ECON 2101 Test 1 Study Guide

An increase in price and quantity

Given a supply curve that is positively sloped and a demand curve for a normal good that is negatively sloped, an increase in income will most likely result in:

The set of acquired skills and abilities that workers bring to the production of goods and services

Human Capital is

1/2 pound of potatoes

If Farmer Erasmus MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear possibilities curve for his farm, the opportunity cost of producing an additional pound of cabbage is

It indicates combinations of good A and good B that society can produce using all of the economy's factor efficiently

If all the points are on the curve

Has no idle resources and is using resources efficiently

If an economy is producing a level of output that is on its production possibilities curve, the economy

Command economy

If an economy's factors of production were owned by the government sector and the coordinating activity was done by a government planning board, the economy would be called

Maximizing profits or minimizing losses.

In a market economy, entrepreneurs are most concerned with

The cost, if any, to the American and South Korean economies of the tariff

In considering the effects of South Korea's tariff on imported of US corn, an economist considers

Technology does not change

In drawing a production possibilities curve, it is assumed that:

Specialization in the production of goods

International trade is possible in part through

The analysis of the aggregate values in the economy

Macroeconomic deals with

Relationship between the quantity of a good or service sellers are willing to offer for sale and the independent variables that determine quantity

Supply is best defined as the:

What, how, and for whom

The fundamental economic questions that every economic system must answer are:

Prices

The key signals that sends messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged

Downward sloping

The law of demand is illustrated by a demand curve that is:

An increase in the purchases of personal computers results from lower prices.

The law of demand is illustrated when

Resources are not equally productive in all output categories.

The law of increasing opportunity costs is a result of the fact that:

Emphasize basic relationships by abstracting from complexities in the everyday world

The models used in economics

What is given up to acquire it

The opportunity cost of something is:

The equilibrium price falls, and the equilibrium quantity rises

The price of an apple falls. What happens in the market for apple pies

A change in quantity demanded is a movement along the demand curve, and a change in demand is a shift in the demand curve

The primary difference between a change in demand and a change in the quantity demanded is:

Aggregates in the economy

The primary emphasis in macroeconomics is on:

Most goods can be produced with different combinations of resources.

The problem of determining how goods and services should be produced exists because:

Natural ability and human capital

Two components of labor are

Demand

When economists study the behavior of buyers, they are studying

Scarcity

When we are forced to make a choice we are facing the concepts of

Suppliers' expectations of higher prices in the future

A decrease in supply could be caused by

A shift to the left of the entire supply

A decrease in supply means

An increase in the quantity demanded

A decrease in the price of a good will, all other things unchanged, result in:

Capital

A factor of production that has been produced for use in production of other goods and services is

Assigning opportunity costs a major role in their analyses of choices, assuming individuals make choices to maximize objectives, and emphasizing that choices are made at the margin.

A feature that distinguishes economists' approach to making choices is (are)

Entrepreneur

A person who seeks to earn profits by finding ways to organize factors of production is called a(n)

Resources are equally good at producing either good.

A production possibilities curve that is a straight line means

Advances in technology

A source of economic growth

If you achieve more of one, you will achieve less of the other.

A tradeoff between two economic goals means that

Dependent

A variable that responds to a change in another variable is called a(n) _______ variable.

Has the highest cost for producing that good

An economy is said to have a comparative advantage in producing a particular good if it

An increase in investment spending tends to reduce unemployment

An example of a positive statement

Technology

An example of a supply shifter

Was produced and can be used to produce other goods and services

Any factor of production is capital if it

One pair of blue mittens

Assume that the economy above wants to consume some green mittens and some blue mittens. They would never consume all blue mittens or all green mittens. In the production possibilities curve above, the opportunity cost of producing one pair of green mittens is

All other things unchanged

Ceteris paribus means:

Lower opportunity cost.

Comparative advantage leads to producing at a:

Specialize in producing green mittens and trade for blue mittens

Consider the economy whose production possibilities is shown above. If they have the opportunity to trade 1 pairs of green mittens for 2 pairs of blue mittens, this economy will

Specialize in producing blue mittens and trade for green mittens

Consider the economy whose production possibilities is shown above. If they have the opportunity to trade 3 pairs of green mittens for 2 pairs of blue mittens, this economy will

Demand shifters

Consumer preferences, prices of related goods, income, and demographic characteristics are often termed

The quantity buyers are willing to and able to purchase at various prices during a particular period, all other things unchanged

Demand is defined as

Social science concerned chiefly with how people choose among alternatives

Economics is a

The resources the economy has available to produce goods and services

Factors of production are

A choice must be made between two or more alternatives

Scarcity exists when

2 pounds of cabbage

Suppose Farmer Sam Macdonald faces a linear production possibilities curve for his farm. He can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes. The opportunity cost of producing an additional pound of potatoes is

Demand increases

Suppose scientists discover that eating asparagus slows down the aging process. How this will affect the market for asparagus?

Supply increases

Suppose the technology for producing automotive gasoline improves. How this will affect the market for automative gasoline?

Helps to restrict analysis to the effect of a single economic factor

The "all other things unchanged" assumption is useful because it

Is positive

The current rate of unemployment is 5 percent. This statement:

Making choices at the margin

The economic way of thinking has to do with

Opportunity cost

The sacrifice of an alternative is called

Normative statement

The statement that the minimum wage needs to be increased is a

Exist because of scarcity

The three fundamental economic questions of what, how, and for whom:

The equilibrium price and quantity rise

There is an increase in incomes. What happens in the market for steak, a normal good?