eco 2023 test 1 M

price floor

Qd<Qs surplus

price ceiling

creates a shortage

OC (opportunity cost) of A =

B lost/ A gained aka opportunity cost of A in terms of B

Examples of Micro

-Components of economy: labor, land, capital, entrepreneurship -performance/behavior of individual units=family, consumer, industry, firms

Examples of Macro

-directly impacts the economy -poverty -GDP -import/export -economic growth -globalization

What are the factors of production?

-land -labor -capital -entrepreneurship -resources owned by the government

Microeconomics

-specifics: -firm -industry -region (state, country, city) -product -group -specific good

Positive (in comparison to normative)

-statements of what is -descriptive statements ****verifiable -can be statements that are accurate but not positive

Normative (in comparison to positive)

-what should be prescriptive -**opinions (can't verify if it is wrong)

OC of B=

A lost/ B gained aka opportunity cost of B in terms of A

Factors of Demand: # of demanders # demanders decrease

# demanders decrease= demand decreases

Factors of Demand: # of demanders # demanders increase

# demanders increase= demand increases

Define Capital

Final goods that are used to produce other goods and services`

Factors of Demand: Preferences Like less

Like less= demand decrease

Factors of Demand: Preferences Like more

Like more= demand increase

price ceiling

Qd>Qs shortage

Factors of Supply: # of suppliers # suppliers increase

Supply increases (shifts right)

Only government intervention can cause a change in equilibrium ceiling/floor T/F?

True

The ONLY factor that shifts both supply and demand curves is?

a change in expected future price

price floor

creates a surplus

Factors of Demand: Ease of credit/state of financial markets credit harder to get

demand decreases

Factors of Demand: expected future price decreases

demand decreases

Factors of Demand: Ease of credit/state of financial markets credit easier to get

demand increases

Factors of Demand: Prices of Related Goods COMPLEMENTS price of complement decreases

demand increases ie: hotdog & buns

the ____ of supply are any factors other than the product's ____ that have an effect on the supply of a good or service and cause the supply curve to shift

determinants price

The points on a production possibilities curve show?

potential output= the maximum attainable output with our limited resources production possibilities curve= shows the limits of our options

in free markets, though prices will rise and fall equilibrium ___ and ___ will always be achived

price and quantity

A change in ___refers to a movement along the demand curve in response to changes in price of a good or service

quantity demanded

change in demand

refers to a shift of the demand curve leftward or rightward in response to anything other than changes in the price of a good or service

Qd > Qs

shortage

The ability & willingness to sell specific quantities of a good at alternative prices in a given time period, ceteris paribus is the definition of market________.

supply

Factors of Supply: Expected Future Price expected future price increases

supply decreases

Factors of Supply: Prices of Substitutes & Complements in production price of production of substitute increases

supply decreases ie: hybrids & SUVs

Factors of Supply: State of Nature Bad state of nature

supply decreases ie: hurricane, earthquakes, tornadoes, flooding, tsunamis, droughts

Factors of Supply: Technology Technological retreat

supply decreases (shifts left)

Factors of Supply: Expected Future Price expected future price decreases

supply increases

Factors of Supply: State of Nature Good state of nature

supply increases

Factors of Supply: Prices of Substitutes & Complements in production price of production of complement increases

supply increases ie: steak & leather chicken breasts & wings

Factors of Supply: Costs Cost decreases

supply increases (shifts right)

Factors of Supply: Technology Technological advance

supply increases (shifts right)

Qd<Qs

surplus

Choose all of the following that will cause a change in supply rather than a change in quantity supplied. A) producer expectations B) product price C) number of sellers D) consumer expectations E) technology

A, C, E producer expectations, technology, number of sellers

Which of the following is not a factor of production? A. A psychiatrist. B. The $100,000 used to start a new business. C. A bulldozer. D. Six thousand acres of farmland.

B. The $100,000 used to start a new business. Land, labor, capital, and entrepreneurship are the factors of production. Money does not fall under any category of the factors of production. Factors of production are what are needed on a camping trip. Money is not needed on a camping trip. Why they are factors of production A) is a type of labor/skill C) is a capital= something used to further produce other goods, a piece of equipment D) first factor is land.

combinations of output that fall inside the production possibilities curve of an economy represent: a) goods that are attainable b) the inefficient use of resources c) goods that are unattainable d) efficiently produced goods

a & b

What does a straight line of the PPC (production possibility curve) imply?

a straight line PPC means resources are equally adaptable to producing either good

An entrepreneur ___. a) is employed by a big company b) innovates c) takes the risk of earning profits or suffering losses from owning an enterprise d) looks for the latest new products to copy e) makes strategic business decisions that set the course of an enterprise

a, b, d

The highest-valued alternative that is given up or sacrificed when choosing to produce or consume one good over another is referred to as ______________.

an opportunity cost

Factors of Demand: Prices of Related Goods SUBSTITUTES price of substitute decreases

demand decreases ie: coke & pepsi

Factors of Demand: Prices of Related Goods COMPLEMENTS price of complement increases

demand decreases ie: hotdog & buns

Factors of Demand: expected future price increases

demand increases

Factors of Demand: Prices of Related Goods SUBSTITUTES price of substitute increases

demand increases ie: coke & pepsi

Macroeconomics

economy wide country wide -inflation, CPI -GDP -fiscal policy

Factors of Demand: Income INFERIOR GOODS increase income decrease income

increase income= decrease demand decrease income= increase demand

Factors of Demand: Income NORMAL GOODS increase income decrease income

increase income= increase demand decrease income= decrease demand

Hint that it is price ceiling aka shortage

maximum wage

Hint that it is price floor aka surplus

minimum wage

Factors of Supply: # of suppliers # suppliers decrease

supply decreases (shifts left)

Factors of Supply: Costs Cost Increase

supply decreases (shifts left)

Mixed economy

utilizes both market and nonmarket signals to allocate goods and services. Have significant roles for gov intervention in allocation of goods & services

Hints that it is supply:

wages of workers