. a change in consumer income.

a decrease in quantity demanded.

Farmers can plant either corn or soybeans in their fields. Which of the following would cause the supply of soybeans to increase? a decrease in the price of corn an increase in the price of soybeans an increase in the demand for corn an increase in the price of soybean seeds

a decrease in the price of corn

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase? an increase in the price of flour an increase in the price of rye bread, a substitute for white bread a decrease in the price of flour an increase in the price of butter, a complement for white bread

a decrease in the price of flour

If the price of grapefruit rises, the substitution effect due to the price change will cause a decrease in the demand for oranges, a substitute for grapefruit. a decrease in the quantity demanded of grapefruit. a decrease in the quantity supplied of grapefruit. a decrease in the demand for grapefruit.

a decrease in the quantity demanded of grapefruit.

Holding everything else constant, an increase in the price of MP3 players will result in an increase in the supply of MP3 players. a decrease in the quantity of MP3 players supplied. a decrease in the quantity of MP3 players demanded. a decrease in the demand for MP3 players.

a decrease in the quantity of MP3 players demanded.

The phrase "demand has increased" means that a demand curve has shifted to the right. there has been a downward movement along a demand curve. a demand curve has shifted to the left. there has been an upward movement along a demand curve.

a demand curve has shifted to the right.

Which of the following will not shift the demand curve for a good? an increase in population an increase in consumer incomes a decrease in the price of a substitute good an increase in the price of the good

an increase in the price of the good

If a decrease in income leads to an increase in the demand for macaroni, then macaroni is an inferior good. a necessity. a normal good. a neutral good.

an inferior good.

At a product's equilibrium price any buyer who is willing and able to pay the price will find a seller for the product. the federal government will provide the product to anyone who cannot afford it. not all sellers who are willing to accept the price will find buyers for their products. anyone who needs the product will be able to buy the product, regardless of ability to pay.

any buyer who is willing and able to pay the price will find a seller for the product.

The production possibilities frontier model assumes all of the following except any level of the two products that the economy produces is currently possible. the economy produces only two products. labor, capital, land and natural resources are fixed in quantity. the level of technology is fixed and unchanging.

any level of the two products that the economy produces is currently possible.

If the marginal cost of producing a television is constant at $200, then a firm should produce this item until the marginal benefit it receives reaches zero. as long as the marginal benefit it receives is just equal to or greater than $200. as long as its marginal cost does not rise. only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.

as long as the marginal benefit it receives is just equal to or greater than $200.

The law of demand implies, holding everything else constant, that as the price of bagels increases, the quantity of bagels demanded will decrease. as the price of bagels increases, the quantity of bagels demanded will increase. as the price of bagels increases, the demand for bagels will decrease. as the price of bagels increases, the demand for bagels will increase.

as the price of bagels increases, the quantity of bagels demanded will decrease.

Which of the following is part of an economic model? preferences of economic agents opinions assumptions norms

assumptions

Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision? depends on the "going rate" for stay-at-home dads at least $60,000 0 since he will no longer be earning a salary the value he attributes to the joy of parenting

at least $60,000

What is an economic model? a. It is a description of an economic issue that includes all possible related information. b.It is a simplified version of some aspect of economic life used to analyze an economic issue. c.It is a description of an economic issue based on official government information. d.It is a detailed version of some aspect of economic life used to analyze an economic issue.

b.It is a simplified version of some aspect of economic life used to analyze an economic issue.

Assume that both the demand curve and the supply curve for MP3 players shift to the right but the demand curve shifts more than the supply curve. As a result the equilibrium price of MP3 players will decrease; the equilibrium quantity may increase or decrease. the equilibrium price of MP3 players may increase or decrease; the equilibrium quantity will increase. the equilibrium price of MP3 players will increase; the equilibrium quantity may increase or decrease. both the equilibrium price and quantity of MP3 players will increase.

both the equilibrium price and quantity of MP3 players will increase.

Consider the following two factors: a. A study conducted by Forrester Research estimates that between 2000 and 2015, 3.3 million jobs in the United States will have been outsourced. b. Over this same period, the number of jobs expected to be created is more than 450 million and the number of jobs due to all causes is estimated at 430 million. These statements suggest that a. the US is not creating jobs fast enough to offset jobs lost due to outsourcing and other causes. b. it is highly likely that the average person will lose her job due to outsourcing. c. the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job due to other causes. d. the likelihood that the average person will lose her job due to outsourcing is large small to losing her job due to other causes.

c. the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job due to other causes.

You have an absolute advantage whenever you can produce something at a lower opportunity cost than others. prefer to do one particular activity. can produce more of something than others with the same resources. are better educated than someone else.

can produce more of something than others with the same resources.

Which of the following generates productive efficiency? government inspectors government production rules and regulations competition among sellers competition among buyers

competition among sellers

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called consumer surplus. the substitution effect. producer surplus. the income effect.

consumer surplus.

Which of the following best describes an assumption economists make about human behavior? a.They assume that people take into account the question of fairness in all decisions they make. b.They assume that individuals act randomly. c.They assume that individuals act rationally all the time in all circumstances. d.They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

d.They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.

Table 2-3 shows the number of labor hours required to produce a digital camera and a pound of wheat in China and South Korea.Refer to Table 2-3. South Korea has a comparative advantage in the production of both products. wheat. neither product. digital cameras.

digital cameras.

A worker is hired in a government market. goods and services market. product market. factor market.

factor market.

A supply schedule is a table that shows the relationship between the price of a product and the quantity of the product that producers and consumers are willing to exchange. is a table that shows the relationship between the price of a product and the quantity of the product supplied. is the relationship between the supply of a good and the cost of producing the good. is a curve that shows the relationship between the price of a product and the quantity of the product supplied.

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

The area above the market supply curve and below the market price is equal to the total cost of production. is equal to the marginal cost of the last unit produced. is equal to the total amount of producer surplus in a market. is equal to the total amount of economic surplus in a market.

is equal to the total amount of producer surplus in a market.

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called normative economics. microeconomics. public economics. macroeconomics.

macroeconomics.

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except engage in mutually beneficial trade with other nations. consume a combination of goods that lies outside its own production possibilities frontier. increase the variety of products that it can consume with no increase in resources. produce a combination of goods that lies outside its own production possibilities frontier.

produce a combination of goods that lies outside its own production possibilities frontier.

Comparative advantage means the ability to produce more of a product with the same amount of resources than any other producer. the ability to produce a good or service at a lower opportunity cost than any other producer. compared to others you are better at producing a product. the ability to produce a good or service at a higher opportunity cost than any other producer.

the ability to produce a good or service at a lower opportunity cost than any other producer.

Human capital refers to the accumulated skills and training workers have. the machines workers have to work with. the wealth people have. the money people have.

the accumulated skills and training workers have.

Marginal cost is the average cost of producing a good or service. the difference between the lowest price a firm would have been willing to accept and the price it actually receives. the additional cost to a firm of producing one more unit of a good or service. the total cost of producing one unit of a good or service.

the additional cost to a firm of producing one more unit of a good or service.

The total amount of producer surplus in a market is equal to the area above the market supply curve and below the market price. the area between the demand curve and the supply curve below the market price. the difference between quantity supplied and quantity demanded. the area above the market supply curve.

the area above the market supply curve and below the market price.

The substitution effect of a price change refers to the shift of a demand curve when the price of a substitute good changes. the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes. the movement along the demand curve due to a change in purchasing power brought about by the price change. the shift in the demand curve due to a change in purchasing power brought about by the price change.

the change in quantity demanded that results from a change in price making a good more or less expensive relative to other goods that are substitutes.

Opportunity cost is defined as the highest valued alternative that must be given up to engage in an activity. the monetary expense associated with an activity. the total value of all alternatives that must be given up to engage in an activity. the benefit of an activity.

the highest valued alternative that must be given up to engage in an activity.

A consumer is willing to purchase a product up to the point where he spends all of his income. the quantity demanded is equal to the quantity supplied. he is indifferent between consuming and saving. the marginal benefit is equal to the price of the product.

the marginal benefit is equal to the price of the product.

The production possibilities frontier shows what an equitable distribution of products among citizens would be. what people want firms to produce in a particular time period. the various products that can be produced now and in the future. the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

Willingness to pay measures the maximum price a buyer is willing to pay minus the minimum price a seller is willing to accept. the maximum price a buyer is willing to pay for a product minus the amount the buyer actually pays for it. the maximum price that a buyer is willing to pay for a good. the amount a seller actually receives for a good minus the minimum amount the seller is willing to accept for the good.

the maximum price that a buyer is willing to pay for a good.

Increasing marginal opportunity cost implies that the more resources already devoted to any activity, the benefits from allocating yet more resources to that activity decreases by progressively larger amounts. that rising opportunity costs makes it inefficient to produce beyond a certain quantity. the law of scarcity. the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

the more resources already devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts.

The income effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power. the quantity demanded when income changes. income on the price of a good. demand when income changes.

the price of a good on a consumer's purchasing power.

Technology is defined as the process of developing and revising models. new innovations and creations. the process of recycling products. the processes used to produce goods and services.

the processes used to produce goods and services.

Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline, the demand curve shifted to the right resulting in an increase in the equilibrium price. the demand curve shifted to the left resulting in a decrease in the equilibrium price. the supply curve shifted to the right resulting in an increase in the equilibrium price. the supply curve shifted to the left resulting in an increase in the equilibrium price.

the supply curve shifted to the left resulting in an increase in the equilibrium price.

The demand for lobster is lower in the spring than in the summer. If the price of lobster is higher in spring than in summer then there are more substitutes for lobster in summer than there are in spring. consumers' tastes for lobster are greater in spring than in summer. the supply of lobster is greater in summer than in spring. there is a shortage of lobster in spring and a surplus of lobster in summer.

the supply of lobster is greater in summer than in spring.

Each point on a demand curve shows the willingness of consumers to purchase a product at different prices. the legally determined maximum price that sellers may charge for a given quantity of a product. the economic surplus received from purchasing a given quantity of a product. the consumer surplus received from purchasing a given quantity of a product.

the willingness of consumers to purchase a product at different prices.

Refer to Figure 3-3. At a price of $5, there would be a shortage of 4 units. there would be a scarcity of 4 units. there would be a shortage of 6 units. there would be a surplus of 4 units.

there would be a shortage of 4 units.

Refer to Figure 3-2. If the price is $25, there would be a surplus of 200 units. there would be a shortage of 200 units. there would be a surplus of 300 units. there would be a shortage of 300 units.

there would be a surplus of 300 units.

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is George's opportunity cost of cultivating a garden? two lawns mowed two-thirds of a garden cultivated one and a half lawns mowed half a garden cultivated

two lawns mowed

Table 2-2 shows the output per day of two gardeners, George and Jack. They can either devote their time to mowing lawns or cultivating gardens. Refer to Table 2-2. What is Jack's opportunity cost of mowing a lawn? two lawns mowed two-thirds of a garden cultivated one and a half lawns mowed half a garden cultivated

two-thirds of a garden cultivated

Refer to Figure 2-1. Point C is is the equilibrium output combination. technically efficient. unattainable with current resources. inefficient in that not all resources are being used.

unattainable with current resources.

An increase in the equilibrium price for a product will result when there is a decrease in supply and an increase in demand for the product. when there is a decrease in supply and a decrease in demand for the product. when there is an increase in demand and an increase in the number of firms producing the product. when the quantity demanded for the product exceeds the quantity supplied.

when there is a decrease in supply and an increase in demand for the product.

Which of the following is not an example of an economic tradeoff that a firm has to make? whether or not consumers will buy its products whether it should produce more of its product whether it is cheaper to produce with more machines or with more workers whether it is to outsource the production of a good or service

whether or not consumers will buy its products