Micro Econ

In the circular flow model, which of the following refers to markets where goods such as computers or services such as medical treatment are offered?

Goods markets

What is the name given to the highest-valued alternative that must be given up to engage in any activity?

Opportunity cost

In his 1776 book, "An Inquiry into the Nature and Causes of the Wealth of Nations," Adam Smith notes that specialization increases productivity. Which of the following was the cause of this phenomenon?

The division of labor

what is the impact of a quota (known as a taxi medallion) on the number of taxis allowed to service this market?

There is a reduction in the quantity of taxi services and a higher price.

Which of the following statements about a shortage is correct?

There is no shortage of most scarce goods.

You and your neighbor pick apples and cherries. If you can pick apples at a lower opportunity cost than your neighbor can, which of the following is true?

You have a comparative advantage in picking apples.

For markets to generate the greatest benefit and function in the most efficient manner they must:

be perfectly competitive

A consumer maximizes total utility when:

choosing more of one good and less of another no longer increases utility

The marginal utility from consuming the second ice cream cone is the:

extra satisfaction you get from consuming the second ice cream cone

Rent controls

make tenants less mobile

According to the law of diminishing marginal utility, as the consumption of a particular good increases:

marginal utility decreases

When an individual's total utility increases with the consumption of one more unit of an item, it must be true that the person's:

marginal utility from consuming this unit is positive

The optimal combination of pizza and coke is the one where the:

marginal utility per dollar spent on pizza equals the marginal utility per dollar spent on coke

Consumer equilibrium requires that the consumer:

maximize total utility, subject to an income constraint

If an effective minimum wage is imposed, then:

more workers will be unable to find jobs

If marginal utility is __________ then total utility must be __________.

negative, declining

Markets can be inefficient due to the presence of subsidies and lead to:

overproduction

If the price of Good A rises, other things being constant, then the marginal utility:

per dollar's worth of Good A falls

If the total utility increases with additional consumption of a good, then the marginal utility is:

positive

Black markets may arise if:

price ceilings exist

A legally determined minimum price that sellers must receive is known as a:

price floor

Prolonged shortages arise if:

prices are not allowed to rise to equilibrium

Absolute advantage is the ability of an individual, firm, or country to:

produce more of a good or service than competitors using the same amount of resources

If marginal utility is positive, but falling, then total utility:

rises at a decreasing rate

Prolonged agricultural surpluses can arise if governments:

set the price above equilibrium

Price controls that put a price ceiling on goods and services create

shortages

The principle of increasing opportunity cost states that the more resources devoted to any activity, the __________ the payoff to devoting additional resources to that activity.

smaller

Price controls that put a price floor on goods and services create

surplus

The actual division of the tax burden between buyers and sellers is known as:

tax incidence

Tax incidence refers to

the actual division of the tax between buyers and sellers in a market

When the elasticity of demand for a product is smaller than the elasticity of supply, consumers pay __________ of the tax on the product.

the majority

If marginal utility is negative, then:

total utility falls

Markets can be inefficient due to the presence of taxes and lead to:

underproduction