Exam 1 (ch. 1-4)

deciding if a company will produce automobiles by robotics or manual labor answers the economic question of:

"how will the products be produced?"

if the price of monthly satellite TV service increases from $40 to $50, the percentage change is:

25 percent

when Canada buys lemons from Mexico instead of growing lemons in heated greenhouses,

Canadian consumers will gain because lemon prices will drop

a small change in a variable is:

a marginal change

the Latin phrase ceteris paribus means that when a relationship between two variables is being studied:

all other variables are held fixed

in considering the relationships between price and quantity demanded, ceteris paribus directs the economist to assume that

all other variables remain unchanged

an economy in which government bureaucracy decides how much of a good to produce, how to produce the good, and who gets the good is known as a

centrally planned economy

trade results from

comparative advantage

suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity decreased, then the market experienced a

decrease in demand

when supply increases and the supply curve shifts to the right, equilibrium price _____ and equilibrium quantity______

decreases; increases

the decrease in the price of wool would be reflected by a movement _______ on the market supply curve for wool

down and to the left

one role government can play in addressing market failure is to

enforce the rules of exchange

in a market based economy, the government

enforces property rights

the effort used to coordinate the factors of production is a description of:

entrepreneurship

the knowledge and skills acquired by a worker through education and experience is a description of which factor of production?

human capital

if the population increases, the market demand for most products will

increase

after the government deceased cigarette taxes in several Canadian provinces, demand for cigarettes ________ in these provinces, shifting the demand curve to the ________

increased; right

if an economy is represented by a point along its production possibilities curve

it can produce more of one product only if it produces less of another product

if the adverse weather conditions last longer than usual, the impact on the supply curve for cocoa pods, shifting the supply curve to the ________ due to a _______ in cocoa yields

left; decrease

the cost savings from outsourcing often lead to _____ for consumers and ______ for the outsourcing company

lower prices; more output

specialization and trade exploit differences in productivity across workers and

make everyone better off

the marginal principle implies that an individual should produce or consume where

marginal benefit equals marginal cost

the face value of money or income is called it ______ value

nominal

in a market economy, what encourages firms to develop new products and production processes?

patents

when economists assume that people are rational and respond to incentives, they mean:

people act in their own self-interest

one common source of market failure is

pollution

If real salaries increase but nominal salaries do not, this means that:

prices have fallen

the principle that "as one input increases while the other inputs are held fixed, output increases at a decreasing rate" is known as the

principle of diminishing returns

suppose that the bakers of bread face a decrease in the price of flour (an input). In the market for bread, this will cause the _______ and the equilibrium price to ______

supply of bread to increase; decrease

microeconomics is best described as the study of

the choices made by individual households, firms, and governments.

suppose that consumers expect that the price of a product will increase in the future. The result is that

the current demand for the product increases

suppose that a new advertising campaign extolling the virtues of apple juice is successful, and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?

the equilibrium price of apple juice rises and the equilibrium quantity of apple juice might rise or fall

if the demand for jelly decreases, and the price of grapes rises

the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls

macroeconomics is best described as the study of

the nation's economy as a whole

a change in quantity supplied of a product is the result of a change in

the price of the product

when there is a change in the quantity demanded it means that

the quantity a consumer is willing to buy changes when the price changes

when the price of almonds falls

the quantity of almonds demanded increases, ceteris paribus

the price of pineapples has risen dramatically. Which of the following is likely to happen?

the quantity of pineapples supplied will increase

suppose that you lend $1,000 to a friend and he or she pays you back one year later. What is the opportunity cost of lending money

the real interest rate that would have been earned on the money

olives are used to produce olive oil. If the price of olives increases

the supply of olive oil decreases

suppose that in 2011, 3 million plasma TVs were purchased at $950 each, while in 2012 4 million plasma TVs were purchased at $800 each. What might have caused this change?

there was an advance in plasma TV manufacturing technology

suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit

there will be an excess supply of the product

in the U.S., which of the following government programs assist workers find jobs when they lose their jobs due to trade?

trade adjustment assistance program

the opportunity cost of something is:

what you sacrifice to get it