macro test 1 al hambdi

every society faces a tradeoff between

equity and efficiency

The study of economics arises due to

scarcity

The minimum wage is an example of

a price floor

a production possibilities frontier with a---- shape indicates increasing opportunity costs as more and more of one good is produced

bowed outward

economic decline happens when the PPF shifts

inward

Which of the following is a normative economic statement?

tobacco should be banned in all public places

Physical capital refers to stocks and bonds.

true

The willingness of consumers to buy a product at different prices is shown on a

a demand curve

If the government implements a binding price ceiling on insulin, this will have all of the following effects on the market for insulin except

a more efficient equilibrium

the recession of 2007-2009 would most likely be represented in a production possibilities frontier graph by

a point inside the frontier

An example of a factor of production is

a worker hired by an auto manufacturer.

Which of the following is part of an economic model?

data

one of the basic principles of economics is that trade makes

everyone better off

An increase in quantity supplied is represented by a rightward shift of the supply curve.

false

As population declines, scarcity eventually disappears.

false

If the demand for a product decreases and the supply of the same product increases, the equilibrium quantity will increase.

false

In economics, the term "free market" refers to a market where no sales tax is imposed on products sold.

false

In market economies, income distribution is always going to be completely equitable.

false

In the circular flow model, households supply resources such as labor services in the product market.

false

Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.

false

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

false

Rent control is an example of a price floor.

false

The difference between consumer surplus and producer surplus in a market is equal to the deadweight loss.

false

There is a shortage of every good that is scarce.

false

the PPF shows the possible and efficiently combination of goods and services a--- can produce

firm

The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.

income

A(n) ________ is represented by a rightward shift of the demand curve while a(n) ________ is represented by a movement along a given demand curve.

increase in demand; increase in quantity demanded

The area above the market supply curve and below the market price

is equal to the total amount of producer surplus in a market.

macroeconomics

is the study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

comparative advantage means the ability to produce a good or service at a -- than any other producer

lower opportunity cost

We need to privatize the social security program in the State of Kansas is a

normative statement

The ability to exercise control over one's own resources within the confines of the law refers to

ones property right

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

people respond to economic incentives

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced.

firms sell goods in the

product market

when you purchase a new surfboard, you do so in the

product market

the ability to exercise control over ones own resources with in the confines of the law refers to ones

property rights

If the quantity demanded for a product exceeds the quantity supplied, the market price will rise until

quantity demanded equals quantity supplied. The market price will then equal the equilibrium price.

the assumption that people are..... is one of the basic assumptions in econ

rational

In a market economy, those who are willing and able to buy what is produced

receive the most of what is being produced

If you can produce more of something than others with the same resources, you have

absolute advantage

Marginal cost is the ________ associated with a particular increase in an activity.

additional cost

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.

allocative efficiency

When the marginal benefit equals the marginal cost of the last unit sold in a competitive market,

an economically efficient level of output is produced

An outward shift of a nation's production possibilities frontier can occur due to

an increase in labor shift

An increase in the demand for peanuts due to changes in consumer tastes, accompanied by an increase in the supply of peanuts as a result of favorable growing conditions, will result in

an increase in the equilibrium quantity of peanuts; the equilibrium price may increase or decrease.

Which of the following would cause a decrease in the supply of peanut butter?

an increase the price of peanuts

If an increase in income leads to a decrease in the demand for salami, then salami is

an inferior good

At a product's equilibrium price

any buyer who is willing and able to pay the price will find a seller for the product.

A black market is a market where buying and selling take place

at prices that violate government price regulations.

the--- production points on a production possibilities frontier are the points along and inside the production possibilities frontier

attainable

Voluntary exchange increases economic efficiency

because neither the buyer nor the seller would agree to a trade unless they both benefit.

In Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. These price ceilings were set ________ the market prices, which resulted in ________ of food.

below; shortages

is the PPF in linear, then the opportunity cost of producing a good or service is

constant

Specializing in the production of a good or service in which one has a comparative advantage enables a country to do which of the following?

consume a combination of goods that lies outside its own production possibilities frontier

economic growth is represented on a production possibilities frontier model by the production possibilities frontier

shifting outward

the opportunity cost of the good on the x axis is the--- of the PPF

slope

A demand curve shows the relationship between

the price of a product and the quantity of the product demanded.

Deadweight loss refers to

the reduction in economic surplus resulting from not being in competitive equilibrium.

The circular flow model demonstrates

the roles played by households and firms in the market system.

If in the market for apples the supply has decreased, then

the supply curve for apples has shifted to the left.

Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline

the supply curve shifted to the left resulting in an increase in the equilibrium price.

Published in 1776, ________ was written by Adam Smith.

"An Inquiry into the Nature and Causes of the Wealth of Nations"

All of the following are examples of spending on goods and services in the circular flow model except

Chaitanya buys a new spa pedicure chair for her expanding nail salon business.

Economics promotes which of the following as the way to make the best decision?

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

________ shows that if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good.

The production possibilities frontier model

If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?

The supply curve will shift to the right.

Which of the following describes a characteristic of a perfectly competitive market?

There are many buyers and sellers

Which of the following is a result of imposing a rent ceiling?

There is an increase in the quantity of apartments demanded

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

$10

Monique buys a new television for $795. She receives consumer surplus of $355 from the purchase. How much does Monique value her television?

$1150

The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk?

1 2/3 dozen eggs

marginal analysis is involving comparing

MB and MC

The processes used to produce goods and services describes

technology

Assume that the hourly price for the services of personal trainers has risen and sales of these services have also risen. One can conclude that

the demand for personal trainers has increased.

f the price of smartphones was to increase, then

the demand for smartphone apps would decrease.

Opportunity cost is defined as

the highest valued alternative that must be given up to engage in an activity.

A supply curve shows

the marginal cost of producing one more unit of a good or service.

Consumer surplus in a market for a product would be equal to the area under the demand curve if

the market price was zero

A surplus is defined as the situation that exists when the quantity of a good supplied is 3eater than the quantity demanded.

true

Consider a country that produces only two goods: pineapples and tractors. Suppose it is possible for this country to increase its production of pineapples without producing fewer tractors. In this case, its current output combination is inefficient.

true

In a two-good, two country world, if one country has an absolute advantage in the production of both goods, it can still benefit by trading with the other country.

true

The additional benefit to a consumer from consuming one more unit of a good or service is the marginal benefit.

true

Which of the following is a macroeconomic question?

what determines the minimum wage?

microeconomics

•how households and firms make choices,•how they interact in markets, and •how the government attempts to influence their choices.