Econ Exam #1

When a California farmer decides to harvest lettuce by the use of machines instead of by migrant workers the farmer is answering the --- question

"how"

when a firm decides to produce more electric cars and fewer gas guzzlers, it is most directly answering the -- question

"what"

The night before the midterm exam, you decide to go to the movies instead of studying for the exam. You score 60% on your exam. If you had studied the night before you'd have scored 70%. What was the opportunity cost?

10% off your grade

Suppose Joe can prepare 20 sandwiches or 10 pizzas in an hour and Beth can produce 36 sandwiches or 27 pizzas. The concept of comparative advantage concludes

Beth should produce pizza and Joe should produce sandwiches

Suppose a country of Popcorn produces only jets and corn. If Popcorn cannot produce any more jets without giving up corn, we say that Popcorn has achieved

Production Efficiency

the principle of decreasing marginal benefit implies that

additional benefit from obtaining one more of a good or service decreases as more is consumed

A person has a comparative advantage in producing a particular good if that person

can produce it at lower opportunity cost than anyone else can

economic growth comes from

capital accumulation and technological advance

a marginal cost curve

is upward sloping; shows that a more of a good is produced, opportunity costs of producing another unit increase

Factors of production include

land, labor, capital and entrepreneurship

Scarcity is a situation in which

people cannot satisfy all their wants

when economic growth occurs, the

production possibilites frontier shifts outward

the opportunity cost of good A in terms of good B is equal to the

ratio of the money price of good A to the money price of good B

The demand for a good increases when the price of a substitute-- and also increases when the price of a complement

rises; rises

If the supply of spring water decreases and at the same time the demand for spring water increases, the equilibrium price -- and the -- equilibrium quantity--

rises;might increase, decrease, or stay the same

the law of demand states that, other things remaining the same, the higher the price of a good, the

smaller is the quantity of the good demanded

the opportunity cost of something you decide to get is

the highest valued alternative you give up to get it

Each point on a supply curve represents

the lowest price for which a supplier can profitably sell another unit

the supply curve slopes upward when graphed against --, because of --

the price of a good; increasing marginal cost

if both demand and supply increase, what will be the effect on the equilibrium price and quality?

the quantity will increase but the price will either rise, fall or remain the same

Positive stament example

when the national unemployment rate is 9%, the unemployment rate for inner-city youth is often close to 40%