Economics msu exam 1
If a tax is levied on the buyers of a product, then there will be a(n)
downward shift of the demand curve
In most societies, resources are allocated by
the combined actions of millions of households and firms
The production possibilities frontier illustrates
the maximum of output that an economy can produce
Which of the following will allow a nation to produce beyond its current production possibilities frontier
the nation increases its number of productive inputs
The only variable that can affect a movement along the demand curve is
the price of a good itself
The law of demand tells us that people will buy less of a good if
the price of the good increases
When a tax is imposed on the sellers of a good, the supply curve shifts
upward by the amount of the tax.
The opportunity cost of an item is
what you give up to get that item
According to the law of demand other things being equal
when the price of a good goes down then people buy more of that good
You have decided that you want to attend a costume party as Iron Man. You estimate that it will cost $40 on the custom. you realize that the additional pieces you need will cost you $25 more. The marginal cost of completing the costume
$25
Suppose you have received $300 as a birthday gift. You can spend it today or you can put the money in the bank for a year and earn 5 percent interest. The opportunity cost of spending the money today in terms of what you could have after one year is
$315
Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is
$42,600 21,000+11,000+1,800+(16,000-7200)
Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda
-can be thought of as a the total benefit Bridget enjoys by drinking three sodas minus the total benefit she would have enjoyed y drinking just two sodas - determines her willingness to pay for the third soda -is likely different from the marginal benefit provided to her by the second soda (All of the above)
Assuming the market for lemons starts at a point of equilibrium, Qs=Qd and Pd=Ps, a rise in the equilibrium quantity supplied of lemons can be attributed to or cause by, which of the following.
A decrease in the number of people drinking lemonade
For which of the following individual would the opportunity cost of going to college be highest
A famous, highly-paid actor who wants to take time away from show business to finish college and earn a degree
Concerning the burden of a tax imposed on take-out food, if the demand for takeout food is more inelastic than supply
Buyers bear most of the burden of the tax.
When a tax is placed on the sellers of energy drinks, the
burden of the tax will be shared by the buyers and the sellers, but the division of the burden is greatest on whichever side of the market is more inelastic
If the government wants to reduce the burning of fossil fuels, it should impose a tax on
buyers of gasoline.
Rational people make decisions at the margin by
comparing marginal costs and marginal benefits
When we say that the demand for a good has decreased we mean
consumers are now willing to purchase more of the product in question at every possible price
An increase in the price of a good will
decrease in quantity demanded
A tax on the sellers of coffee mugs
decreases the size of the coffee mug market.
If the government wants to reduce the burning of fossil fuels, it should impose a tax on
either buyers or sellers of gasoline.
If the government removes a tax on a good, then the quantity of the good sold will
increase.
Suppose the government imposes a 25-cent tax on the buyers of incandescent light bulbs. Which of the following is not correct? The tax would
lower the equilibrium price by 25 cents.
A rational decision maker takes an action only if the
marginal benefit is greater that the marginal cost
If the government removes a $1 tax on sellers of gasoline and imposes the same $1 tax on buyers of gasoline, then the price paid by buyers will
not change, and the price received by sellers will not change.
Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?
people respond to incentives
When the term "price" is used in the law of demand
price refers to the of the good relative the price of another good
A professor spends 10 hours per day giving lectures and writing papers. For the professor, a graph that shows his various possible mixes of output (lectures given per day and papers written per day) is called his
production possibilities frontier
Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the
quantity demanded of physicals increases, and the quantity supplied of physicals decreases.
Suppose the equilibrium price of a tube of toothpaste is $2, and the government imposes a price floor of $3 per tube. As a result of the price floor, the
quantity demanded of toothpaste decreases, and the quantity of toothpaste that firms want to supply increases.
The law of demand states that
quantity demanded will vary inversely with the price of the good
What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have
scarcity
When we say the supply for a good has increased we mean
suppliers are now willing to supply more of the production in question at every possible chance