microeconomics midterm 1
If the demand for digital cameras increases when consumers' income rise, then digital cameras are?
A normal good.
What would be an example of a capitol good?
Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the?
Cross elasticity of demand.
The total revenue test says?
Demand is elastic if a decrease in price results in an increase in total revenue.
Which of the following is true regarding demand?
Demand is the relationship between quantity demanded and the price of a good when all other influences on buying plans remain the same
Jan is attending college and studying to be an investment broker. To improve her chances of employment following college, she has interned as a top brokerage firm during the last two summers. Jan's internship has increased her?
Human Capitol.
Which of the following is an assumption used when drawing a production possibilities frontier?
Human wants and desires are limited to what is available The level of technology is fixed and unchanging.
Scarcity exists because?
Human wants exceed the resources available to satisfy them.
The law of supply states that, other things remaining the same?
If the price of a good increases, the quanity supplied increases.
Which of the following is a positive statement?
If we reduce welfare payments given to the poor, they will find jobs.
Economic growth depends upon which of the following?
Improving the quality of labor Technological advancement Increasing the amount of capital.
Suppose a medical study reveals new benefits to consuming beef and at the same time a bumper corn crop reduces the cost of feeding steers. The equilibrium quantity of beef will?
Increase.
During 2008 the supply of gasoline decreased while at the same time the demand for gasoline increased. If the magnitude of the increase in demand was greater than the magnitude of the decrease in supply, then the equilibrium price of gasoline ___ and the equilibrium quantity ___.
Increased; decreased.
As more time passes, the price elasticity of gasoline?
Increases.
As a factor of production, oil reserves are counted as?
Land.
If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be?
Negative.
The value of the best thing that a person must give up when making a decision is known as the ___ cost?
Opportunity.
The price elasticity of supply is a measure of the extent to which the quatity supplied of a good changes when the?
Price changes.
Suppose the equilibrium quantity of movie tickets is 100. If the demand curve shifts___, the equilibrium quantity of the movie tickets will___?
Rightward; Increase.
Consider the market for bread. If the price of wheat rises, then the?
Supply curve of bread shifts leftward.
Why is the production possibilities frontier bowed out(concave)?
The bowed shape reflects increasing opportunity cost.
Suppose the equilibrium price and quantity of new houses both increase. Which of the following could be a cause of this change?
The demand for new houses increased and the supply did not change.
In stores, it is common to find seasonal products marked down when the season ends. What explains this behavior?
The law of demand is being used to increase the quanity demanded.
Assume that an association of young workers has lobbied Congress to require that all workers retier once they reach the age of fiftey. What impact would this law have on the nations production possibilities frontier?
The production possibilities frontier would shift inward.
If a higher price for wheat decreases the quantity of corn being produced, which of the following describes what has occurred?
The quantity of wheat supplied increased and the supply of corn decreased.
Plywood is used in the construction of houses. If the price of plywood rises, what happens to the supply of houses?
The supply decreases so that the supply curve shifts leftward.
Consider the market for peanut butter, If there is an increase in the price of peanuts?
There is a decrease in the supply of peanut butter.
The "law of demand" refers to the fact that, other things remaining the same, when the price of a good rises?
There is movement up along the demand curve to a smaller quantity demanded.
The price of salsa rises. How does the increase in the price of salsa affect the supply of salsa?
There is no change to the supply of salsa, but the quantity of salsa supplied.
Which of the following increases the supply of gasoline?
a decrease in the price of a resource used to produce gasoline, such as crude oil.
Which of the following does not increase the supply of personal computers, that is, does not shift the supply curve of personal computers?
a rise the price of personal computer.
Which of the following increases the supply of a good and shifts its supply curve rightward?
a technological advance in how the good is produced.
In a production possibilities frontier graph, the cost of producing more units of a good is measured by the?
amount of the other good or service that must be forgone.
Your economics professor offers 10 points extra credit if you attend a review session before your next exam. This extra credit is an example of
an incentive to take a particular action.
Which of the following definitely results in a products equilibrium price rising?
an increase in demand combined with a decrease in supply.
Consider the market for smart phones. Which of the following shifts the demand curve rightward?
an increase in the price of land-line phone service, a substitute for smart phones.
An increase in the number of pineapple growers results in?
an increase in the supply of pineapples and a rightward shift in the supply curve of pineapples.
An incentive is
an inducement to take a particular action.
A product that has a negative income elasticity of demand is ___ good?
an inferior.
Economists measure opportunity cost?
as the best thing given up.
The production possibilities frontier is the?
boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology.
The question of "what goods and services get produced?" most closely relates to which of the following issues?
building a missile defense system, or putting a computer in every elementary school classroom.
The price of elasticity of demand is a measure of?
buyers' responsiveness to change in the price of a product.
% change in quantity demanded of x / % change in price of y
cross price elasticity of demand
when income is expected to decrease in the future, or when credit is hard to get and the cost of borrowing is high, what happens to demand of some goods?
decrease
a fall in the expected future price of a good does what to the current demand of that good?
decreases
an decrease in productivity raises cost and does what to supply?
decreases
if the prices of a complement falls what does the supply do?
decreases
if the prices of a complement rises what does the demand do?
decreases
if the prices of a substitute falls what does the demand do?
decreases
if the prices of a substitute rises what does the supply do?
decreases
The sustained expansion of production possibilities is called?
economic growth.
If the price elasticity of demand for moose hunting lessons is 4.23, then the demand for mosse hunting lessons is.
elastic.
The circular flow model shows the flow of?
expenditure and income throughout the economy.
Milions of people from Mexico have migrated to the United States. This has reduced the supply of labor in Mexico and increased the supply of labor in the United States. Assume that the demand for labor in Mexico and the United States is unchanged. Then wages in the United States___ and wages in Mexico___.
fall;rise.
the _______ the number of buyers in a market, the larger is the demand for any good
greater
If a product is narrowly defined, it is likely to?
have many substitutes and therefore its demand is elastic.
A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an F in the course. The professor has?
increased the marginal cost of cheating.
a rise in the expected future price of a good does what to the current demand of that good?
increases
an increase in productivity lowers cost and does what to supply?
increases
if the prices of a complement falls what does the demand do?
increases
if the prices of a complement rises what does the supply do?
increases
if the prices of a substitute falls what does the supply do?
increases
if the prices of a substitute rises what does the demand do?
increases
when income is expected to increase in the future, or when credit is easy to get and the cost of borrowing is low, what happens to demand of some goods?
increases
Moving from one point to another on a production possibilities frontier implies?
increasing the production of one good and decreasing the production of another.
When the percentage change in the quantity demanded is less than the percentage change in price, then demand is?
inelastic.
what kind of good: the demand decreases if income increases and demand increases if income decreases
inferior good
Moving from a point inside the production possibilities frontier to a point on the production possibilities frontier, the opportunity cost of producing more of the good on the horizontal axis?
is 0.
A demand schedule?
is a list of the quantities demanded at each different price when all other influences on buying plans remain the same.
Dan missed class the day the professor covered the circular flow model. Dan asked his friend Joan to explain markets to him. Joan correctly stated that a market ?
is any arrangement that brings buyers and sellers together.
Huey has eaten two hamburgers and is considering a third. The marginal benefit in his decision is the pleasure from consuming?
just the third hamburger.
the greater the number of sellers in a market, the ______ is supply
larger
Scarcity requires that we?
make choices about what goods and services to produce.
The production possibilities frontier illustrates the?
maximum combinations of goods and services that can be produced.
The greater the amount of time that passes after a price change, the?
more elastic supply becomes.
with cross price elasticity of demand, complements are...
negative
The cross elasticity between computers and software is?
negative because they are complements.
what kind of good: the demand increases if income increases and demand decreases if income decreases
normal good
when preferences change, the demand for one item increases and the demand for another item (or items) decreases. preferences change when?
people become better informed and new goods become available
with cross price elasticity of demand, substitutes are...
positive
The statement that "increases in the tax on gasoline increase the price of gasoline" is an example of ?
positive statement.
what are the main influences on buying plans that change demand?
prices of related goods, expected future prices, income, expected future income and credit, number of buyers, preferences
the main influences on selling plans that change supply are
prices of related goods, prices of resources and other inputs, expected future prices, number of sellers, productivity
The phrase "a change in demand" most directly implies?
shift of the demand curve.
If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good?
shifts leftward.
The supply schedule?
shows the relationship between the quanity supplied and the price of a good when all other influences on selling plans remain the same.
the more it costs to produce a good, the _______ is the quantity supplied of that good
smaller
If the demand for used cars decreases after the price of a new car falls, used cars are ?
substitue goods.
If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are?
substitutes.
Market demand curves are obtained by?
summing the quantities every consumer is willing to to buy at each different price.
Suppose the equilibrium price of oranges is $2.00 per pound. If the actual price is above the equilibrium price a?
surplus exists and the price falls to restore equilibrium.
What is the "quanity demanded"?
the amount of a good people are able and willing to buy during a specific time period and at a given price.
The quantity supplied of a good, service, or resource is____ during a specified period and at a specified price?
the amount that people are able and willing to sell.
Which of the following statements is correct?
the income elasticity of demand for normal goods is positive.
Market equilibrium occurs when?
the quantity demanded equals the quantity supplied.
Correlation means?
the values of two variables move in a predictable and related way.
To economists, scarcity means?
unlimited wants cannot be satisfied by the limited resources.
Which of the following statements best describes the study of economics? Economics studies how
we make choices in the face of scarcity.
In economics, cost is measured as___, and benefit is measured as___.
what you must give up to get something; what you are willing to give up to get it.
