Econ Final Chapters 1-5

Demand has increased

If a demand curve shifts to the right, then

The demand for gasoline would decrease

If the price of automobiles was to increase, then

A shortage of oranges

. In 2004, hurricanes damaged a large portion of Florida's orange crop. As a result of this, many orange growers were not able to supply fruit to the market. If, following the hurricane, the price remained at its pre-hurricane level, we would expect to see

The marginal social cost of producing a good or service exceeds the private cost

A negative extrernality exists if

The marginal social benefit to exceed the marginal private cost of the last unit produced

A positive externality causes

There is a positive relationship between price and quantity supplied, and as the price of a product increases, firms will supply more if it to the market

According to the law of supply,

A benefit or cost experienced by someone who is not a producer or consumer of a good or service

An externality is

Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price.

Assume there is a shortage in the market for digital music players. Which of the following statements correctly describes this situation?

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

By definition, economics is the study of

Unlike public goods, common resources are rival in consumption

Common resources differ from public goods in that

avoiding the private costs associated with disposing your trash some other way and creating a social cost

If you burn your trash in the backyard in spite of regulations against it, then you are

A decrease in quantity demanded

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as

a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.

Economic efficiency is

portray reality in all its minute details

Economic models do all the following except

marginal benefit equals the marginal cost.

Economists reason that the optimal decision is to continue any activity up to the point where the

0

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is

A command-and-control approach to pollution reduction

Government imposed quantitative limits on the amount of pollution firms are allowed to produce is an example of

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

In 2004, hurricanes destroyed a large portion of Florida's orange and grapefruit crops. In the market for citrus fruit in 2004

The demand curve shifts to the right

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?

landlords have an incentive to rent more apartments than they would without rent control.

In a city with rent-controlled apartments, all of the following are true except

One who waits for others to produce a good then enjoys its benefits without paying for it

In economics, the term "free rider" refers to

Marginal

In economics, the term ________ means "additional" or "extra."

All else equals

In general, the term "ceteris paribus" means

Scarcity

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls

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

Opportunity cost is

A decrease in the price of orange juice processing

Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect?

$75

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

Once produced, it will not be possible to exclude those who do not pay for the good

Private producers have no incentive to provide public goods because

The supply curve shifts to the right

Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

the actual division of the burden of a tax between buyers and sellers in a market

Tax incidence is

Above;Below

The area ________ the market supply curve and ________ the market price is equal to the total amount of producer surplus in a market

if transactions costs are low, private bargaining will result in an efficient solution to the problem of externalities.

The coase theorem states that

Consumer Surplus

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called

Equity

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

The quantity of bagels demanded will decrease

The law of demand implies, holding everything else constant, that as the price of bagels increases,

Absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a power opportunity cost

The primary difference between absolute and comparative advantage is

If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

The production possibilities frontier model shows that

One, what goods and services will be produced? Two, how will the goods and services be produced? Three, who will receive the goods and services produced?

Trade-offs force society to make choices, particularly when answering the following three fundamental questions:

The rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

What are property rights?

forcing producers to factor into their production costs the cost of the externalities created in the production of their output

What does the phrase "internalizing an external cost" mean?

the sum of all costs to individuals in society, regardless of whether the costs are borne by those who produce the products or consume the product

What is a "social cost" of production?

It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.

What is a market failure?

A more than the economically efficient output level

When a negative externality exists, the private market procedures

Keeping a junked car parked on your front lawn

Which of the following activities create a negative externality?

Macroeconomics

Which of the following covers the study of topics such as inflation or unemployment?

Public Goods

Which of the following displays these two characteristics: nonrivalry and nonexcludability in consumption?

Incomplete property rights or inability to enforce property rights

Which of the following is a source of market failure?

Planting trees along a sidewalk which add beauty and create shade

Which of the following is an example of a positive externality?

The price of bananas is lowered in order to increase sales

Which of the following is evidence of a surplus of bananas?

At equilibrium, quantity demanded equals quantity supplied

Which of the following is the correct way to describe equilibrium in a market?

The social cost of production

Which of the following represents the true economic cost of production when firms produce goods that cause negative externalities?

Scarcity refers to the situation in which unlimited wants exceed limited resources.

Which of the following statements about scarcity is true?

A decrease in the price of flour

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase?

Positive, normative, positive

______ is concerned with what is, and ________ is concerned with what ought to be. Economics is about ________, which measures the costs and benefits of different courses of action.

Economists assume that individuals

are rational and respond to incentives.