Exam 1 Principles of economics

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The fact that people with higher incomes get to consume more goods and services addresses the ______ part of one of the two big economic questions.

"For whom"

The above shows the demand schedule and supply schedule for chocolate chip cookies. What is the equilibrium quantity and price chocolate chip cookies?

4 pounds $5 per pound

price ceiling

A legal maximum on the price at which a good can be sold

In the above figure, a price $15 per dozen for roses would results in

A shortage because a price that low would increase the demand

Which of the following is NOT one of the factors that influences the supply of a product?

Income

In every economic system choices must be made because resources are ------ and our our wants are too.

Limited

Studying the effects choices have on the individual markets within the economy is part of

Macroeconomics

An increase in number of suppliers in a market results in?

Movement up along the supply curve

A supply curve shows the relation of quantity of a good supplied and

The price of a good. Usually a supply curve has negative slope.

Normative economic statements

What "ought" or should be

A price below the equilibrium price results in

excess supply

Rational consumer

means they have well defined goals and try to fufill them as best as they can

seller's surplus

the difference between the price received by the seller and his or her reservation price

Which figure shows the demand for fruit snacks when there is an increase of price of non-fruit snacks?

the price would increase up the line

When China builds a dam using few machines and a great deal of labor, it is answering the ________ question

"How"

When a California farmer decides to harvest lettuce using machines instead of by migrant workers, the farmer is answering the______ part one of the two big economic questions.

"How"

When firms in an economy start producing more computers and fewer televisions, they are answering the ________ part one of the two big economic questions?

"What"

Suppose people buy more of good 1 when the price of good 2 falls. These goods are

Compliments

The quantity demanded of a good or service is the amount that

Consumers plan to buy during a given time at a given price.

Opportunity cost

Cost of the next best alternative use of money, time, or resources when one choice is made rather than another

The above figures show the market for oranges. Which figure shows the effect of changing consumer preferences for more orange juice and less coffee in the morning?

Figure A because it show the movement from left to right showing the decrease in coffee.

The figure above shows the demand for fruit snacks, which movement reflects an increase in demand?

From point a to point d basically means the line moves diagonally to a new line when the demand goes up

Opportunity cost means

Highest-valued alternative forone

Which of the following are TRUE regarding positive statements? I. They describe what "ought" to be II. They describe what is believed about how the world appears III. They can be tested as to their accuracy

II and III

In broad terms the difference between microeconomics and macroeconomics is that

Microeconomics studies individuals and business decisions, while macroeconomics analyzes the decisions made by countries and governments. Microeconomics focuses on supply and demand, and other forces that determine price levels, making it a bottom-up approach.

The term used to emphasize that making choices in the face of scarcity involves a cost is

Opportunity cost

economic surplus

The difference between benefit and cost

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

a decrease in quantity demanded because of the substitution effect.

change in supply

a shift of the supply curve, which changes the quantity supplied at any given price

positive economic statement

can be tested against the facts basically can be proved or disproved.

All economic questions are about

how to make money

People buy more of good 1 when the price of good 2 rises. These goods are

substitutes

marginal cost

the cost of an additional unit or activity

buyer's surplus

the difference between the buyer's reservation price and the price he or she actually pays

marginal benefit

the extra benefit of adding one unit

The "Law of demand" states that changes in

the quantity demanded of a good are inversely related to changes in its price.

Economics

the study of how people make choices under conditions of scarcity and of the results of those choices for society

Macro economics topics include

total nationwide employment


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