Econ 202 Nwoha exam 1

A competitive market is a market in which

no individual buyer or seller has any significant impact on the market price

What must be given up to obtain an item is called

opportunity cost

Refer to Figure 6-10. The price that buyers pay after the tax is imposed is

$24

A manufacture produces 400 units when the market price is $10 per unit and produces 600 units when the market price is $12 per unit. Using the midpoint method, for this range of prices, the price elasticity of supply is about

2.2

Refer to figure 3-1. The rate of trade-off between producing chairs and producing couches is constant to

Graph (b) only.

If the government removes a binding price ceiling from a market, then the price paid by buyers will

Increase, and the quantity sold in the market will increase

Assume that a 4 percent increase in income results in a 2 percent increase in the quantity demanded of a good. The income elasticity of demand for the good is

Positive, and the good is a normal good

A legal minimum on the price at which a good can be sold is called a

Price floor

What will happen to the equilibrium price and quantity of new cars if the price of gasoline rises, the price of steel rises, public transportation becomes cheaper and more comfortable, and auto-workers negotiate wages?

Quantity will fall, and the effect on the price is ambiguous.

In the 1970s, long lines at gas stations in the United States were primarily a result of the fact that

The US government maintained a price ceiling on gasoline.

Refer to figure 2-4, Graph (a) and Graph (b). A shift of the economy's production possibilities frontier from Graph (a) could be caused by

an improvement in donut production technology

Refer to Figure 4-6. The shift from S to S could be caused by an

an increase in input prices

A good will have a more inelastic demand, the

broader the definition of the market

A tax on the buyers of cameras encourages

buyers to demand a smaller quantity at every price

Equilibrium price must decrease when demand

decreases and supply does not change, when demand does not change and supply increases, and when demand decreases and supply increases simultaneously

Two goods are substitutes when a decrease in the price of one good

decreases the quantity demanded of the other good

Refer to figure 4-1. It is apparent from the figure that the

demand for the good confirms to the law of demand.

A decrease in supply will cause the largest increase in price when

demand is elastic and supply is inelastic

Economists make assumptions to

focus their thinking on the essence of the problem at hand

Central planning refers to

government guiding economic activity. Today many countries that had this system have abandoned it.

If an externality is present in a market, economic efficiency may be enhanced by

government intervention

The "invisible hand" refers to

government regulations without which the economy would be less efficient

A circular-flow diagram is a model that

helps to explain how consumers and the government interact with one another

A popular celebrity that is paid highly for her time should probably not mow her own lawn because

her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

in order to consume beyond it pff, the United States should produce more pork than what it requires and export some of it to Mexico

Trade between countries tends to

increase both competition and specialization.

Refer to figure 2-3. This economy cannot currently produce 70 washers and 70 dryers because

it does not have the resources and technology to produce that level of output

An economy's production of two goods is efficient if

it is possible to produce more of one good without producing less of the other

Refer to Figure 4-10. Which of the following movements would illustrate the effect in the market for swimming lessons of an increase in the incomes of parents with school-aged children

point A to point D

Refer to figure 4-10. Which of the following movements would illustrate the effect in the market for golf balls of an increase in green fees?

point C to point B

When an economist points out that you and millions of other people are interdependent, he or she is referring to the fact that we all

rely upon one another for the goods and services we consume

Efficiency means that

society is getting the most it can from its scarce resources

If the number of sellers in a market increases, then the

supply in that market will increase

A rational decisionmaker

takes an action only if the marginal benefit of that action exceeds the marginal cost of that action

Demand is said to be inelastic if

the quantity demanded changes only slightly when the price of the good changes.

Productivity is defined as

the quantity of goods and services produced from each unit of labor input

A key determinant of the price elasticity of supply in the

time horizon

Refer to Figure 4-8. All else equal, the premature deaths of thousands of turkeys would cause a move from

x to y

A $1.50 tax levied on the buyers of pomegranate juice will shift the demand curve

downward by exactly $1.50

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that

equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.

Trade between countries

allows each country to consume at a point outside its production possibilities frontier

Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase total revenue?

4

Which of the following changes would not shift the demand curve for a good or service?

A change in the price of the good or service

Suppose there is a flood in St. Louis, Missouri, that destroys several beer bottling facilities. Which of the following would not be a direct result of this event?

Buyers would not be willing to buy as much before at each relevant price.

Refer to figure 2-1 Morgan buys a refrigerator for his new home. To which of the arrows does this transaction directly contribute

C only

Refer to Figure 2-3. Suppose this economy is producing at point D. Which of the following statements would best explain this situation?

There is widespread unemployment in the economy

If something happens to alter the quantity supplied at any given price, then

We move along the supply curve

refer to figure 4-4 The movement from point A to B on the graph is called

a decrease in supply

cross-price elasticity of demand

a measure of how much the quantity demanded of one good responds to a change in the price of another good.

Minimum-wage laws dictate

a minimum wage that firms must pay workers