Macroeconomics - Quiz 1

A shift in a demand curve caused by a change in anything EXCEPT price is called a _________.

"change in demand"

A movement along a demand curve caused by a change in price is called a __________.

"change in quantity demanded"

A movement along a supply curve is called a __________.

"change in quantity supplied"

Economics is the study of the ______ people make to attain their goals, given their ______ resources. a. Income; available b. Purchases; unlimited c. Choices; scarce d. Decisions; household

Choices; scarce

Which of the following is a microeconomics question? a. Will government intervention lower the unemployment rate? b. Why do economies experience periods of recession? c. How will Apple decide on a selling price for the iPad? d. Why has growth in the economy slowed down over the past decade?

How will Apple decide on a selling price for the iPad?

What is opportunity cost?

Opportunity cost is the HIGHEST VALUED ALTERNATIVE that must be given up to engage in an activity

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

Opportunity costs are constant as more of one good is produced.

Which of the following statements about positive economic analysis is true? a. Unlike positive economic analysis, normative economic analysis can be tested. b. There is much less disagreement among economists over normative economic analysis than over positive economic analysis. c. There is much more disagreement among economists over positive economic analysis than over normative economic analysis. d. Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

Positive analysis uses an economic model to estimate the costs and benefits of different course of actions.

What is a trade-off?

Producing more of one good or service means producing less of another good or service.

The study of economics arises due to _______. a. Greed b. Money c. Scarcity d. Resources

Scarcity

What is supply?

Supply summarizes the willingness and ability of sellers to sell a good, given the constraints they face

Opportunity cost is defined as ________. a. The highest valued alternative that must be given up to engage in an activity. b. The total value of all alternatives that must be given up to engage in an activity c. The benefit of an activity d. The monetary expense associated with an activity.

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

Which of the following is a macroeconomics question? a. What factors determine the price of iPhones? b. What determines the wages and benefits of flight attendants? c. How is the production quantity of digital cameras determined? d. What determines the unemployment rate?

What determines the unemployment rate?

A shift in the supply caused by anything but a change in price is a __________.

"change in supply"

What are the three forms of economy?

1. Centrally planned (command economy) - decisions all made by government 2. Market economy - decentralized decisions made by individuals interacting in markets 3. Mixed-market economy

What are the roles of government?

1. Defines and enforces property rights 2. Corrects market failures 3. Redistributes income 4. May intervene to dampen business cycle

What are the three components of investment?

1. New capital by firms 2. New residential construction by households 3. Accumulation (or de-accumulation) of inventories by firms

What are the four kinds of competitive markets?

1. Perfect competition - many buyers/sellers, cheap or free entry, full information shared 2. Oligopoly - few firms, strategic interaction 3. Monopolistic competition - main firms selling differentiated products, free entry 4. Monopoly - single seller, one firm controls entire market

Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. Refer to Table 1-1. Using marginal analysis, how many hours should Eva extend her bakery's hours of operations? a. 2 hours b. 3 hours c. 4 hours d. 5 hours

4 hours

he Stogie Shop, a cigar store in the mall, sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each. What is the opportunity cost of buying a hand-rolled cigar? a. $10.00 b. One-quarter of a machine-made cigar c. 4 machine-made cigars d. $2.50

4 machine-made cigars

What does a demand curve show?

A demand curve shows the maximum quantity people are willing/able to purchase at each price assuming everything also remains the same (ceteris peribus)

What is an economy?

A machine that produces goods and services using scarce resources for consumption

What is a market?

A market is an institution which brings buyers and sellers together in order to accomplish mutually beneficial costs

What is a model?

A model is a simplified description of reality.

What is a positive statement?

A statement that describes what IS --> a punitive statement about the current state of things

What is a normative statement?

A statement that describes what SHOULD BE

Macroeconomics studies that _________ behaviors of the economy.

Aggregate

If the marginal cost for Big Ed's Used Car Emporium to advertise one additional day each week on a local TV station is $1,500, then Big Ed's should advertize that additional day: a. As long as the weekly marginal cost does not rise b. Until the marginal benefit the company receives reaches zero c. Only if the marginal benefit the company receives each week is greater than $1,500 plus an acceptable profit margin d. As long as the marginal benefit the company receives each week is just equal to or greater than $1,500.

As long as the marginal benefit the company receives each week is just equal to or greater than $1,500.

What is demand?

Demand summarized the willingness and ability of buyers to purchase a good under specified conditions

What is equilibrium?

Equilibrium is a state from which there is no inherent tendency to change.

In a market economy, ________ interact in markets to decide the answers to the fundamental economic questions. a. The judicial and legislative branches of the federal government b. State and local governments c. Large corporations d. Households and firms

Households and firms

The production possibilities frontier shows ________. a. What people want firms to produce in a particular time period. b. The various products that can be produced now and in the future c. The maximum attainable combinations of two products that may be produced in a particular time period with available resources. d. What an equitable distribution of products among citizens would be

The maximum attainable combinations of two products that may be produced in a particular time period with available resources.

Which of the following is a positive economic statement? a. The government should subsidize solar power for homeowners. b. The minimum wage law causes unemployment. c. The number of work visas should not be limited by the government. d. People should not buy imported fruits and vegetables.

The minimum wage law causes unemployment.

Trade-offs force society to make choices when answering what three fundamental questions? a. Who gets jobs; what wages to workers earn; and who owns what property? b. What goods and services to produce; how will these goods and services be produced; and who receives them? c. How much will be saved; what will be produced; and how can these goods and services be fairly distributed d. What will be the prices of goods and services; how will these goods and services be produced; and who will receive them?

What goods and services to produce; how will these goods and services be produced; and who receives them?

According to the Law of Supply, the supply curve is ___________ sloped.

positively

A _____________ shows the maximum amount a supplier will provide at each and every price.

supply curve