MICROECONOMICS

Labor

Human effort to produce

trade-off

To achieve one goal economic agents must give up something else; when we do one thing we usually cant do the other

If two countries participate in free trade

both countries as a whole will gain from the trade

mixed economies

combine elements of market capitalist and of command socialist economic systems

The North Korean economy is currently classified as

command socialism

Eliminating third-party payer systems is most likely to ________ the quantity of health care ________.

decrease; demanded

The principle stating that, for virtually all goods and services, there is a negative relationship between price and quantity demanded, all other things unchanged, is the law of:

demand

When economists study the behavior of buyers, they are studying:

demand

In the personal computer industry, the reason for the fall in prices and the increase in quantity after 1980 was:

primarily due to technological change and an increase in the number of sellers.

An economy is said to have a comparative advantage in the production of a good if it can

produce the good at a lower opportunity cost than another economy

If the price of a commodity increases, all of the things unchanged, you would expect the:

quantity demanded to decrease

One source of high health care costs is the:

relatively large fraction of health care expenditures paid by third-party payers.

In a competitive market, when price is below the equilibrium price, there will be pressure for the price to

rise

comparative advantage

In producing a good or service if the opportunity cost of producing that good or service is lower for that economy than for any other

Capital

Machinery, equipment and tools

An increase in supply, with no change in demand, will lead to ______ _ in equilibrium quantity and ________ in equilibrium price.

an increase; a decrease

Economists in general agree that rent controls are:

an inefficient and ineffective way to help low-income families.

The economic way of thinking includes:

attention paid to the opportunity costs involved in any choice.

If people demand more of product A when the price of B falls, then A and B are:

complements

When the price of gas goes up and the demand for tires goes down, this means tires and gas are:

complements

An increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to which demand shifter?

consumer expectations

The "all other things unchanged" assumption is useful because it:

helps to restrict analysis to the effect of a single economic factor.

A cost that farm subsidies and price floors imposes on the rest of the economy is:

higher consumer commodity prices.

An answer to the question "How are goods produced?" determines:

how resources are combined in the production of good

In the 1930s, the federal government established the social security system to provide a minimum level of income to elderly and disabled people. This primarily addressed the economic question of:

For whom shall the goods be produced?

The production possibilities curve represents the fact that

if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced

A shift of a demand curve to the right, all other things unchanged, will:

increase equilibrium price and quantity.

Economists concerned about economy-wide trends in the unemployment of labor, the rate of inflation, and the level of economic production are studying:

macroeconomics.

A market price support policy establishes a price floor, which:

increases the price received by farmers.

The fact that a society's production possibilities curve is bowed out from the origin of a graph demonstrates the law of:

increasing opportunity cost.

the current rate of unemployment is 5 percent. This statement:

is a positive

The equilibrium price established by supply and demand could be called a "just right" price because:

it is the only price where the quantity demanded and the quantity supplied are equal

The factors of production are

labor, capital and natural resources

Human capital

An organizations employees, described in terms of their training, experience, judgment, intelligence, relationships, and insights.

social science model

Social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices

Which of the following would not change the demand for automobiles?

a change in the cost of steel

If the government sets out to help low-income people by establishing a maximum amount for rent:

a price ceiling has been set and a shortage of rental units may occur.

A substantial increase in the price of oranges (a normal good) is likely to result from:

a prolonged freeze in Florida

A decrease in supply means:

a shift to the left of the entire supply curve.

Macroeconomics is most likely to be concerned with the:

aggregates in the economy.

the primary emphasis in macroeconomics is on:

aggregates in the economy.

Which of the following always results in an increase in price and quantity?

an increase in demand with no change in supply

The law of demand is illustrated by a demand curve that is:

downward-sloping.

The models used in economics:

emphasize basic relationships by abstracting from complexities in the everyday world.

Those who make economic policy concerning price controls often do so in order to:

establish a more equitable result based on normative judgements.

A market price support policy attempts to assist the farm industry by:

establishing price floors in farm output markets.

Economics resources used in the production process are called

factors of production

A market price support policy establishes price ________ the market equilibrium.

floors above

The United States is confronted with two significant problems in health care. They are:

health-care cost and how to limit spending on health care.

An area of concern in the provision of health care in the United States is that:

health-care costs and spending are too high

Assume an economy is operating on its production possibilities curve, which shows the production of military and civilian goods. If the output of military goods is increased, the output of civilian goods

must decrease

Scarcity in economics means:

not having sufficient resources to produce all the goods and services we want.

The key signals that send messages to buyers and sellers to buy or not to buy or to sell or not to sell are, all other things unchanged:

prices

The relationship between the quantity of a good or service sellers are willing and able to offer for sale and the independent variables that determine quantity is:

supply

The intersection of the supply and demand curves indicates:

the equilibrium solution in the market

technology/innovation

the knowledge that can be applied to the production of goods and services. By innovating, an entrepreneur seeks to earn profits by finding new ways to organize factors of production

Factors of production are

the resources the economy has available to produce goods and services

An arrangement in which consumers choose their health-care services while other institutions pay a share of the cost of those services is called a(n) ________ payer system.

third-party

role of government

to regulate the activities of private firms, to protect the environment, to provide education, and to produce a wide range of other goods and services, to provide defense, enforce laws, and redistribute income

An area of concern in the provision of health care in the United States is that:

too many resources are devoted to health care.

Any factor of production is capital if it

was produced and can be used to produce other goods and services

natural resources

water, air, soil, sun

Tastes and preferences, price of related goods, Income, Demographics, Buyers Expectations

Demand shifters

Assume a market initially exhibits a shortage. Assuming that both prices and quantities are flexible, which of the following will be true after the market adjusts to equilibrium?

Quantity supplied is more.

marginal thinking

Requires decision makers to evaluate whether the benefit of one more unit of something is greater than its costs. Example: should i do more or less of something

Britain imports some goods and exports other goods primarily because of

specialization