Macro exam #1

As a firm produces more of a​ good, the cost of producing each additional unit_____ . This implies that the marginal cost of producing a good_____ as you make more of that good.

increases/ increases

An aggregated demand curve is created by summing the _____ at each price on the individual demand____.

quantity demanded/curves

The Law of Supply states that as the price of a good​ increases, ceteris paribus​, the _____ of that good increases. This can be shown graphically with an ____ supply curve or numerically in a table using a ______ .

quantity supplied/ upward sloping/ supply schedule

When one of the five major factors​ changes, causing an increase in​ demand, the demand curve shifts ____

rightward

When one of the five major factors​ changes, causing an increase in​ demand, the demand curve shifts____

rightward

which of the following will NOT cause a shift in the demand for a good a. a change in the consumer income b. a change in the number of consumers c. a change in the taste and preferences d. a change in the market price of the good

d. a change in the market price of the good

a budget constraint represents the___ a. aggregate income earned by all firms in a economy b. total money income that an agent earns in different time periods c. inequality in the incomes earned by various economic agents d. good and services an economic agent can choose given her limited income

d. good and services an economic agent can choose given her limited income

a seller's willingness to accept is the same as his ___ cost of production a. fixed b. total c. average d. marginal

d. marginal

the best alternative use of a resource is referred to as its__ a. market price b. social cost c. optimization cost d. opportunity cost

d. opportunity cost

You are considering renting a city apartment with​ 1,000 square feet for ​$1,700 per month. The monthly rent on a​ larger, 1,500-square-foot city apartment is ​$2 The marginal cost of renting an apartment with 500 additional square feet is ​$___per square foot per month.

1.3

You have been invited to play a​ 4-hour round of golf that has a value to you of ​$70. The total price to play the round of golf is ​$35. The net benefit of the round of golf is ​$____ ​

35

Which of the following statements is true if the supply curve is curve shaped ​(non-linear)? A.It is difficult to expand production the higher the quantity supplied. B.It is easier to expand production the higher the market price. C.The price does not affect the quantity supplied. D.The price and the quantity supplied are negatively related.

A.It is difficult to expand production the higher the quantity supplied.

Are all markets perfectly​ competitive? A.No, there are other market types where firms have considerable power to control the price. B.​No, in other types of​ markets, sellers offer identical goods and simply accept the market price. C.​Yes, any economic system with a market structure is by definition perfectly competitive. D.​No, there are also command and control markets that are run by a central government.

A.No, there are other market types where firms have considerable power to control the price.

How would the equilibrium price in a market be affected if there were a large increase in supply and a small increase in demand​? A.The equilibrium price decreases. B.The equilibrium price would remain the same. C.The equilibrium price increases. D.More information is needed. It may​ increase, decrease, or remain the same.

A.The equilibrium price decreases.

Holding all else​ equal, if the price of a digital camera​ rises, then we can expect A.a decrease in the quantity demanded of digital cameras. B.an increase in the demand for digital cameras. C.an increase in the quantity demanded of digital cameras. D.a decrease in the demand for digital cameras.

A.a decrease in the quantity demanded of digital cameras

f people expect the price of SUVs to decrease in the future​, then the demand for the Toyota Rav4 SUV would​ __________. A.decrease left parenthesis shift left right parenthesis. B.remain unchanged. C.increase left parenthesis shift right right parenthesis.

A.decrease left parenthesis shift left right parenthesis.

If opportunity cost were to suddenly​ increase, total cost would A.increase and net benefit would decrease. .B.decrease and net benefit would increase. C.increase and net benefit would increase. D.decrease and net benefit would decrease.

A.increase and net benefit would decrease.

If an increase in the immigration of unskilled labor leads to a fall in the wages of wine minus grape pickers​, then the supply curve for sparkling wine would​ __________. A.increase left (shift right right). B.decrease left( shift left right). C.remain unchanged.

A.increase left (shift right right).

If sparkling wine producers expect nbsp the price of wine to decrease in the future​, then the supply curve for sparkling wine would​ __________. A.increase left parenthesis shift right right parenthesis. B.decrease left parenthesis shift left right parenthesis. C.remain unchanged.

A.increase left parenthesis shift right right parenthesis.

In a perfectly competitive​ market, if one seller chooses to charge a price for its good that is slightly higher than the market​ price, then it will​ _________. A.lose all or almost all of its customers. B.see no change in its number of customers. C.see a small decrease in its number of customers. D.All of the above are equally likely.

A.lose all or almost all of its customers.

Absolute advantage is the ability to​ ____________. A.produce more of a good or service in a given period of time than any other producer. B.produce a good or service that generates a higher total profit than any other producer. C.produce more of a good or service in a given period of time at the lowest cost per unit than any other producer. D.produce a good or service at the lowest cost per unit than any other producer.

A.produce more of a good or service in a given period of time than any other producer.

Trade allows buyers and sellers to exploit gains from specialization because it allows sellers to​ ____________. A.specialize in the production of the good or service for which they have a comparative advantage and buy goods and services for which they do not have a comparative advantage. B.specialize in the production of the good or service for which they have an absolute advantage and buy goods and services for which they do not have an absolute advantage. C.develop comparative advantages in the production of goods and services through the employment of​ low-wage workers, allowing them to sell their goods and services at a lower cost to buyers. D.develop an absolute advantage in the production of goods and​ services, which eventually forces buyers to pay higher prices for those goods and services.

A.specialize in the production of the good or service for which they have a comparative advantage and buy goods and services for which they do not have a comparative advantage.

The concept of diminishing marginal benefits states that A.the more you consume of a​ good, your willingness to pay for an additional unit declines. B.the more you pay for a​ good, the less benefit you receive. C.the more you pay for a​ good, the greater the benefit you receive. D.the more you consume of a​ good, the less benefit you receive

A.the more you consume of a​ good, your willingness to pay for an additional unit declines.

What is meant by holding all else equal and how is this concept used when discussing movements along the demand​ curve? A.All variables in the model are set to equal values. B.All variables that can affect the demand for the good are held constant. C.everything else in the economy is held​ constant, including the price of the good. D.All of the above.

B.All variables that can affect the demand for the good are held constant.

Which would be the correct sequence of events in the speedboat industry if waterway access was improved​ and, at the same​ time, a lighter polymer became available that increased production​ efficiency? A.Supply would shift​ left, demand would shift​ left, equilibrium price would be​ indeterminable, and equilibrium quantity would decrease. B.Supply would shift​ right, demand would shift​ right, equilibrium price would be​ indeterminable, and equilibrium quantity would increase. C.Supply would shift​ right, demand would shift​ left, equilibrium price would​ increase, and equilibrium quantity would be indeterminable. D.Supply would shift​ left, demand would shift​ right, equilibrium price would​ decrease, and equilibrium quantity would increase.

B.Supply would shift​ right, demand would shift​ right, equilibrium price would be​ indeterminable, and equilibrium quantity would increase.

How would the equilibrium price in a market be affected if there were a large decrease in demand and a small decrease in supply​? A.The equilibrium price would remain the same. B.The equilibrium price decreases. C.The equilibrium price increases. D.More information is needed. It may​ increase, decrease, or remain the same.

B.The equilibrium price decreases.

how would a decrease in demand affect the equilibrium price in a​ market? A.The equilibrium price increases. B.The equilibrium price decreases. C.The equilibrium price would remain the same. D.More information is needed. It may​ increase, decrease, or remain the same

B.The equilibrium price decreases.

How would the equilibrium price in a market be affected if there were a large decrease in supply and a small decrease in demand​? A.The equilibrium price would remain the same. B.The equilibrium price increases. C.The equilibrium price decreases. D.More information is needed. It may​ increase, decrease, or remain the same.

B.The equilibrium price increases.

All of the following would cause a shift in the supply curve for orange​ juice, except A.tax credits for citrus farmers. B.a new medical discovery about the benefits of citrus. C.a freeze over all of Florida for three nights in a row. D.new machinery that speeds up the picking process.

B.a new medical discovery about the benefits of citrus.

Which change causes a movement along the demand​ curve? A.buyer's beliefs about the future B.price of the good itself C.number and scale of buyers D.tastes and preferences

B.price of the good itself

Comparative advantage is the ability to​ ____________. A.produce a good or service that generates a higher total profit than any other producer. B.produce a good or service at the lowest opportunity cost per unit than any other producer. C.produce more of a good or service in a given period of time at the lowest cost per unit than any other producer. D.produce more of a good or service in a given period of time than any other producer.

B.produce a good or service at the lowest opportunity cost per unit than any other producer.

The Law of Supply states​ that, in most​ cases, the quantity supplied of a good​ ___________ when the price of the good rises. This means we would expect a typical supply curve to​ be___________. A.falls; upward-sloping. B.rises; upward-sloping. C.​rises; downward-sloping. D.​falls; downward-sloping

B.rises; upward-sloping.

How would a decrease in supply affect the equilibrium price in a​ market? A.The equilibrium price would remain the same. B.The equilibrium price decreases. C.The equilibrium price increases. D.More information is needed. It may​ increase, decrease, or remain the same.

C.The equilibrium price increases.

How would the equilibrium price in a market be affected if there were a large increase in demand and a small increase in supply​? A.The equilibrium price would remain the same. B.The equilibrium price decreases. C.The equilibrium price increases. D.More information is needed. It may​ increase, decrease, or remain the same.

C.The equilibrium price increases.

Which of the following is common between the supply schedule and the supply​ curve? A.They give information about the quantity supplied in a nation. B.They give information about the quantity supplied in different parts of the world. C.They give information about the quantity supplied at different prices. D.They give information about the quantity supplied at different time periods.

C.They give information about the quantity supplied at different prices.

If the number of people over the age of 16 in the country increased significantly​, then the demand for the Toyota Rav4 SUV would​ __________. A.decrease left parenthesis shift left right parenthesis. B.remain unchanged. C.increase left parenthesis shift right right parenthesis.

C.increase left parenthesis shift right right parenthesis.

The competitive equilibrium price equates A.price to quantity demanded. B.supply to demand. C.quantity supplied to quantity demanded. D.price to quantity supplied.

C.quantity supplied to quantity demanded.

Holding all else​ constant, if the number of cell phone manufacturers suddenly decreased due to increased​ regulations, then A.supply would shift​ leftwards, equilibrium price would​ decrease, and equilibrium quantity would decrease. B.supply would shift​ rightwards, equilibrium price would​ increase, and equilibrium quantity would decrease. C.supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease. D.supply would shift​ rightwards, equilibrium price would​ decrease, and equilibrium quantity would increase.

C.supply would shift​ leftwards, equilibrium price would​ increase, and equilibrium quantity would decrease.

Does the shape of the market demand curve differ from the shape of an individual demand​ curve? A.Yes, individual demand curves tend to be​ upward-sloping, while market demand curves are horizontal. B.​No, they both tend to be​ upward-sloping curves. C.​No, they both tend to be​ downward-sloping curves. D.​Yes, individual demand curves tend to be​ downward-sloping, while market demand curves are​ upward-sloping.

C.​No, they both tend to be​ downward-sloping curves.

For a trade to take​ place, a​ buyer's willingness to pay must be​ ____________. A.higher than the​ seller's willingness to accept. B.equal to the​ seller's willingness to accept. C.lower than the​ seller's willingness to accept. D.A and B only. E.All of the above.

D.A and B only.

Which of the following would not be considered a market by an​ economist? A.Your corner gas station B.An online auction site such as ebay C.A dating website D.All of the above are examples of a market

D.All of the above are examples of a market

Which of the following statements regarding marginal analysis is​ true? A.If total cost is​ rising, marginal cost must be rising. B.If total cost is​ falling, marginal cost must be positive. C.If total cost is​ falling, marginal cost could be zero. D.If total cost is​ rising, marginal cost could be falling.

D.If total cost is​ rising, marginal cost could be falling.

Which of the following is not one of the five major factors that shifts the demand curve when it​ changes? A.The price of complementary goods. B.Tastes and preferences. C.The number of buyers. D.Prices of inputs used to produce the good.

D.Prices of inputs used to produce the good.

hich of the following is not one of the five major factors that shifts the demand curve when it​ changes? A.Income and wealth. B.The price of substitute goods. C.Expectations about the future. D.Prices of inputs used to produce the good.

D.Prices of inputs used to produce the good.

Which of the following is not one of the four major factors that shifts the supply curve when it​ changes? A.The scale of sellers. B.Prices of inputs used in production. C.Sellers' beliefs about the future. D.The price of the good itself.

D.The price of the good itself.

Suppose you have a flashlight that takes three batteries to power it. If you buy the batteries one at a​ time, for which purchase will diminishing benefits set​ in? A.When you buy the first battery. B.When you buy the second battery. C.When you buy the third battery. D.When you buy the fourth battery.

D.When you buy the fourth battery.

In a perfectly competitive​ market, sellers​ _________ and buyers​ _________. A.are able to charge more than the market​ price; are able to pay less than the market price. B.are able to charge more than the market​ price; cannot pay less than the market price. C.cannot charge more than the market​ price; are able to pay less than the market price. D.cannot charge more than the market​ price; cannot pay less than the market price.

D.cannot charge more than the market​ price; cannot pay less than the market price.

The concept of diminishing marginal benefits means that​ __________. A.the more of a good that you​ consume, the lower is your overall benefit from that good. B.as you consume more of a​ good, your willingness to pay for that good increases faster than the benefit you receive. C.each additional unit consumed is worth more to you than the previous​ one, but the additional benefit grows at a diminishing rate. D.each additional unit consumed is worth less to you than the previous one.

D.each additional unit consumed is worth less to you than the previous one.

Market demand is derived by​ __________. A.adding up both the prices each buyer pays and the quantities that each buyer demands. B.fixing the quantity and adding up the prices that each buyer pays. C.dividing each​ buyer's demand by the total number of consumers in the market. D.fixing the price and adding up the quantities that each buyer demands.

D.fixing the price and adding up the quantities that each buyer demands.

A competitive market will A.create excess supply because producers want profits. B.create excess demand because wants exceed needs. C.move towards equilibrium because producers set the prices. D.move towards equilibrium quantity because both producers and consumers act in their own best interest.

D.move towards equilibrium quantity because both producers and consumers act in their own best interest.

Suppose that the East requires 100 units of labor to produce one car and 200 units of labor the produce one bus. Suppose that the West requires 600 units of labor to produce one car and 300 units of labor to produce one bus. Which of the following statements is​ correct? A.It would not be possible for both countries to gain from trade. B.West has an absolute advantage in both cars and busses. C.East has an absolute advantage in both cars and busses. D.Gains from trade for both countries could occur if East specialized in cars and West specalized in busses. E.Both​ c) and​ d) are correct.

E.Both​ c) and​ d) are correct.

What is the difference between marginal values and average​ values? A.Marginal values show the total benefit or cost from consuming a​ good, while average values are the total benefit or cost from consuming a good divided by the amount of the good consumed. B.Marginal values show the benefit from consuming an additional unit of a​ good, while average values are the cost from consuming an additional unit of a good. C.Marginal values show the benefit or cost from consuming one unit of a​ good, while average values are the benefit or cost from consuming all units of a good. D.Marginal values show the ordinal benefit or cost from consuming an additional unit of a​ good, while average values are the cardinal benefit or cost from consuming an additional unit of a good. E.Marginal values show the additional benefit or cost from consuming an additional unit of a​ good, while average values are the benefit or cost per unit of a good.

E.Marginal values show the additional benefit or cost from consuming an additional unit of a​ good, while average values are the benefit or cost per unit of a good.

Suppose you had information on the sales of similar homes just east and just west of the boundary between two school districts. Also suppose schools on one side of the school boundary are better than the schools on the other side in terms of test scores. You could estimate the average value that parents place on a​ one-point increase in test scores by​ ___________. A.dividing the difference in the prices of big and small homes in a district by the average test score in that district. B.multiplying the price of a home in either district by the difference in test scores between districts. C.dividing the difference in the prices of big homes in one district and small homes in the other district by the difference in test scores between districts. D.dividing the difference in the prices of similar homes between districts by the average test score for both districts combined. E.dividing the difference in the prices of similar homes between districts by the difference in test scores between districts.

E.dividing the difference in the prices of similar homes between districts by the difference in test scores between districts.

If the production possibilities frontier is linear, then a. OC are constant as more of one good is produced b. OC are increasing as more of one good is produced c. OC are decreasing as more of one good is produced d. it is easy to efficiently produce output

a. OC are constant as more of one good is produced

the principle of___ is that the economic cost of using a factor of production is the alternative use of that factor given up a. opportunity cost b. economic growth c. entrepreneurship d. marginal cost

a. opportunity cost

the slope of a production possibilities frontier measures the ____ of producing one more unit of a good a. opportunity cost b. marginal cost c. total revenue d. marginal revenue

a. opportunity cost

When optimizing for total​ value, opportunity cost must be ____total cost. Assuming ____ ​benefits, the lowest cost option is the optimal choice

added to/equal

the ___ plots the relationship between prices and the quantity that buyers are willing to purchase a. marginal cost curve b. demand curve c. budget constraint d. supply curve

b. demand curve

the law of supply states that___ a. at the equilibrium price, there is always some excess supply in the market b. the quantity supplied of a good rises when the price rises, all other things remaining constant c. supply creates its own demand d. the quantity supplied of a good will always equal the quantity of the good demanded

b. the quantity supplied of a good rises when the price rises, all other things remaining constant

which of the following is likely to lead to a rightward shift in the supply curve of cotton a.decrease in the price of cotton b. a rise in labor costs due to wage demands by labor unions c. an increase in labor productivity due to training programs d. an increase in the price of cotton

c. an increase in labor productivity due to training programs

a fall in the price of flour, used in making cakes, is likely to ___ of cakes. a. increase the quantity supplied b. decrease the quantity supplied c. increase the supple d. decrease the supply

c. increase supple

two goods are said to be substitutes when a fall in the price of one good____ a. does not affect the demand for the other good b. leads to a rise in the price of the other good c. leads to a leftward shift in the demand for the other good d. leads to a rightward shift in the demand for the other good

c. leads to a leftward shift in the demand for the other good

total cost falls when marginal cost is ___, and total cost rises when marginal cost is ____ a. positive, negative b. zero ,positive c. negative, positive d. zero, negative

c. negative, positive

the best alternative use of a resource is referred to as its____ a. social cost b. market price c. opportunity cost d. optimization cost

c. opportunity cost

the principle of ____ is that the economic cost of using a factor of production is the alternative use of that factor that is given up a. normative economics b. marginal cost c. opportunity cost d. entrepreneurship

c. opportunity cost

the slope of the PPF measures the ___ of producing one more unit of a good a. marginal revenue b. marginal cost c. opportunity cost d. total revenue

c. opportunity cost

____ exists because unlimited wants exceed the limited resources available to fulfill those wants a. the command economy b. economic growth c. scarcity d. productive efficiency

c. scarcity

the concept of diminishing marginal benefits state that a. lower levels of consumption give lower level utility b. the demand for commodity is more dependent on income than on price c. the willingness to pay for an additional unit declines as more of a good is consumed d. the demand for commodity declines as its price increases

c. the willingness to pay for an additional unit declines as more of a good is consumed

which of the following examples best describes the Law of Demand a. when the price of water increases, a local manufacturer starts offering more watches for sale b. when john's income doubles, his telephone bill also doubles c. when the price of bread doubles, john's consumption of bread halves d. when a new anti-tobacco commercial is released, the consumption of tobacco products decreases sharply

c. when the price of bread doubles, john's consumption of bread halves

the opportunity costs are ___, the productions possibilities frontier would be graphed as a negatively sloped straight line a. negative b. increasing c. constant d. decreasing

c.constant

A demand curve has a _____ slope due to the Law of Demand. The Law of Demand is based off of a​ consumer's willingness to pay ____as marginal units are consumed.

negative/ less

The lowest price that a seller is willing to receive to sell an extra unit of a good is called ____, while the highest price that a buyer is willing to pay for an extra unit of a good is called____ .

willingness to accept/willingness to pay