ECON EXAM !

Per capita GDP

= GDP/Population

Value added

= value of good - cost of intermediate goods

movement along the demand curve

A change in price will lead to a

along D2 from Point B to Point A.

A decrease in quantity demanded is represented by the movement

supply curve S3.

A decrease in the price of mushrooms (an input for gardenburgers) will cause a movement from Point B on supply curve S2 to

there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza.

A frozen food manufacturer can produce either pizzas or calzones. As a result of an increase in the price of calzones, the firm produces more calzones and fewer pizzas. An economist would explain this by saying

Production Possibility Frontier (PPF)

A graph that shows all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

The expenditure approach

A method of computing GDP that measures the amount spent on all final goods during a given period.

The income approach

A method of computing GDP that measures the income—wages, rents, interest, and profits—received by all factors of production in producing final goods.

change in supply

A non-price induced change in supply is referred to simply as

quantity demanded

A price induced change in demand is referred to as a change in

quantity supplied

A price induced change in supply is referred to as a change in

an improvement in technology

A shift from ppf1 to ppf2 may be caused by

False

A shift in the supply curve is caused by a change in a good's own price.

A to C.

According to Figure, an increase in unemployment may be represented by the movement from

f

According to the figure, which point cannot be produced with the current state of technology?

positive relationship between price and the quantity of a good supplied.

According to the law of supply, there is a

truw

All else equal, higher costs lower a firms profits. This will generally cause firms to supply less, as producing more may be far too expensive and not profitable

shift from ppf1 to ppf2.

An improvement in technology may be represented by a

from D2 to D3.

An increase in demand is represented by the movement

Point B to Point A along supply curve S2

An increase in quantity supplied is represented by a movement from

decrease in quantity demanded; movement along the demand curve

An increase in the price of a good or service leads to a(n) ________ that leads to a(n) ________.

supply curve S1.

An increase in the wage rate of pizza makers will cause a movement from Point B on supply curve S2 to

right

An increase in wealth typically shifts the Demand curve to the

will shift the supply curve of cotton to the left, the equilibrium price of cotton will increase, and the quantity demanded of cotton will decrease.

An insect that is resistant to currently used pesticides has infested the cotton crop, and this year's crop is only half of what was produced last year.You accurately predict that this

shift of a demand curve

Any factor other than price that results in a change in demand, will cause a

change in demand

Any non-price induced change in demand is referred to simply as a

$10, 11

Assume that there are only two people in the market for baseball caps: Alex and Ryan. Along the market demand curve for baseball caps, at a price of _____, quantity demanded would be _____.

Durable goods Nondurable goods Services

C (personal consumption expenditures)

true

Changes in tastes and preferences will affect demand, as they affect consumers' willingness to purchase goods and services

are a normal good and sushi is an inferior good.

During an economic downturn when consumer income falls, the demand for tacos increases and the demand for sushi decreases.

Federal State and local

G (Government consumption and gross investment)

Nonresidential Residential change in business inventories

I (Gross private domestic investment)

without sacrificing any consumer goods

If Macroland's economy is at Point A, it could produce more capital goods

closer to its production possibilities frontier (ppf).

If an economy begins to use its resources more efficiently, it will move

increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded.

If improvements in technology have reduced the cost of producing personal computers, you accurately predict that in the market for personal computers, there will be a(n)

demand curve D3.

If pizza and beer are complementary goods, a decrease in the price of beer will cause a movement from Point B on demand curve D2 to

demand curve D3.

If pizza and hamburgers are substitutes, an increase in the price of hamburgers

surplus

If price is above equilibrium, there is a

shortage

If price is below equilibrium, there is a

normal good

If the demand for coffee decreases as income decreases, coffee is a(n)

decrease, the quantity demanded will rise, and the quantity supplied will fall.

If the market for tires is unregulated and is presently characterized by excess supply, you can accurately predict that price will

remain constant because the market is in equilibrium.

If the price per cheeseburger is $7, the price will

decrease because there is an excess supply in the market.

If the price per pizza is $12, the price will

excess supply of 600 units.

If the price per pizza is $15, there is a(n)

opportunity cost

It is the value of the best alternative that you give up when you make a choice.

the equilibrium price to either increase, decrease or remain the same and the equilibrium quantity to decrease.

Lettuce and spinach are substitutes. Lettuce and tomatoes are complements. Lettuce is a normal good. During the winter, about 20% of the lettuce crop was destroyed by flooding. If at the same time that part of the lettuce crop was destroyed, consumer income also decreased. Then, ceteris paribus, in the market for lettuce this would have caused

Scarcity

Limited quantities of resources to meet unlimited wants

the supply of mustard would decrease, the price of mustard would increase, and the quantity demanded of mustard would decrease.

Mustard and mayonnaise are substitutes. Mustard and relish are complements. Mustard is a normal good. During the summer, about 50% of all mustard was recalled by manufacturers and removed from store shelves. As a result of the recall, you would expect that

Exports (EX) Imports (IM)

Net exports (EX - IM)

supply, decrease

One explanation for the increase in the price of the Baltimore newspaper is the increase in the cost of newsprint. This would cause the ________ of Baltimore newspapers to ________.

law of diminishing returns

PPF is concave due to the....

both full resource employment and production efficiency.

Point B represents a situation of

only when an economy produces underneath its production possibility frontier.

Production inefficiency occurs

The price of plasma TVs would increase and the rental price of DVDs would decrease.

Rented DVDs and movies shown in theaters are substitutes. Rented DVDs and plasma TVs are complements. Plasma TVs and movies are shown in theaters are normal goods. People watch rented DVDs more often in the winter than in the summer. Most plasma TVs sold in the United States are imported from Japan. If the United States government reduces the number of plasma TVs that can be imported into the United States, ceteris paribus, what would happen?

substitutes

Suppose the demand for books goes down when the price of video games goes down. We can say that these two goods are

Increases supply

Technological advances

as prices fall, quantity demanded increases.

The "law of demand" implies that

demand for the Kindle increases, the quantity of electronic textbooks demanded increases, and demand for traditional, hard − copy textbooks decreases.

The Amazon Kindle and the electronic textbooks available for the Kindle are complementary goods. Electronic textbooks and traditional, hard − copy textbooks are substitute products. If the price of electronic textbooks for the Kindle decreases

indeterminate from this information, as we don't have any information about society's preference

The best point for society would be

Scarcity

The concept of opportunity cost is based on the principle of

30 LCD televisions that must be forgone to produce 20 additional plasma televisions

The economy is currently at Point A. The opportunity cost of moving from Point A to Point B is the

Microeconomics

The focus is on the behaviors of an individual economic agent (e.g. a firm or a consumer). The objective is to learn how an economic agent makes decisions in different types of market environment.

increasing

The law of _____ opportunity costs is best depicted by the production possibilities frontier in panel A.

$4.00, 350

The market is initially in equilibrium at Point A. If demand shifts from D1 to D2 , the new equilibrium price will be _____ and the new equilibrium quantity will be _____.

a decrease in the rental price of DVDs.

The number of DVDs Isabel rents per week increases from 4 to 7. This is caused by

constant

The opportunity cost of sailboats in terms of surfboards is

all the combinations of goods and services that can be produced if all of society's resources are used efficiently.

The production possibility frontier is a graph that shows

opportunity costs

The production possibility frontier is used to illustrate the concept of

price of pepsi has increased

The quantity demanded of Pepsi has decreased. The best explanation for this is that

increasing opportunity costs

The shape of Macroland's production possibility frontier shows

Inferior Goods

The type of goods for which the demand curve shifts to the left as a result of an increase in income is referred to as

Normal Goods

The type of goods for which the demand curve shifts to the right as a result of an increase in income is referred to as

marginal rate of transformation.

The value of the slope of a society's production possibility frontier is called its

9

This market will be in equilibrium if the price per pizza is

the supply of sugar decreased and the price of sugar increased.

When Hurricane Andrew passed through Louisiana in the summer of 1992, approximately a quarter of the sugar cane crop was destroyed. Ceteris paribus,

price, decrease

When the supply of bubble gum increases while the demand for bubble gum decreases, the equilibrium ________ of bubble gum will definitely ________, ceteris paribus.

US

Which Country has the largest nominal GDP?

a decrease in income, assuming that Dr. Pepper is a normal good

Which of the following would be most likely to cause the demand for Dr. Pepper to shift from D0 to D1 ?

You are not using all your resources You are not using your technology efficiently

You can operate inside the PPF due to:

complements

a decrease in the price of one shifts the demand curve for the other to the right and vice versa.

Substitues

an increase in the price of one shifts the demand curve for the other to the right and vice versa.

Intermediate goods

are goods produced by one firm for use in further processing by another firm

Change in inventories

computes the amount by which firms' inventories change during a given period. Inventories are the goods that firms produce now but intend to sell later.

true

consumers expectations about the future price of a good can affect the current demand

Net investment

equals gross investment minus depreciation.

Nonresidential investment

includes expenditures by firms for machines, tools, plants, and so on.

Residential investment

includes expenditures by households and firms on new houses and apartment buildings.

Quantity Demanded

is the amount (number of units) of a product that a household would buy in a given time period if it could buy all it wanted at the market price.

supply

is the amount of a good that producers are willing and able to offer for sale at a given price

Equilibrium price

is the price at which quantity demanded equals quantity supplied

equilibrium quantity

is the quantity demanded and supplied at the equilibrium price

market demand

is the sum of all the quantities of a good or service demanded per period by all the households buying in the market for that good or service.

Gross Domestic Product

is the total market value of all final goods and services produced within a given period by factors of production located within a country.

Gross investment

is the total value of all newly produced capital goods (plant, equipment, housing, and inventory) produced in a given period.

Double counting

is when you count the same good or service more than once in your valuation of output

final goods and services

refers to goods and services produced for final use.

Law of Supply

states that as the price of a good goes up, the quantity supplied also goes up, all else equal. Similarly if the price of a good goes down, the quantity supplied goes down, all else equal. (positive relationship)

law of demand

states that there is a negative, or inverse, relationship between price and the quantity of a good demanded and its price. (demand curves slope downward)

Macroeconomics

the focus is not on an individual economic agent. Instead the focus is on the economy and on aggregate variables.