ChandlerMicro1
Which of the following is a positive economic statement?
If the price of IPhones falls, a larger quantity of IPhones will be purchased
Which of the following statements about scarcity is true?
Scarcity refers to the situation in which unlimited wants exceed limited resources
The three fundamental questions that any economy must address are
What goods and services to produce; how will these goods and services be produced; and who receives them?
Ranchers can raise either cattle or sheep on their land. Which of the following would cause the supply of sheep to increase?
a decrease in the price of cattle
The revenue received from the sale of _________ of a product is a marginal benefit to the firm.
an additional unit
Which of the following is a factor of production?
an oven in a bakery
Comparative advantage means the ability to produce a good or service
at a lower opportunity cost than any other producer
Which of the following is a common mistake made by consumers
being overly optimistic about their future behavior
We can derive the market demand curve for gold earrings
by adding horizontally the individuals demand curve of each gold earring consumer
You have an absolute advantage whenever you
can produce more of something than others with the same resources
The observation that people tend to value something more highly when they own it than when they don't is called the
endowment effect
All of the following are critical functions of the government in facilitating the operation of a market economy except
ensuring an equal distribution of income to all citizens
Marginal utility is the
extra satisfaction received from consuming one more unit of a product
If a commercial dairy farm wants to purchase feeding throughs, it does so in the
factor market
In the circular flow model, producers
hire resources sold by households in the factor market
Microeconomics is the study of
how households and firms make choices
The production possibilities frontier model shows that
if all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good
A supply schedule
is a table that shows the relationship between the price of a product and the quantity of the product supplied.
If the production possibilities frontier is ________, then opportunity costs are constant as more of one good is produced.
linear
Economists assume that the goal of consumers is to
make themselves as well off as possible
Economists reason that the optimal decision is to continue any activity up to the point where the
marginal benefit equals the marginal cost
The demand by all the consumers of a given good or service is the _______ for the good or service.
market demand
The slope of a production possibilities frontier
measures the opportunity cost of producing one more unit of a good.
In their surveys of consumers,Daniel Kaheman, Jack Knetsch and Richard Thaler found that
most people considered an increase in price by firms following an increase in their costs to be fair but believed it was unfair for firms to raise their prices because of an increase in demand
All of the following are part of an economic model except
opinions
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost
Economic models do all of the following except
portray reality in all its minute details
By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.
price; quantity; price
If Marlowe obtains 9 units of utility per dollar spent on apples and 6 units of utility per dollar spent on oranges, then Marlowe
should buy more apples and fewer oranges
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources
Macroeconomics is the study of
the economy as a whole
When the price of audio books, a normal good, falls causing your purchasing power to rise, you buy more of it due to
the income effect
If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of
the law of diminishing marginal utility
In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we change
the price of the product and hold everything else constant
Adams Smith's invisible hand refers to
the process by which individuals acting in their own self - interest bring about a market outcome that benefits society as a whole
The law of demand implies, holding everything else constant, that as the price of bagels increases,
the quantity of bagels demanded will decrease
What is behavioral economics?
the study of situations in which people act in ways that are not economically rational
A network externality occurs when
the usefulness of a good is affected by how many others use the good
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
trade-off
Economists have used the ultimatum game and the dictator game in experiments designed to determine
whether consumers care about fairness when they make decisions
The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each. What is the opportunity cost of buying a Russian tea cake?
2/5 of a cappuccino
Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?
25 silk leaves
What is the difference between an "increase in demand" and an "increase in quantity demanded"?
An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve
What is the difference between an 'increase in supply' and an 'increase in quantity supplied"?
An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
Which of the following is the correct way to describe equilibrium in a market?
At equilibrium, quantity demanded equals quantity supplied
Which of the following is a normative economic statement?
The price of gasoline is too high
Which of the following is a microeconomics question?
What factors determine the price of carrots
