ECON test 1 study guide-ish

REFERENCE THE TABLE FROM REVIEW QUIZ 4 - Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, the equilibrium price and quantity are ____ and ____, respectively

$10, 12

"If I didn't have class tonight, I would save the $4 campus parking fee and spend four hours at work where I earn $10 per hour." The opportunity cost of attending class this evening is:

$44

REFERENCE THE TABLE FROM PREVIEW QUIZ 4- Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, the equilibrium price and quantity are ______ and ____, respectively.

$6, 13

REFERENCE THE TABLE FROM PREVIEW QUIZ 4- Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, the equilibrium price and quantity are ____ and ____, respectively.

$8, 15

why is there scarcity?

Because our unlimited wants exceed our limited resources

which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods

are markets always at equilibrium?

No, but if there is no outside interference, they tend to move toward equilibrium.

REFERENCE THE GRAPH FROM REVIEW QUIZ 4 - Refer to Figure 5-1. The movement from ____ to ____ is consistent with a decrease in the price of cotton (a substitute).

Pint A, Point H

REFERENCE THE GRAPH FROM PREVIEW QUIZ 4- Refer to Figure 5-1. The movement from ____ to ____ is consistent with a successful advertising campaign that claims wool keeps you warm.

Point A, Point F

REFERENCE THE TABLE FROM REVIEW QUIZ 4 - Refer to Table 5-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4:

a 10 unit shortage will result

A change in price of a good or service typically causes ___________________________ for that specific good or service

a change along the supply curve

Which of the following would most likely shift the production possibilities curve inward?

a decrease in the average number of hours worked per week as the labor force chooses to enjoy more leisure time

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

After widespread press reports about the dangers of contracting "mad cow disease" by consuming beef from Canada, the likely economic effect on the U.S. demand curve for beef from Canada is:

a shift of the demand curve for beef to the left

the imposition of a price ceiling on a market often results in:

a shortage

the economists most notably identified with capitalism is...

adam smith

Any given demand or supply curve is based on the ceteris paribus assumption that ___________________.

all else is held equal

REFERENCE THE GRAPH FROM APP QUIZ 2- The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.

allocative efficiency

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.

allocative efficiency

Which of the following statements most likely lies within the realm of microeconomics?

an increase in labor costs will increase the additional cost of producing another bus.

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:

andy's demand for beer to increase

Many cooks view butter and margarine to be substitutes. If the price of butter rises, then in the market for margarine:

both the equilibrium price and quantity will rise

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the _________________, sometimes also called the opportunity set, a diagram which shows what choices are possible.

budget constraint

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

budget constraint

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers

the nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it

specalization:

can lead to an increase in overall production

Economic models like the _____________________ are not physical models, but instead are diagrams or graphs or even mathematical equations that represent economic patterns or theories.

circular flow diagram

When __________________, a firm will supply a higher quantity at any given price for its output, and the supply curve will shift to the right.

costs of production fall

specialization: a) allows workers to develop skills by working on a large number of tasks b) leads to greater self-sufficiency c) is always the result of an inefficient use of resources d) can lead to an increase in overall production

d) can lead to an increase in overall production

The price of gasoline increases to $10.00 per gallon. What will happen to the sales of large SUV's? 1. Will demand increase or decrease? 2. Which direction will the demand curve move?

decrease, shift to the left

Thousands of previously unemployed workers receive a job through a local jobs program just before Valentine's Day 1. Will it affect supply or demand? 2. Which direction will the appropriate curve move?

demand, right

consumer incomes increase by an average of 10%. 1. Will it affect supply or demand? 2. Which direction will the appropriate curve move?

demand, right

REFERENCE THE GRAPH FROM APP QUIZ 2- The law of ____________________________ explains why people and societies rarely make all-or-nothing choices.

diminishing marginal utility

the law of ____ explains why people and societies rarely make all-or-nothing choices

diminishing marginal utility

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

the ____ is the only price where quantity demanded is equal to quantity supplied

equilibrium price

REFERENCE THE TABLE FROM REVIEW QUIZ 4 - Refer to Table 5-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:

equilibrium price increases from $6 to $8

The ____________ is the quantity where quantity demanded and quantity supplied are equal at a certain price.

equilibrium quantity

REFERENCE THE TABLE FROM PREVIEW QUIZ 4- Refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then:

equilibrium quantity decreases from 15 to 13

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ___________________.

excess demand

in the ____, households receive goods and services and pay firms for them.

goods and services market

In a command economy, the ____ either makes most economic decisions itself or at least strongly influences how the decisions are made.

government

The two main tools of macroeconomic policy include monetary policy, and fiscal policy, which involves __________ spending.

government

which of the following best describes a fiscal policy tool?

government spending

REFERENCE THE GRAPH FROM APP QUIZ 2- Calculate Opportunity Costs: State whether the benefits are greater than the costs from Point A to Point B.

higher for education than health care

REFERENCE THE GRAPH FROM APP QUIZ 2- calculate Opportunity Costs: State whether the benefits are greater than the costs from Point D to Point E.

higher for health care than education

which of the following would reduce the supply of microcomputers?

higher wage rates for the workers that assemble the computers

Improvements in the productivity of labor will tend to:

increase wages

The number of high school graduates nationally is expected to increase through the year 2020. What will happen to the demand for higher education in the United States? 1. Will demand increase or decrease? 2. Which direction will the demand curve move?

increase, shift to the right

The price of a movie theater ticket increases to $20.00. What will happen to the amount of movie rentals at Netflix? 1. Will demand increase or decrease? 2. Which direction will the demand curve move?

increase, shift to the right

The price of cotton drops, reducing the price of women's dresses by one-half. What would be the effect on the sales of women's shoes? 1. Will demand increase or decrease? 2. Which direction will the demand curve move?

increase, shift to the right

The price of ultra-high definition movie streaming players is reduced by half. What would happen to the sales of ultra-high definition movies? 1. Will demand increase or decrease? 2. Which direction will the demand curve move?

increase, shift to the right

the opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

the economist most notably identified with interventionism (fascism) is...

john maynard keynes

the economist most notably identified with socialism is...

karl marx

in the ____, households work and receive payment from firms.

labor market

Economists refer to this pattern, the ___________________________________, which means that as a person receives more of a good, the additional or marginal utility from each additional unit of the good declines.

law of diminishing marginal utility

when nations desire a healthy macroeconomy, they typically focus on three goals, one of these being:

low inflation

If a firm faces ________________________, while the prices for the output the firm produces remain unchanged, a firm's profits will increase.

lower costs of production

Most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

As a person receives more of a good, the _______________ from each additional unit of the good declines.

marginal utility

in a ___, most economic decisions about what to produce, how to produce it, and whom to produce it are made by buyers and sellers.

market-oriented economy

the marginal benefit of a slice of pizza is the:

maximum amount that a consumer is willing to pay for the slice.

The basic difference between macroeconomics and microeconomics is that

microeconomics is concerned with the trees (individual markets) while macroeconomics is concerned with the forest (aggregate markets).

Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________, which describe how the world should be.

normative statements

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible.

opportunity set

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be

positive statements

The law of supply functions in labor markets; that is, a higher ________ for labor leads to a higher quantity of labor supplied.

price

In contrast to goods and services markets, _____________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.

price ceilings

______________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislators to keep prices from falling.

price floors

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, _________________ decreases.

price, quantity demanded

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and ____________, shown on the horizontal axis.

quantity

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the _________________.

quantity supplied

there would be no subjects known as economics if there were no...

scarcity

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

A drought decreases the supply of agricultural products, which means that at any given price a lower quantity will be supplied; conversely, especially good weather would shift the __________________.

supply curve to the right

The local sales clerks union successfully negotiates with the flower store owner to increase all of the clerks' pay by $2.00 per hour. The owner is not able to pass along the price increase to consumers. 1. Will it affect supply or demand? 2. Which direction will the appropriate curve move?

supply, left

The neighborhood supermarket runs a month long 50% off sale on its flowers. 1. Will it affect supply or demand? 2. Which direction will the appropriate curve move?

supply, left

The price of seeds used to produce flowers decreases by 20%. 1. Will it affect supply or demand? 2. Which direction will the appropriate curve move?

supply, right

As the _____________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.

technology

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

Which of the following best denotes the reason for the existence of substantial black markets?

the command economy

In a discussion of microeconomics, which of the following would exert the most influence on an individual firm's decision to hire workers?

the macroeconomy

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price

When consumers and businesses have greater confidence that they will be able to repay in the future, _______________________.

the quantity demanded of financial capital at any given interest rate will shift to the right

REFERENCE THE GRAPH FROM APP QUIZ 2- Calculate Opportunity Costs: State whether the benefits are greater than the costs from Point B to Point D.

the same for both

Interpret the following statement: "An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market."

the statement is correct

A severe freeze has once again damaged the Florida orange crop. The impact on the market for orange juice will be a leftward shift of:

the supply curve

according to the law of supply:

there is a direct relationship between price and quantity supplied

If macroeconomics looks at the economy as a whole, it focuses on which of the following?

unemployed people

scarcity exists because of:

unlimited wants and limited resources

Many states do have ____________, which impose an upper limit on the interest rate that lenders can charge.

usury laws

The general pattern that consumption of the first few units of any good tends to bring a higher level of _______ to a person than consumption of later units is a common pattern.

utility