Microeconomics: Test 1
Which of the following statements is correct?
A shortage occurs when the quantity demand it is greater than the quantity supplied at a price below the market clearing price
which of the following will cause the demand curve for beer to shift right?
A successful advertising campaign linking beer consumption to lower cholesterol
when the current market price is greater than the market clearing price
A surplus Will exist and the price of the product for fall
What's the following would likely cause an increase in the supply of espresso coffee makers?
A widespread expectation that the price of espresso makers will fall in the future
which of the following is a non-price determinant of demand?
Income, tastes and preferences, prices of related goods and services. all of the above
If Irene can make either four chairs or one table in an hour and Greg can make either three chairs or two tables in an hour then
Irina has the comparative & absolute advantage in the production of chairs.
In economics, physical capital includes
Machinery
The study of how a particular firm might choose to maximize its profits would fall into what type of analysis?
Microeconomics
The supply curve shows the relationship between the
Price of a product and the quantity supplied
suppose new research shows that soymilk and other products derived from soybeans provide more health benefits than previously thought. At the same time, drought conditions result in extensive damage to the soybean crop. What will be the combined impact of these two factors on the equilibrium price and quantity of soybeans?
Price will increase but the effect on quantity is indeterminate
people consume more fresh fruit in the summer than during the rest of the year, yet the prices of fresh fruit are lower in the summer than in other seasons. What accounts for this?
The supply of fresh fruit increases in the summer
all the following reduce a transaction cost for consumers except
The supreme court decisions regarding the second amendment
which of the following is a positive statement?
The unemployment rate is 5.8%
The value of a model is determined by
The usefulness of its predictions in the real world
The high opportunity cost of voting in the United States is due to
The value of time devoted to casting a ballot
what would lead an economist to conclude that theory A is superior to theory B
Theory A predicts real-world events better than does Theory B
Consider the case of a teacher who tells students that those who miss more than three classes for any reason will automatically receive a lower grade.
This is an example of a negative incentive for students to attend class.
The imposition of a per-unit tax on a product
Will cause the supply curve to shift upward and to the left
"My brother is better at cooking, better at cleaning, and better at fixing the car than I am ". Relative to his sister, this brother has
absolute advantage in cooking, cleaning, and car repair
Which of the following terms identifies something that macroeconomists would study but that microeconomists would NOT?
aggregates
The price rationing mechanism of a freely functioning market is efficient because
all gains from mutually beneficial trade are exhausted
The term "labor" for an economist includes
all productive contributions of humankind.
suppose that Canadian farmers can grow wheat more cheaply than can US farmers. In the interest of efficiency what is the most desirable outcome
allow the Canadian farmers to sell their wheat for a lower price
Deciding whether to go to school or go to the beach is
an economic decision
how does an economy represented by a straight line production possibilities curve differ from one represented by traditional production possibilities curve with a bowed shape
in the economy represented by a straight line production possibilities curve, the law of increasing realtive cost does not apply
if the demand for a product rises and the supply says the same
both the market clearing price and equilibrium quantity will rise
The rationing function of prices means that
buyers and sellers synchronize their decisions through the price system
inefficient use of resources is shown on the production possibilities curve
by a point inside the curve
The publication consumer reports reduces transaction costs on many purchases
by providing reliable information on products quality so consumers don't have to spend time doing the research themselves
your local grocery store reduces transaction costs to the consumer
by reducing the consumers need to travel from food producer to food producer (or manufacturer to manufacturer) to purchase the food staples that the consumer desires
how does the science of economics deal with the fact that we all have different values?
by using positive analysis
All of the following are examples of macroeconomic problems EXCEPT:
consumers deciding to buy more fish and less beef because of concerns about a healthier diet
transaction costs are
costs associated with exchange
if the government offers to reduce your property taxes by 10% if you install solar heating for your home, this would be an example of
incentives
what is meant by saying that economics is an empirical science?
economic theories will be tested by seeing how well they correspond to real world phenomena
Ceteris Paribus means
economists isolate one or two factors that change when analyzing human decisions
You have the option of consuming one cup of coffee or two donuts or three oranges. You picked a cup of coffee. Therefore the opportunity of this cup of coffee is
either the donuts or the oranges, whichever you like more.
economics may be referred to as a ________ Science, meaning that data is looked at to see whether assertions are correct
empirical
The principle of comparative advantage implies that
everyone can benefit from international trade
The bowed shape of the traditional production possibilities curve reflects the
fact that not all resources are equally well-suited to producing all goods
Two factories make wooden chairs. If the workers in factory A make each chair from start to finish and the workers in factory B divide labor, one would assume
factory B can take advantage of division of labor and produce more efficiently.
economic bads are goods
for which the desired quantity is less than what nature provides at a zero price
Using productive resources to make capital goods requires that we
forgo some level of current consumption
according to the law of demand, an increase in the price of an item
generates an upward movement along the demand curve for the item
One of the benefits of specialization is
greater output
by using the ceteris paribus assumption in conjunction with a model, economists can
hold certain factors constant
Total market demand can be calculated by
horizontally summing individual demand curves at each and every price level
Total market supply can be derived by
horizontally summing individual supply curves at each and every price level.
Because resources are scarce relative to wants, the study of economics concerns
how individuals, businesses, and governments make choices
Economics does NOT concern itself with
how people think
Education increases the stock of which factor of production?
human capital
The accumulated training and education that you have is
human capital
education and training of workers would best be categorized as
human capital
Scarcity exists because
humans have unlimited wants and limited resources
Economic analysis is used
in all decision making
positive economics
is objective
to an economist the term "needs"
is objectively undefinable
The law of demand
is supported by observations of human behavior in the marketplace
Technology
is the recipe for combining land, labor, physical capital, and entrepreneurship to produce a good.
why do most people choose to specialize in a narrow set of skills for their work, rather than to learn a little bit about several varied fields of endeavor?
it allows them to earn more income by being more productive
The country is currently producing inside its production possibilities curve
it can increase the production of both goods by putting unemployed resources to work
why is efficiency desirable?
it makes the best use of the finite resources we have
which factor of production include water?
land
Oil found in Alaska is an example of
land or natural resource.
The fact that when the price of a good goes up, people buy less of it is known as the
law of demand
when the Price of Nintendo GameBoy's goes up and fewer Nintendo GameBoy's are purchased, this is representative of the
law of demand
The direct relationship between changes in price and changes in quantity supplied is
law of supply
The production possibilities curve illustrates economic growth by
outward shift of the PPC
rationality assumption states that
people do not intentionally make decisions that would leave them worse off.
rent controls primarily benefit
people who already occupy rental units
ceteris paribus, as the price of a good or service increases
people will buy less of it
comparative advantage is the ability to
perform an activity at a lower opportunity cost
The following products are likely to be complementary goods?
portable CD players and batteries
The supply curve has a
positive slope
The slope of a nonlinear curve is ____ when the curve is rising, and ____ when the curve is falling.
positive, negative
The demand curve shows the relationship between quantity demanded and
price
An incentive is a
reward for desired behavior
When the quantity supplied is greater at each price, there is a
rightward shift in the supply curve
The market system is also called the price system because
rising prices are the signal to producers to offer more of a particular good
The basic economic problem is
scarcity
The most basic concept in economics is
scarcity
opportunity cost exist because of
scarcity
economists assume that people are motivated by
self-interest
to enhance their prestige, some country clubs like to point to the fact that they have a waiting list for new members. Even at clubs with high initiation fees, it is common that prospective members have to wait three or more years before there is room for them on the membership rolls. How do these country clubs set the price for membership to ensure they have a waiting list?
set the membership price below the market clearing price
when income increases, the demand curve for an inferior good
shift to the left
economic models
simplified representations of the real world
economic models are used to
simplify reality to predict outcomes
microeconomics is concerned primarily with
smaller units of the economy such as firms and households.
Economics is a
social science
The supply curve will shift to the left when
some producers leave the industry.
International trade between two nations increases the standard of living in both nations due to
specialization and gains from comparative advantage.
if a decrease in the price of good A causes a decrease in the demand for good B, the two goods are
substitutes
If producers must receive a higher price to be induced to produce any quantity, we can conclude that
supply decreased
which of the following would most likely be considered complements?
tennis rackets and tennis balls
Economics is a study of
the allocation of scarce resources to satisfy unlimited wants
as an economy moves from point to point along its production possibilities curve, which one of the following variables changes
the amount of each good or service produced
opportunity cost is best defined as
the amount of one product that must be given up to produce one more unit of another product.
macroeconomics might study which of the following?
the causes of domestic unemployment
when a shortage exists in a market
the current price is below the market clearing price and the price will rise
during periods of unemployment
the economy operates at a point inside the production possibilities curve
Macroeconomics is primarily concerned with
the entire economy
when a market clearing price is determined
the exchange between buyers and sellers is voluntary.
Which of the following is NOT studied in microeconomics?
the impact of an increase in the unemployment rate on economic production
buyers and sellers receive information about the markets
through the price system
which of the following would be categorized as "land"?
timber
High gasoline prices give people all of the following incentives EXCEPT
to buy a new SUV
which of the expressions below best describes the aim of economic theory?
to predict the choices people will make
an improvement in technology will shift the production possibilities curve
to the right
which of the following is not a voluntary exchange
tom's car is stolen from the front of his house
Tom is better than his sister at mowing the lawn and delivering papers. However, he earns $10 per hour delivering papers and zero dollars mowing his parents lawn.
tom's opportunity cost for mowing the lawn is the money he could've earned delivering papers.
when productive activities are organized according to the principle of the division of labor,
total output increases due to the advantages of specialization
which of the following is an aggregate?
total production of all goods and services
The production possibilities curve shows all possible combinations of
two goods that can be efficiently produced with a given set of resources.
The idea of bounded rationality is used to address all of the following characteristics except
unbounded selfishness
if Joey go surfing for 4 hours instead of earning $10 per hour for those 4 hours, his opportunity cost is
$40
suppose that on average there are five more car accidents for every extra inch of snow fall in a certain region. is snowfall is graft on the Y axis in car accidents on the X axis, then if we graph this relationship, the slope of the line will be
1/5
you cannot buy either movie tickets or DVDs. If one movie ticket cost $10 and a DVD costs $15, what is the opportunity cost of buying 10 DVDs?
15 movie tickets
which of the following will not change the supply of a good?
A change in the price of a good
which one of the following would cause an increase in the demand for hotel rooms in Hawaii?
A decrease in airfares to Hawaii
which factor would cause a movement along the demand curve for pizza
A drop in the price of pizza
which of the following is assumed when constructing a production possibilities curve?
A fixed amount of resources, efficient use of resources, resources of a given quality. all of the above.
The tasks performed by the chef at your favorite restaurant could be categorized as
A good, and economic code, & a service or intangible good. all of the above
which of the following would cause a change in the quantity demanded of a product?
A higher price, a higher income, expectations of future price increases.
The relationship between beers consumed the night before an exam and a test grade will be graphed as
A line sloping down from upper left to lower right
The difference between positive statements and normative statements is
A positive statement is a statement of fact and a normative statement involves value judgments
which of the following is not a factor of production?
A product
A graphical representation which shows the trade off that occurs when more of one output is obtained at the sacrifice of another is called
A production possibilities curve
which of the following will shift the supply curve for laptop computers to the left?
A reduction of the number of firms that make laptop computers
demand is defined as
A schedule of how much an item people will purchase at any particular price of the item during a specified time period, other things being constant.
Demand is a schedule showing
A set of possible prices for a good and the quantities of the good that will be purchased at each of those prices
which of the following is not considered to be an economic resource?
a view of the stars on a clear night
The author of the book "An inquiry to the nature and causes of the wealth of Nations" is
Adam Smith
suppose you observe that the price of movie admissions decline and that the number of people attending movies declines as well. If only the demand curve or the supply curve shifts this suggests that
Admission prices for other types of entertainment, such as live shows and sporting events, have also declined.
regarding the law of supply, which of the following statements is correct?
As the price of a good or service rises, the quantity supplied will increase.
if vice president Smith is a better typist then his assistant, he said to have an ______ advantage in typing over the assistant
absolute
"Wants" as an economic concept includes
both material and nonmaterial desires
in order for a production possibilities curve to shift to the right, which of the following must occur?
economic growth
if the demand for a product falls and supply stays the same
both the market clearing price and equilibrium quantity will fall
The reason that most of the coffee that is consumed in the United States comes from Columbia is that
Columbia has a comparative advantage in producing coffee relative to the united states
which of the following would cause an increase in demand for digital cameras?
Digital cameras become easier to use
which of the following statements about economic models is true?
Every economic model is based on a set of assumptions.
The law of increasing relative cost exists because
resources are not perfectly adaptable to both production processes
which of the following is a non-price determinant of supply
Technological advances in production
when Adam Smith's ten pin workers specialized, they were able to increase output of pins in a day from 200 to 48,000. One reason for the increase in pin output was due to
The Time saved when workers do not need to shift from one task to another
which of the following is a microeconomic topic?
The advertising strategy of a particular company
Suppose that because of unseasonable cold weather in Brazil, their husbands substantial decline in Brazilian coffee crop. This statement means that
The amount of coffee beans available at various prices will decline
which of the following is example of a positive statement?
The amount of financial assistance given to farmers is higher this year than it was 10 years ago
which of the following is held constant when constructing a production possibilities curve?
The amount of total resources used
all of the following are aspects of microeconomics EXCEPT:
The average level of prices of all goods and services produced in a country in a year
how could Adam Smith's comment about the butcher, the Brewer, and the baker be accurately rephrased in modern terms?
The butcher, the Brewer, and the baker give us our dinner because they each earn a living by doing so.
what situation gives rise to a surplus?
The current price of the good is above its market clearing price.
economic growth appears on a production possibilities curve as
The curve shifting out away from the origin
if one day it was discovered that lime juice cause cancer, which of the following would likely result?
The demand curve for lime juice would shift to the left
we know the product G & H are related goods, because when the price of G increases
The demand for H decreases
The Chunnel auto tunnel allows motorists to travel between England and France. As an alternative, there is a ferry service across the English channel. What would happen in the market for ferry service if the fees for using the Chunnel were increased
The demand for ferry service would increase
what would happen in the market for prescription drugs if people begin to view over-the-counter remedies as a good substitute for prescription medications?
The demand for prescription medications will decrease
The making and selling of a pencil for $.10 would likely not be possible, but for
The division of labor
suppose that an early frost damages the Florida orange crop. As a result, the price of California oranges increases. Ceteris paribus, which one of the following statements best explains the situation?
The supply of Florida oranges decreased, causing their price to increase, and thus causing the demand for California oranges to increase.
A student has a job that pays a wage rate of $10 per hour. The night before the economics exam, the student has set aside four hours to study for the exam, estimating that for each hour spent studying, her grade will rise by 5 points. That night, she gets a call from her employer to come to work for a wage rate of $15 per hour for that night. She decides to work for three hours and earn an extra $45.00. The next day she takes the test and gets a grade of 75. The opportunity cost of her work is
The extra 15 points she estimates she could've earned on the exam if she had studied for the extra three hours.
in a market system, how are the terms of exchange established?
The forces underlying supply and demand interact to determine a market clearing price
The trade off between the present and future consumption is measured by
The foregone present consumption
The opportunity cost of going to college full-time away from home is
The income you would've earned from a full-time job. The fund you would've saved if you had not paid the tuition. The time you would've spent with friends back home.
and outward bowed production possibilities curve illustrates all of the following except
The law of decreasing relative cost
When a society takes increasing amounts of resources and applies them to the production of a specific good, resulting in increasing opportunity costs for each additional unit produced, which of the following applies?
The law of increasing relative costs
suppose that, at an official ticket price of $80, there are 6000 David gray fans waiting to attend his concert, but only 4000 ticketed seats are available. Which one of the following statements is true?
The market clearing price of the tickets is more than $80
if the demand for a product remains the same and the supply increases
The market clearing price will fall and the equilibrium quantity will rise
if the demand for a product remains the same and the supply falls
The market clearing price will rise and the equilibrium quantity will fall
suppose that, at a rental rate of $700 per month, 350 residents wish to rent apartments and that landlords offer 500 apartments available for rent. Which one of the following statements is true?
The market clearing rental price of apartments is less than $700 per month
which of the following is NOT a positive statement?
The national debt is too high
John and Mary work at a bakery. John can decorate either 10 ice cream cakes or 4 wedding cakes; Mary can decorate either 8 ice cream cakes or 2 wedding cakes. According to this scenario,
The opportunity cost of decorating a wedding cake for Mary is 4 ice cream cakes. The opportunity cost of decorating an ice cream cake for John is 2/5 wedding cake.
an example of an entrepreneur would be
The owner of a new Indian food restaurant
which of the following is not a non-price determinant of demand?
The price of a good or service
which of the following would likely be considered as falling into the domain of microeconomics?
The price of apples
all of the following are non-price determinants of demand except
The price of raw materials used in the production of a good
The relative price of a textbook is
The price of the textbook compared with the price of some other good sold in the same year.
division of labor means that
The production process is divided into smaller tasks
The assumption that individuals do NOT intentionally make decisions that would leave them worse off is referred to as
The rationality assumption
which of the following statements is true
The relative price of a good refers to the opportunity cost of purchasing it
in constructing a production possibilities curve, all the following are assumed except
The state of technology is improving.
If a teacher tells a student that those who attend the study session typically score higher on the final exam,
The student has a positive incentive to attend the study session because she may get a higher grade.
which of the following is an example of a normative statement?
a camera makes a good wedding gift
A movement along a demand curve
a change in the quantity demanded of a good that is the result of a change in that good's price
The law of supply states that there is
a direct relationship between price and quantity supplied, ceteris paribus.
The impact of an increase in the gasoline tax on SUV sales is:
a microeconomics topic because it deals with one industry
market clearing price is in a market system act as
a signaling device
Scarcity, by definition, means
a situation where the inputs for producing the things we desire are insufficient to satisfy all of our wants
Economic analysis is
a tool that can aid all decision making
aggregate measures are
a total measure of a variable across the economy
which of the following would cause an increase in the supply of cardboard?
an improvement in the technology used to produce cardboard
which of the following will not cause market supply to increase
an increase in the costs of resources used to produce the product
what are the following would cause an increase in the market supply of mountain bikes?
an increase in the number of firms making mountain bikes
when the price of a good rises there is
an increase in the quantity supplied
A production possibilities curve will shift outward or to the right for all of the following reasons except
an increase in the unemployment rate
The law of demand states that there is
an inverse relationship between price and quantity demanded, ceteris paribus
economists argue that unhindered international trade leads to an efficient outcome. What is meant by "in efficient outcome" in this context
an outcome in which the resources are devoted to their most efficient use
economic growth is shown by
an outward shift of the production possibilities curve
rational behavior for an economist means that individuals
are motivated by self-interest
normative economic statements
are statements of "what ought to be"
Resources
are used to produce goods and services to satisfy people's wants
the production possibilities curve for two products is bowed out because
as the production of a good increases, opportunity cost increases
The text argues that if avocado growers in Mexico can produce avocados cheaper than avocado growers in the United States, this will not reduce total jobs available in the United States. The logic underlying this argument is that
avocado growers in the United States will switch to specializing in a crop in which they have the comparative advantage
consider the statement, "the number of beers consumed the night before a test affects the grade." In this statement
beer is the independent variable and the test grade is the dependent variable
The combination of psychology and economics to determine individual decision making is known as
behavioral economics
which of the following is a microeconomic concern?
consumer behavior
charitable donations to the Red Cross
can be explained by the rational self-interest theory
A positive economic statement is one that
can be refuted
comparative advantage implies that you
can produce a good or service at a lower opportunity cost
if an economy produces only steel in wheat, a new fertilizer will
cause the production of wheat to increase at every point on a production possibilities curve but not affect the production of steel, that is the curve moves out word on the wheat axis only
in building a model the assumption that allows economists to study only the factors being analyzed is the
ceteris paribus assumption
The slope of the line is the
change in the values along the y-axis divided by the change in the values along the x-axis
slope of a nonlinear curve
changes along the various points of the curve
Economics is the study of how people make
choices
opportunity costs arise from
choices
Underlying economic theory is the idea that
choices are affected by both positive and negative incentives
The market system is efficient because
choices are based on individuals self interest
Assuming Vice President Smith has to sacrifice more than his assistant in order to engage in full-time typing, we would say that his assistant has a(n) ________ advantage in typing versus Mr. Smith.
comparative
When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region, it is practicing
comparative advantage
you should specialize in the production of a good if you have
comparative advantage
in economics international trade is based on the existence of
comparative advantage between countries
Microeconomics studies
decisions made by individual consumers and businesses
If the price of margarine falls, the demand for butter will
decrease
which of the following will not affect the supply of cars?
decrease in the price of cars
trading off capital goods for increasing amounts of consumer goods today will most likely result in
decreased long-term growth.
assumptions are necessary to
define a set of circumstances where a model is most likely to apply
which of the following situations could generate a shortage?
demand for a good increases, but the price is not permitted to rise
suppose you observe that the price of a good increases and that the quantity of those goods sold also increases. If only the demand curve or the supply curve shifts this suggest that
demand increased over time while supply remained the same
The newspaper headline asserts: "rising demand pushes up housing prices." this headline
directly implies that an increase in demand will increase the market clearing price
according to the concept of comparative advantage, a good should be produced in the nation in which
domestic opportunity cost is the smallest
according to economists, when two people make exactly the opposite decision,
each person evaluates the situation according to his/her individual self-interest
If the price of milk falls, The supply of ice cream is likely to
increase
if a good is a normal good, an increase in income will
increase in the demand for the good
if the price of oil rises, producers of oil will likely
increase the quantity of oil supplied
A subsidy to carrot farmers will be
increase the supply of carrots
A bowed outward production possibilities curve demonstrates the concept of
increasing opportunity cost as production shifts from the production of one good to the production of another good.
A relationship between two variables in which one variable increases at the same time as the other decreases is called
inverse
what type of relationship does the law of demand demonstrate
inverse
normative economics
involves value judgments
"the US government should not use my tax dollars to subsidize people on welfare"
is a normative statement because it involves a value judgment about an economic policy
A theory or model
is a simplified, abstract view of reality
when we say that an individual behaves according to the "rational self-interest," we mean that this individual
is making choices that they believe will leave him/her better off
Resources are
limited
what type of economics would most likely deal with aggregates?
macroeconomics
The study of economics can be divided into two areas, which are
macroeconomics and microeconomics
In constructing models, economists:
make simplifying assumptions
what of the following are substitute goods
margarine and butter
another term for intermediaries who specialize in reducing transaction costs is
middlemen
Internet companies attempt to make ordering and paying for items as easy as possible in order to
minimize opportunity costs for the consumer
opportunity cost is illustrated on the production possibilities curve (PPC) by a
movement along the PPC.
an increase in the quantity demanded is shown by
movement down along a demand curve
if the production of capital goods is shown along the horizontal axis of a production possibilities curve, and the production of consumer goods is shown along the vertical axis of a production possibilities curve, and the economy desires to have a rapid rate of economic growth, then the economy should produce at a point
near the horizontal axis concentrating on the production of capital goods
if a straight line crosses the Y axis at five and crosses the X axis at 10 we can conclude that the slope of the line is
negative
The saying that "you cannot have your cake and eat it too" illustrates the economic concept of
opportunity cost
ceteris paribus means
other things being equal
To have more consumer goods in the future we must
produce more capital goods today.
if a country wants to promote future growth, it should
produce more capital goods today.
if there is a surplus
producers will lower their prices
activities designed to convert resources into goods and services is known as
production
efficiency is defined as
production of output at minimum cost
which of the following is not a determinant of demand?
production technology
all of the following are methods of rationing goods except
profit motive
economic seeks to use only positive analysis to
provide a value free analysis
economic goods are items that
provide satisfaction to users
A five-cent deposit on beer bottles
provides a positive incentive because it rewards people for recycling, and provides a negative incentive because it punishes people who do not recycle. both A and B
Rational self-interest means
pursuing what makes you better off
The idea that people will not consciously make decisions that make them worse off is known as
rationality assumption
assuming that turkey, chicken, pork, and beef are substitutes, suppose that the price of turkey has fallen. This will, other things being equal,
reduce demand for chicken, pork, and beef
markets tend to
reduce transaction costs
intermediaries, known as a middleman, specialize in
reducing transaction costs
The price of one product in terms of another commodity is called its
relative price
a negative slope
represent an inverse relationship, such as beers consumed and test score
Scarcity
requires individuals to make choices
assumptions in models tend to make
the model more applicable to specific circumstances
which of the following is a macroeconomic concern?
the national output of the United States
The market clearing price of a good is
the price at which there is no surplus and no shortage.
all of the following cause a shift of the demand curve except a change in the
the price of a good or service
If the slope of a curve is 1/5, we know that
the relationship is linear, and the line moves from lower left to upper right.
when producers anticipate that the price of their product will increase in the future,
the supply curve will shift to the left
A direct relationship occurs when
the two variables being compared change in the same direction, or when one goes up the other also goes up.
all of the following are assumptions of the production possibilities curve except
there is a fixed demand for the products
if the price of a product increases
there is an increase in quantity supplied in a decrease in quantity demanded
happens as the result of a surplus
there is downward pressure on prices
what happens as the result of a shortage?
there is upward pressure on prices
when McDonald's runs a special for hamburgers reducing the price of big Macs to $.99 with all other factors held constant
there's likely to be a decrease in demand for burger kings whoppers assuming big Macs and whoppers are substitutes
The opportunity cost of a decision is the
value of the best alternative not chosen
The following is the least scarce
weeds
A production possibilities curve will shift inward
when a war destroys the capital goods of a country
efficiency is achieved
when producers are getting the maximum possible output from the available resources
when are black markets likely to arise
when the government enforces a price ceiling
If both buyers and sellers expect the price of a commodity to fall in the future, it is likely that the market clearing price ______ and the equilibrium quantity ____.
will fall, cannot be predicted
If both buyers and sellers expect the price of a commodity to rise in the future, it is likely that the market clearing price ______ and the equilibrium quantity ____.
will rise, cannot be predicted
The "paired observation" of (14, 6) means
x = 14, y = 6
Based on your understanding of your roommates preferences, you predict that he will select the spaghetti for his lunch at the cafeteria, but instead he chooses the gyros. how do you describe this event in terms of economic theory?
you constructed a model that made a prediction, and the prediction was refuted.
