test one-econ
At the equilibrium price, the quantity of the good that buyers are willing and able to buy
exactly equals the quantity that the sellers are willing and able to sell.
The law of demand states that, other things equal, when the price of a good
falls, the quantity demanded of the good rises.
A production possibilities frontier can shift outward if
there is a technological improvement.
High-school athletes who skip college to become professional athletes
understand the opportunity cost of college is high
If consumers view cappuccinos and lattés as substitutes, what would happen to the equilibrium price and quantity of lattés if the price of cappuccinos falls significantly below lattes?
Both the equilibrium price and quantity would decrease.
Which of the following statements does not apply to a market economy?
Government policies are the primary forces that guide the decisions of firms and households.
Which of the following would incur the highest opportunity cost
Solar panels placed in a farm field
For a particular good, a 2 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The good is a luxury
Which of the following is not an assumption of the productions possibilities frontier?
There is a fixed quantity of money.
A statement describing how the world should be
a normative statement
What would you expect from the correlation between rental cars and air travel.
a quotation that is less than 1 or negative
In a competitive market, the quantity of a product produced and the price of the product are determined by
all buyers and all sellers.
OPEC successfully raised the world price of oil in the 1970s and early 1980s, primarily due to
an inelastic demand for oil and a reduction in the amount of oil supplied.
Consider the market for portable air conditioners in equilibrium. When a heat wave strikes the equilibrium price
and quantity both increase.
Demand is said to be price elastic if
buyers respond substantially to changes in the price of the good.
Suppose you make jewelry. If the price of gold falls, then we would expect you to
be willing and able to produce more jewelry than before at each possible price.
Annie is an excellent baker and Sam has a plentiful farm. If Sam trades eggs and butter to Annie for some of Annie's bread and pastries,
both Sam and Annie are made better off by trade.
A good will have a more inelastic demand, the
broader the definition of the market.
Suppose that 50 ice cream cones are demanded at a particular price. If the price of ice cream cones rises from that price by 4 percent, and the number of ice cream cones demanded falls to 45, then demand for ice cream cones is considered to be
elastic
When small changes in price lead to infinite changes in quantity demanded, demand is perfectly
elastic, and the demand curve will be horizontal.
For a market to exist, there must be a
group of buyers and sellers.
A decrease in the price of a good would
increase the quantity demanded of the good.
When a Production Possibilities Frontier is bowed outward, the opportunity cost of producing an additional unit of a good
increases as more of the good is produced.
A statement describing how the world is
is a positive statement.
The "broken window fallacy"
is illustrated when a government program is justified not on its merits but on the number of jobs it will create.
While in college, Marty and Laura each buy 15 bus tickets per month. After they graduate and have full-time jobs, Marty buys 0 bus tickets per month and Laura buys 28 bus tickets per month. Comparing income elasticity of demand for bus tickets, Marty's
is negative, and Laura's is positive.
When a surplus exists in a market, sellers
lower price, which increases quantity demanded and decreases quantity supplied, until the surplus is eliminated.
Goods with many close substitutes tend to have
more elastic demands.
Last year, Joan bought 50 pounds of hamburger when her household's income was $40,000. This year, her household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant, Joan's income elasticity of demand for hamburger is
negative, so Joan considers hamburger to be an inferior good.
The adage, "There is no such thing as a free lunch," means
people face tradeoffs.
"invisible hand" works to promote general well-being in the economy primarily through
people's pursuit of self-interest.
Unemployment would cause a society to
produce inside its production possibilities frontier.
The signals that guide the allocation of resources in a market economy are
quantities.
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
The ability for society to satisfy wants or relieve uneasiness depends upon
resources
The phenomenon of scarcity stems from the fact that
resources are limited
Suppose roses are currently selling for $20 per dozen, but the equilibrium price of roses is $30 per dozen. We would expect a
shortage to exist and the market price of roses to increase.
If the cross-price elasticity of two goods is positive, then the two goods are
substitutes.
Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,
supply shifts to the left, demand is unaffected, and price increases.
For a good that is a luxury, demand
tends to be elastic.
The law of supply states that, other things equal, when the price of a good
the quantity supplied of a good increase as its price increases, and the quantity supplied of a good decrease as its price decreases.
Generally, a firm is more willing and able to increase quantity supplied in response to a price change when
the relevant time period is long rather than short.
A decrease in the number of sellers in the market causes
the supply curve to shift to the left