Economics

normative question

A question that is based on societal beliefs on what should or should not take place.

The demand for gasoline is rising. Which statement describes a possible cause?

Consumers expect prices to rise in the near future

Bus tickets are often considered _____ goods because _____.

Inferior; as income rises, demand for bus tickets falls.

If bagels and doughnuts are substitute goods, then which scenario is likely to occur if the price of bagels is reduced?

The demand curve for doughnuts will shift to the left

Efficiency

The percentage of the input work that is converted to output work how well resources are used and allocated

Ceteris Paribus

a Latin phrase that means "all other things held constant" assumption used in economics that all other relevant factors or variables are held constant

equity

a condition in which people receive from a relationship in proportion to what they give to it the fairness of various issues and policies

economics assume people make rational decisions, it means that

a rational person will respond to the benefits and costs associated incentives

marginal analysis would put an emphasis on

additional costs and benefits

The main role of a market is to

allocate resources

when the __ outweigh the __ of the information, people will attempt to obtain the information

benefits; costs

positive question

can be answered by available information or facts

inferior goods

demand decreases as income increases

normal goods

demand increases when income increases

Prices do NOT help consumers decide

how much of a product to produce

if two variables are positively related, then, as one variable

increases the other variable increases, and as one variable decreases the other variable decreases

opportunity cost

influence all economics decisions

A market demand curve

is the horizontal summation of individual demands

complements in production

making two products at the same time

demand

maximum amount of a product that buyers are willing to purchase over some period at various prices

Which statement does NOT describe model building in economics

models are developed to cover specific behaviors only

If an increase in income leads to an increase in the demand for opera tickets, then operas are a(n) __ good

normal

change in demand

occurs when one or more of the determinants of demand changes; it shifts the entire demand curve *not the same as quantity demanded*

A shift in the demand curve is caused by a change in:

one of the determinants of demand

a market exists when

people exchange money for goods and services

law of supply

price and quantity supplied are positively related. As price rise, providers want to sell more to maximize profits

On a demand curve

price is on the vertical axis and quantity demanded is on the horizontal axis.

non price factors that affect supply

production technology cost of resources prices of related commodities expectations number of sellers taxes and subsidies

if a graph between hot chocolate sales and temperature is downward sloping, then sales of hot chocolate

rise as temperature falls

which questions is not an example involving marginal analysis

should kmart rebrand ALL its stores to using the Sears name

costs of resources

supply increases if the costs of resources used decrease

production technology

supply increases when improvements in technology lower the cost of production

A shift in the demand curve is NOT caused by

technology

a common definition of economics is that it is the study of

the allocation of scarce resources to satisfy competing wants

the opportunity costs of attending college do NOT include

the expenditures for food

market

the institution through which buyers and sellers interact and engage in exchange

In a market-based economy, scare resources are allocated by

the price system

economics

the study .. is about people making decisions regarding their use of scarce resources

Macroeconomics

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

substitutes in production

when you are making one, you can't make the other. when the price of SUB rises, the supply of its SUBstitutes decreases.

microeconomics is concerned with issues such as

which job to take

Which statement illustrates the law of demand?

Lindsay offers to buy more sticks of chewing gum at $1 than at $2.

supply

Maximum amount of a product that sellers are willing and able to provide over some period at various centers (CETERIS PARIBUS)

Whenever you construct a demand curve, which statement is TRUE?

The price of all other goods must be held constant

Willingness to pay __ from person to person __ and under varying circumstances.

differs; differs

economists use graphs because

they represent relationships between variables

Suppose that a person discovers that, ceteris paribus, when the price of tomatoes increases, the demand for blue cheese decreases. From this he concludes that:

tomatoes and blue cheese are complements