ECO 232 Exam 1 Review Guide
Unrelated
House plants and potato chips are
True
If consumers believe the price of tablet computers will increase in the future, this will cause the demand for tablet computers to decrease now
the supply curve for apples has shifted to the left
If in the market for apples the supply has decreased, then
the supply of bananas increased
If in the market for bananas the supply curve has shifted to the right, then
The supply curve will shift to the right.
If the United States lifts the embargo on Cuban products, what will happen in the U.S. market for Cuban cigars?
a decrease in the quantity of beef jerky demanded
If the price of beef jerky rises, then the substitution effect due to the price change will cause
False
If the price of peaches, a substitute for plums, increases the demand for plums will decrease
increase the demand for game consoles.
If virtual reality headsets are considered substitutes for game consoles, an increase in the price of virtual reality headsets would, all else equal,
The supply curve shifts to the left.
In July, market analysts predict that the price of gold will rise in August. What happens in the gold market in July, holding everything else constant?
complements
Smartphones and smartphone apps are
income
The ________ effect of a price change refers to the impact of a change in the price of a good on a consumer's purchasing power.
the lower the price, the more of the good is bought
The law of demand states that
the maximum attainable combinations of two products that may be produced in a particular time period with available resources.
The production possibilities frontier shows
occurs when production is in coordinate with consumer preferences
What is allocative efficiency?
the study of how people make decisions considering their scarce resources
What is economics?
the next best alternative that must be given up
What is opportunity cost?
goods or service is produced at the lowest possible cost
What is productive efficiency?
unlimited wants and needs but limited resources
What is scarcity?
A change in technology
What is the first supply curve shifter?
income, population, preferences, prices of related goods, expectations of future prices
What shifts the demand curve?
input prices, technology, expectations, number of sellers
What shifts the supply curve?
the ability to produce more of a given product using a given amount of resources
absolute advantage
statement which describes how the world should be
normative statement
statement which describes the world as it is
positive statement
is a curve that shows the relationship between the price of a product and the quantity of the product supplied
A supply curve
False
An inferior good is a good for which the quantity demanded increases as the price decreases, holding everything else constant.
substitutes
Eyeglasses and contact lenses are
complements
Motorcycles and gasoline are
False
Peanut butter and jelly are complements. If the price of peanut butter increases, the demand for jelly will increase.
substitutes
Red wine and white wine are
Supply shift right; a lower equilibrium price and a higher equilibrium quantity
You are looking at the supply and demand for corn muffins. The price of corn decreases. On the graph you will see _____ and the result will be _____.
the ability to produce a good at a lower opportunity cost than another producer
comparative advantage