Microeconomics Final Exam

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Demand refers to

The goods and services buyers are willing and able to purchase at various prices in a given period of time

Which point in the graph is consistent with a recession? (See graph)

a

Subsidies on domestically produced sport utility vehicles cause a(n) _________ in the supply of ________ sport utility vehicles

increase; domestic

The MOST common way in which economists model a problem is by

Simplifying the model down to its basic relevant elements

The state of Florida is experiencing a drought that has caused the price of water that farmers used to grow oranges to rise. This will cause a decrease in the

Supply of oranges

Another name for a market economy is

The Price System

In a market based economy, scarce resources are allocated by

The Price System

Which situation deals more with equity than efficiency

The Red Sox sign a star player for $35 million a year, which is more than 10 times the average salary of the rest of the team

If bagels and donuts are substitute goods, then which scenario is likely to occur if the price of bagels is reduced?

The demand curve for donuts will shift to the left

Given the production possibilities schedule shown in the table, what is the opportunity cost of moving from E to F? Bananas Apples E 12 2 F 9 4 G 5 6 H 0 8

3 Bananas

The opportunity cost of producing a unit of pork is _____ unit(s) of corn. (See Graph on Quiz 2)

5

At an amusement park, Sue achieves an enjoyment value of 10 on her first roller coaster ride and an enjoyment value of 6 on her second ride. Her marginal benefit from her second ride is

6

Which item is most likely an inferior good?

A city bus ticket

Which policy is MOST likely to contribute to improved standards of living over time?

Adding after-school art and music programs to promote creativity

If a pizza parlor uses an oven in its production process, the oven is an example of which factor of production?

Capital

If cream cheese and bagels are complements, then an increase in the price of cream cheese will __________ the demand for bagels.

Decrease

Which headline would be least likely to be studied in macroeconomics?

GM Expands Car Sales in China

Willingness to pay is the

Highest value that a consumer believes a good or service is worth

Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:

Incentives

The market-clearing price

Is the price at which quantity demanded equals quantity supplied

A leather company produces shoes and belts. What will the company do if it expects the price of shoes to rise in the near future?

It will move resources from belt production to shoe production, thereby decreasing the supply of belts.

A laissez-faire approach to the question "How to produce?" would be found in a _____ economy.

Market

According to the law of demand, a decrease in the price of train travel will

Result in higher quantity of trips on trains

An INCREASE in technology

Shifts the production possibilities frontier curve OUTWARD.

Which question would be considered a normative question?

Should obstacle races be regulated to ensure the safety of participants?

The law of supply states that if prices _______ the market

fall, producers will offer fewer product to

Institutions that bring buys and sellers together so they can interact and transact with each other are called

markets

If the price of shoes is $60 per pair, the _______ will be 30 pairs of shoes

quantity supplied

Electricity is essential in the production of aluminum. If electricity price increases

the supply curve for aluminum shifts leftward

(Figure: Production Possibilities) Which statement is NOT correct regarding point X?

Because it is on the line, the combination at point X has no opportunity cost

Ch. 3

Ch. 3

In the demand curve shown, an increase in price from $1 to $2 will

Cause quantity demanded to fall from 30 to 20 units

Ch. 2

Ch. 2

Assuming everything else stays the same, an increase in the price of the laptop computers will _______ of laptop computers

Decrease the quality demanded

In which market is government most likely to intervene to prevent a market failure?

Market for college education

Which is NOT a determinant of supply?

National Income

There is a(n) _____ relationship between price and quantity demanded

Negative

Which enterprise is NOT an example of a market?

Painting one's own house

On a demand curve

Price - VERTICAL AXIS Quantity Demanded - HORIZONTAL AXIS

Every point on a production possibilities frontier (PPF) represents _____ efficiency.

Production

When an economy uses the most efficient means of farming to grow as much corn as possible, this economy has achieved

Production efficiency but not necessarily allocative efficiency

If the price of shoes is $60/pair, the _____ will be 10 pairs of shoes.

Quantity demanded

The Supply Curve

Shows a positive relationship between price and quantity supplied

Assume that imitation gemstones (an inferior good) are a low-cost alternative to diamonds (a normal good). What happens when average incomes increase?

The demand for diamonds increases, and the demand for imitation gemstones decreases

If knitting needles are a complementary good for yarn, what happens in the market for yarn when the price of knitting needles decreases?

The demand for yarn increases, and the equilibrium quantity increases

Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in?

The value of attending the class he decided to miss

A point to the right of the production possibilities frontier is

Unattainable

If an economy is operating at a point that is inside of its production possibilities frontier, then it can be assumed that its resources are

Underutilized


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