Micro/Macro Exam 1

Refer to Table 5-1. If D2 and S2 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are ________ and _________, respectively.

$10, 12 (see quiz 4)

Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are _________ and ________, respectively.

$6, 13 (see quiz 4)

Referring to Table 2-1: A student has only a few hours to prepare for two different exams this afternoon. The above table shows alternative possible exam scores with three alternative uses of the student's time. The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

15 points on the history exam. (see quiz 2)

Consider the Production Possibility Frontier for country X producing 2 groups of goods, MP3 players and watches. The opportunity cost of moving from the combination of MP3 players and watches B to C is

2 watches (see quiz 2)

Refer to Table 2-1. A student has only a few hours to prepare for two different exams tomorrow morning. The above table shows alternative possible exam outcomes with three alternative uses of the student's time. The opportunity cost of scoring an 84 on the history exam rather than 76 is:

7 points on the economics exam (see quiz 2)

Which of the following statements most likely lies within the realm of microeconomics?

An increase in labor costs will increase the additional cost of producing another bus.

Why is there scarcity?

Because our unlimited wants exceed our limited resources

In the circular flow diagram model:

Both (a) and (b) are correct. (a): households receive income from businesses in exchange for providing inputs and use that income to buy goods and services from businesses. (b): businesses receive revenues from households in exchange for providing goods and services and use those revenues to buy inputs from households.

In which of the following countries will the national government have the greatest influence with respect to the nation's economy?

Cuba

Consider the graph of the production possibility frontier for country Z below. A combination of clothing and cell phones that would meet the productive efficiency would be: Question options:

E (see quiz 2)

_____________ - a term referring to the fact that for many goods, as the level of production increases, the average cost of producing each individual unit declines.

Economies of scale

Consider the graph of the production possibility frontier for country X. What is a combination of MP3 players and watches that would be inefficient production for country X?

F (see quiz 2)

If an increase in the price of Good X causes a decrease in the demand for Good Y, we can conclude that:

Goods X and Y are complement goods.

How does a production possibilities model differ from a budget constraint model?

The production possibilities model demonstrates diminishing returns.

Refer to Table 5-1. Suppose that D1 and S2 are the demand and supply schedules for Product A. If the government imposes a price ceiling of $4, then:

a 10 unit shortage will result. (see quiz 4)

Which of the following is most likely a topic of discussion in macroeconomics?

a decrease in the unemployment rate

Any given demand or supply curve is based on the ceteris paribus assumption that

all else is held equal

The term ceteris paribus means that:

all variables except those specified are constant.

Which of the following results in a rightward shift of the market demand curve for labor?

an increase in demand for the firm's product

The slope of the _________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.

budget constraint

In a market-oriented economy, the amount of a good that is produced is primarily decided by the interaction of:

buyers and sellers.

The nature of demand indicates that as the price of a good increases:

buyers desire to purchase less of it.

Specialization:

can lead to an increase in overall production.

Refer to Figure 3-2. A change from Point A to Point B represents a(n):

decrease in quantity demanded. (see quiz 3)

Refer to Figure 3-3. A change from Point A to Point E represents a(n):

decrease in supply.

In the first chapter of The Wealth of Nations, Smith introduces the idea of the __________, which means the way in which the work required to produce a good or service is divided into a number of tasks that are performed by different workers.

division of labor

In a command economy, the __________ either makes most economic decisions itself or at least strongly influences how the decisions are made

government

Refer to Figure 3-1. Using the graph above and beginning on D1, a shift to D2 would indicate a(n):

increase in demand (see quiz 3)

Improvements in the productivity of labor will tend to:

increase wages.

The opportunity cost of an action:

is a subjective valuation that can be determined only by the individual who chooses the action.

Other things being equal, a _____________ supply of workers tends to _________ real wages.

larger; decrease

Most real-world choices aren't about getting all of one thing or another, instead, most choices involve _________________, which involves comparing the benefits and costs of choosing a little more or a little less of a good.

marginal analysis

In a world of scarcity, we will never

meet all of society's wants.

The basic difference between macroeconomics and microeconomics is

microeconomics concentrates on the behaviour of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

The model that economists use for illustrating the process of individual choice in a situation of scarcity is the budget constraint, sometimes also called the _______________, a diagram which shows what choices are possible.

opportunity set

Philosophers draw a distinction between ___________________, which describe the world as it is, and normative statements, which describe how the world should be. Question options:

positive statements

The "law of supply" functions in labor markets; that is, a higher ___________ for labor leads to a higher quantity of labor supplied.

price

The lesson of __________ is to forget about the money that's irretrievably gone and instead to focus on the marginal costs and benefits of future options.

sunk costs

As the _______________ substitute for low-skill labor becomes available, the demand curve for low-skill labor will shift to the left.

technology

Suppose that there are only two types of output in a country: nuclear missiles and consumer goods. All else being constant, as the nation produces more missiles,

the greater the opportunity cost will be of satisfying consumer wants.

Because of ________ if a city government decides to spend money on beautifying its downtown and attracting tourism to its city when no money has been devoted to those efforts before, then gains in tourism may be significant.

the production possibility frontier

Whenever there is a surplus at a particular price, the quantity sold at that price will equal:

the quantity demanded at that price.

Scarcity is a condition that is everywhere and always, since it is based upon two assumptions that reflect permanent universal conditions. The assumptions are that more output will satisfy more wants and

the world has limited productive resources.

When quantity demanded decreases in response to a change in price:

there is a movement up along the demand curve.

Scarcity exists because of:

unlimited wants and limited resources.

In deciding how many hours to work, Beulah will make a choice that maximizes her _______; that is, she will choose according to her preferences for leisure time and income.

utility

Refer to Table 5-1. If D2 and S1 represent the demand and supply schedules in a particular market, then the equilibrium price and quantity are _________ and _________, respectively.

$8, 15 (see quiz 4)

Which of the following best characterizes the circular flow of income?

Businesses buy resources from households, and households use their income from the sale of resources to buy goods and services from businesses.

interpret the following statement: An increase in the price of wheat will encourage farmers to increase the quantity of wheat supplied to the market.

The statement is correct

A change in price of a good or service typically causes ________________ for that specific good or service.

a change along the supply curve

Which of the following best denotes the reason for the existence of substantial black markets?

a command economy

The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display _____________________.

allocative efficiency

Which of the following will not result in a rightward shift of the market supply curve for labor?

an increase in labor productivity

Which of the following will not result in a leftward shift of the market demand curve for labor?

an increase in the wage rate

Which of the following is generally accepted as a valid criticism of the production of useful goods and services?

environmental pollution

The _________ is the only price where quantity demanded is equal to quantity supplied.

equilibrium price

Refer to Table 5-1. Suppose that D1 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D1 to D2, then:

equilibrium price increases from $6 to $8 (see quiz 4)

If the price is below the equilibrium level, then the quantity demanded will exceed the quantity supplied. This is known as ________________.

excess demand

The circular flow diagram of economic activity is a model of the:

flow of goods, services, and payments between households and firms.

Scarcity implies that:

it is impossible to completely fulfill the unlimited human desire for goods and services with the limited resources available.

In a _______________________, most economic decisions about what to produce, how to produce it, and for whom to produce it are made by buyers and sellers.

market-oriented economy

In contrast to goods and services markets, ______________ are rare in labor markets, because rules that prevent people from earning income are not

price ceilings

The downward slope of the demand curve again illustrates the pattern that as _____________ rises, ______________ decreases.

price, quantity demanded

A supply curve is a graphical illustration of the relationship between price, shown on the vertical axis, and _________________, shown on the horizontal axis.

quantity

A demand curve shows the relationship between price and ______________ on a graph.

quantity demanded

When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ________________.

quantity supplied

A straightforward example of a ____________, often used for simplicity, is the interest rate.

rate of return

Gomer decides to spend an hour playing basketball rather than studying. His opportunity cost is:

the benefit to his grades from studying for an hour

The opportunity cost of attending university is likely to include all except which of the following?

the cost of haircuts received during the school term

When consumers and businesses have greater confidence that they will be able to repay in the future, ___________________.

the quantity demanded of financial capital at any given interest rate will shift to the right.

Whenever there is a shortage at a particular price, the quantity sold at that price will equal:

the quantity supplied at that price.