Macro Econ proctored mid-term exam
A to B
A decrease in the price of the product would be represented by a change from picture labeled question 38
B to A
A decrease in the price of the product would be represented by a change from picture labeled question 39
Marginal Revenue (MR)
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
a change in the price of toothpaste
A movement along the demand curve for toothpaste would be caused by
S1 to S2
A technological advancement would be represented by a movement from picture labeled question 50
what will be produced; how something will be produced
Allocative efficiency best explains ________, and productive efficiency best explains ________.
model
An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.
D1 to D2
An increase in population would be represented by a change from picture labeled question 40
S2 to S1
An increase in price of inputs would be represented by a change from picture labeled question 48
an increase in the equilibrium price of lobster; the equilibrium quantity may increase or decrease.
An increase in the demand for lobster due to changes in consumer tastes, accompanied by a decrease in the supply of lobster as a result bad weather reducing the number of fishermen trapping lobster, will result in
economic growth
An outward shift of a nation's production possibilities frontier represents
What is the difference between an "increase in demand" and an "increase in quantity demanded"?
An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.
What is the difference between an 'increase in supply' and an 'increase in quantity supplied'?
An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
the equilibrium price of MP3 players will increase; the equilibrium quantity will decrease.
Assume that the demand curve for MP3 players shifts to the right and the supply curve for MP3 players shift to the left, but the supply curve shifts more than the demand curve. As a result
Panel (c)
Assume that the graphs in this figure represent the demand and supply curves for frozen yogurt. Which panel describes what happens in the market for frozen yogurt when the price of ice cream, a substitute product, increases? picture labeled question 44
200
At a price of $10, how many units will be sold? picture labeled question 49
600
At a price of $20, how many units will be sold? picture labeled question 43
the government
Consider the following economic agents: a. the government b. consumers c. producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?
1/2 of a unicycle
Fred Barney Pogo Sticks 24 28 Unicycles 8 14 The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. What is Barney's opportunity cost of making a pogo stick? picture labeled question 30
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. Which of the following statements is true?
Haley has a comparative advantage in making bracelets and Serena in making necklaces. picture labeled question 36
a shortage of gasoline
Hurricane Katrina damaged a large portion of refining and pipeline capacity when it swept through the Gulf coast states in August 2005. As a result of this, many gasoline distributors were not able to maintain normal deliveries. At the pre-hurricane equilibrium price(i.e., at the initial equilibriumprice), we would expect to see
demand has increased
If a demand curve shifts to the right, then
zero
If the economy is currently producing at point Y, what is the opportunity cost of moving to point W? picture labeled question 32
A market is in equilibrium:
If the price is $20, picture labeled question 42
D1 to D2
If the product represented is a normal good, an increase in income would be represented by a change from picture labeled question 45
D2 to D1
If the product represented is an inferior good, an increase in income would be represented by a change from picture labeled question 47
linear
If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.
receive the most of what is produced
In a market economy, those who are willing and able to buy what is produced
the demand curve shifts to the right
In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant?
D increases, S no change, P and Q increase
Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for walnuts if the Centers for Disease Control and Prevention announces that consuming a half cup of walnuts each week helps to lower bad levels of cholesterol?
S decreases, D no change, P increases, Q decreases.
Let D= demand, S = supply, P = equilibrium price, and Q= equilibrium quantity. What happens in the market for tropical hardwood trees if the governments restrict the amount of forest lands that can be logged?
If the economy is currently producing at point W, what is the opportunity cost of moving to point X?
5 million tons of paper picture labeled question 28
75 pounds of meat
Refer to the diagram to the right which shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. Suppose Mendonca is currently producing 60 pounds of vegetables per period. How much meat is it also producing, assuming that resources are fully utilized? picture labeled question 35
technically efficient
Refer to the diagram to the right. Point B is Picture labeled question 29
outside Tomaso's production possibilities frontier
Refer to the table. Assume that Tomaso's Trattoria only produces pizzas and calzones. A combination of 36 pizzas and 30 calzones would appear picture labeled question 34
unlimited wants exceed limited resources
Scarcity refers to the situation in which
Graph A
Sergio Vignetto raises cattle and llamas on his land. His land is equally suitable for raising either animal. Which of the graphs in the figure above represent his production possibilities frontier? picture labeled question 31
produce a combination of goods that lie outside its own production possibilities frontier.
Specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following except
maximum attainable
The production possibilities frontier shows the ________ combinations of two products that may be produced in a particular time period with available resources.
Which of the following is a macroeconomic question?
What determines the growth rate of gross domestic product? What determines the inflation rate?
The tree fundamental question that any economy must address are
What goods and services to produce; how will these goods and services be produced; and who receives them?
product market
When you purchase a new pair of jeans you do so in the
There is often a trade-off between the two
Which of the following correctly describes the relationship between economic efficiency and economic equity?
there are many buyers and sellers?
Which of the following describes a characteristic of a perfectly competitive market?
Production managers are more concerned with satisfying government's orders than with satisfying consumer wants.
Which of the following is a problem inherent in centrally planned economies?
$1,000 in cash
Which of the following is not a factor of production?
At equilibrium, quantity demanded equals quantity supplied.
Which of the following is the correct way to describe equilibrium in a market?
Which of the following will shift the demand curve for a good?
a decrease in the price of a complementary good
Which of the following would cause an increase in the equilibrium price and an increase in the equilibrium quantity of watermelons?
an increase in supply and an increase in demand greater than the increase in supply
Which of the following would cause a decrease in the supply of peanut butter?
an increase the price of peanuts
economic models
are simplified versions of reality.
Comparative advantage means the ability to produce a good or service
at a lower opportunity cost than any other producer.
You have an absolute advantage whenever you
can produce more of something than others with the same resources.
The opportunity cost of taking a semesterminus−long economics class is
equal to the highest value of an alternative use of the time and money spent on the class.
Microeconomics is the study of
how households and firms make choices
The production possibilities frontier model shows that
if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.
A production possibilities frontier with a bowed-outward shape indicates
increasing opportunity costs as more and more of one good is produced
If society decides it wants more of one good and all resources are fully utilized, then
it has to give up some of another good and incur some opportunity costs.
Every society faces economic trademinus−offs. This means
producing more of one good means less of another good can be produced.
The term 'property rights' refers to
the ability to exercise control over one's own resources within the confines of the law.
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources.
Opportunity cost is defined as
the highest valued alternative that must be given up to engage in an activity.
Which of the following is a positive economic statement?
the minimum wage law causes unemployment
Which of the following is a normative economic statement?
the price of gasoline is too high
Adam Smith's invisible hand refers to
the process by which individuals acting in their own selfminus−interest bring about a market outcome that benefits society as a whole.
If in the market for oranges the supply has increased, then
the supply curve for oranges has shifted to the right.
If the price is $25,
there is a surplus of 300 units. picture labeled question 46
If the price is $10,
there would be a shortage of 600 units. picture labeled question 41
Without an increase in the supply of the factors of production, how can a nation achieve economic growth?
through technological advancement which enables more output with the same quantity of resources
Refer to the diagram to the right. Point C is
unattainable with current resources picture labeled question 37
Which of the following is a microeconomic question?`
what factors determine the price of carrots
quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.
If, for a product, the quantity supplied exceeds the quantity demanded, the market price will fall until
competition
________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.
productive efficiency
________ is a situation in which a good or service is produced at the lowest possible cost.
point A
________ is (are) inefficient in that not all resources are being used. picture labeled question 33
Choices ; scarce
Economics is the study of the ________ people make to attain their goals, given their ________ resources.
marginal benefit equals the marginal cost
Economists reason that the optimal decision is to continue any activity up to the point where the
complements
Elvira decreased her consumption of bananas when the price of peanut butter increased. For Elvira, peanut butter and bananas are
the price of the good changes
One would speak of a change in the quantity of a good supplied, rather than a change in supply, if
macroeconomics
The branch of economics which studies the behavior of entire economies is called
consumers and firms choosing which goods and services to buy or produce.
The decision about what goods and services will be produced in a market economy is made by
0 pounds of meat
The figure shows the production possibilities frontier for Mendonca, an agrarian nation that produces two goods, meat and vegetables. If Mendonca chooses to produce 160 pounds of vegetables, how much meat can it produce to maximize production? picture labeled question 27
increases, the quantity of yogurt demanded will decrease.
The law of demand implies, holding everything else constant, that as the price of yogurt
unattainable
The points outside the production possibilities frontier are
patents and copyrights
The primary purpose of ________ is to encourage the expenditure of funds on research and development to create new products.
2 pogo sticks
The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. What is Barney's opportunity cost of making a unicycle? picture labeled question 30
3 pogo sticks
The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. What is Fred's opportunity cost of making a unicycle? picture labeled question 30
Barney has a comparative advantage in making unicycles and Fred in making pogo sticks.
The table above shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Which of the following statements is true? picture labeled question 30
1 1/3 necklaces
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Haley's opportunity cost of making a bracelet? picture labeled question 36
2 necklaces
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Serena's opportunity cost of making a bracelet? picture labeled question 36
1/2 of a bracelet
The table above shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces. What is Serena's opportunity cost of making a necklace? picture labeled question 36
Barney has an absolute advantage in making both products.
The table to the right shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Which of the following statements is true? picture labeled question 30
