Chapter 1 Econ
An economy has achieved _____ if it has not pass up any opportunities to make some people better off without making others worse off.
efficiency
The invisible hand of self-interest is the means by which markets acheive
efficiency
Which of the following statements describes efficiency
1. A situation in which producers make the highest profits possible 2. A situation in which we cannot produce more of one good without producing less of another good 3. A situation in which we produce the goods and services that people value most highly
Specialization in production was the starting point for Adam Smith in
The Wealth of Nations
Which of the following is true of specialization
The gains from trade are due to specialization.
If an economy is efficient
all opportunities to make people better off without making other people worse off have been taken
A trade-off involves weighing
costs and benefits
According to the principle that one person's spending is another person's income, a decrease in manufacturing employment can:
decrease spending on goods and services, and thereby lower incomes
Product prices change incentives to purchase goods and services. If Byron is choosing between apples and oranges in a local grocery store, an increase in the price of oranges _____ the incentive to buy apples and _____ the incentive to buy oranges.
increases, decreases
Which of the following is a microeconomic topic
reasons why a consumer buys more cheese
One of the potential causes of a recession is an
shortfall of spending
Consider a situation where two gas stations located across the street from each other are charging different prices. The Exxon gas station is charging 50 cents more per gallon of each type of gasoline than the Shell gas station. The equilibrium can be restored if:
the Exxon gas station reduces its prices
You can spend $300 on either a pair of new Air Jordan sneakers or a new skateboard. If you choose to buy the Air Jordans, the opportunity cost is
your enjoyment of the new skateboard
Which of the following is not a tool of macroeconomic policy
Anti-trust regulation
According to the principle that one person's spending is another person's income, an increase in manufacturing employment can:
Increase spending on goods and services, and thereby increase incomes
Suppose everyone in a small town decided to save more and spend less. How will this affect an economy? (in macroeconomics, this is called the paradox of thrift)
It will have no impact, since a small town makes up a small portion of an economy
When the Chicago city manager receives complaints that the municipal courts are not fully accessible to individuals with disabilities, she responds that the $1 million improvement needed to address the problem will not happen because "that money could be spent building lavatory space for people with disabilities" Which economic principle does this statement BEST represent?
The true cost of something is its opportunity cost
When the economy experiences shortfalls or excesses of spending, government policies can be used to address the imbalances. Which statement does NOT address such imbalances, realized during the coronavirus pandemic?
There is fear of recession and uncertainty about the future in a post COVID - 19 reality
making a trade-off involves
incurring an opportunity cost
Excess availability of empty parking spots near the stadium during a popular college football game indicates that the parking market _____ in an equilibrium and _____ to restore the equilibrium.
is not; the parking fees need to be lowered
In a market economy, each individual _____ able to make his or her own choices, and coordination takes place _____ a coordinator.
is; without
A decrease in efficiency means that an economy has
made more people worse off without making others better off
Scarcity of resources
means that there are not enough resources available to satisfy all the ways that society wants to use them
If a market is in equilibrium
no individual will be better off doing something different
If elijah is given a free ticket to see a movie
elijah still incurs an opportunity cost
As incomes fall, spending ____, and as incomes rise, spending _____
falls, rises
Sabrina has gone out to lunch three times this week. She has some extra money, so she decides to go out to lunch a fourth time. Which economic principle does this statement BEST represent
"How much" is a decision at the margin
You decide whether to eat one more slice of cheesecake based on how hungry you feel. This statement best represents this economic concept:
"How much" is a decision at the margin
Quinn is trying to decide what to serve his guests when they watch the big game. He prefers to have pizza, which will cost $50, but he could also serve his next best choice of hotdogs, which would only cost $30. If Quinn chooses to have pizza, his opportunity cost is
$50 and the hot dogs
Which of the following topics would be studied in macroeconomics
Recessions
If Isabella drives to a Kansas City, 120 miles from Manhattan, Kansas (home of Kansas State UniversityO to do her back-to-school shopping, this will:
hurt Isabella's community because Isabella's spending will be income for people in the large city
According to the principle that one person's spending is another person's income, an increase in consumer confidence can _____ spending on goods and services, and therefore _____ incomes.
increase, increase
A sushi chef prepares a California roll for a customer. Which of the following factors is physical capital?
the knife use to cut the sushi
When the price of a good changes in a market
the market will move toward a new equilibrium
During economic downturns the number of Americans without jobs increases. According to the principle that one person's spending is another person's income
the reduction in spending by the unemployed workers will further lower incomes
Animah has a calculus exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Aminah decides to attend the lecture instead of studying for her exam. Aminah's opportunity cost of attending the lecture is:
the transportation and time cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight
Suppose one parent picks up their child from day care, while the other parents stays home to make dinner. This is an example of the principle that
there are gains from trade