ECON 266 chp 1-5
If there are external benefits for good X, which of the following is true? The socially efficient amount of good X can be achieved if society taxes consumers of good X. The socially efficient amount of good X can be achieved if society subsidizes consumers of good X. The socially efficient amount of good X will be equivalent to the free market equilibrium quantity. The socially efficient amount of good X does not exist.
The socially efficient amount of good X can be achieved if society subsidizes consumers of good X.
Suppose the federal government imposes a new pollution tax of $0.01 per kilowatt-hour of electricity on coal-fired power producers. Which of the following describes how this tax will affect the market for electricity served by these power plants? Demand for electricity will decrease. Demand for electricity will increase. The supply of electricity will decrease. The supply of electricity will increase.
The supply of electricity will decrease.
Suppose the state of California imposes a minimum wage of $15 per hour. In the entry-level labor market in California fast-food restaurants, the quantity of labor demanded at $15 per hour is 800,000 and the quantity of labor supplied is 1.2 million. Which of the following is true? There is a shortage of 800,000 workers in the labor market. There is a surplus of 400,000 workers in the labor market. There is a shortage of 400,000 workers in the labor market. There is a surplus of 1.2 million workers in the labor market.
There is a surplus of 400,000 workers in the labor market.
Suppose the federal government imposes a price floor (support price) in the milk market at a price of $6 per gallon. If market quantity demanded at $6 is 1 billion gallons, and market quantity supplied is 1.5 billion gallons, which of the following is true? There is a shortage of 500 million gallons of milk, and the federal government will buy 1 billion gallons to maintain the $6 price. There is a surplus of 500 million gallons of milk, and the federal government will buy these 500 million gallons to maintain the $6 price. There is a shortage of 500 million gallons of milk, and the federal government will buy an additional 500 million gallons to maintain the $6 price. There is a surplus of 1 billion gallons of milk, and the federal government will buy 1.5 billion gallons to maintain the $6 price.
There is a surplus of 500 million gallons of milk, and the federal government will buy these 500 million gallons to maintain the $6 price.
*Which of the following is true about renewable natural resources?* - They are a type of land resource (for example, oil, coal, and natural gas) that has a fixed stock. - They are a type of capital resource (for example, irrigation networks and wastewater treatment plants) that utilize water. - They are a type of capital resource (for example, air filtration systems in buildings) that renew and refresh polluted air from the outside. - They are a type of land resource (for example, forests, rangelands, and marine fisheries) that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest.
They are a type of land resource (for example, forests, rangelands, and marine fisheries) that naturally regenerate and thus can tolerate a sustained harvest but can be depleted from excessive harvest.
Combinations of goods outside the production possibilities curve (PPC) have which of the following characteristics? They are attainable today only if we employ all unemployed or underemployed resources. They are not attainable given our existing stock of resources and technology. They imply that some resources, such as labor, are unemployed or underemployed. None of the answers is correct.
They are not attainable given our existing stock of resources and technology.
Suppose the alternative uses of an hour of your time in the evening, ranked from best to worst, are (1) study economics, (2) watch two half-hour sitcoms, (3) play video games, and (4) jog around town. You can choose only one activity. What is the opportunity cost of studying economics for one hour given this information? Jogging around town Watching two half-hour TV sitcoms Playing video games The sum of watching two half-hour TV sitcoms, playing pool, and doing your laundry
Watching two half-hour TV sitcoms
If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then if we increase the production of shelter along the PPC, which of the following is true? We also increase the production of food. We must decrease the production of food. This forgone food production represents the opportunity cost of the increase in shelter. We cannot change the production of food. The concept of opportunity cost does not apply along PPC.
We must decrease the production of food. This forgone food production represents the opportunity cost of the increase in shelter.
Which of the following is not one of the three fundamental economic questions? What happens when you add to or subtract from a current situation? For whom to produce? How to produce? What to produce?
What happens when you add to or subtract from a current situation?
Which of the following best describes the three fundamental economic questions? What to produce, when to produce, and where to produce What time to produce, what place to produce, and how to produce What to produce, when to produce, and for whom to produce What to produce, how to produce, and for whom to produce
What to produce, how to produce, and for whom to produce
Under the law of demand, any increase in price will cause in quantity demanded. a decrease an increase no change constant change
a decrease
A production possibilities curve shows the various combinations of two outputs that Answer consumers would like to consume. producers would like to produce. an economy can produce. an economy should produce.
an economy can produce.
The law of demand is the principle that there is relationship between the price of a good and the quantity buyers are willing to purchase in a defined time period, ceteris paribus. a direct no an inverse an independent
an inverse
The expenditure approach for the calculation of GDP includes spending on consumption, investment, durable goods and exports. consumption, gross private domestic investment, government spending for goods and services, and exports. consumption, gross private domestic investment, government spending for goods and services, and net exports. consumption, net private domestic investment, government spending for goods and services, and net exports. consumption, gross private domestic investment, all government spending including transfer payments, and net exports.
consumption, gross private domestic investment, government spending for goods and services, and net exports.
A leftward shift in the demand curve is called a(an) decrease in demand. decrease in quantity demanded. increase in demand. increase in quantity demanded.
decrease in demand.
An increased equilibrium price and a decreased equilibrium quantity results from a(an) decrease in demand. increase in supply. decrease in supply. increase in demand.
decrease in supply.
A decrease in demand with the supply held constant leads to a(an) increased equilibrium price and an increased equilibrium quantity. decreased equilibrium price and a decreased equilibrium quantity. decreased equilibrium price and an increased equilibrium quantity. increased equilibrium price and a decreased equilibrium quantity.
decreased equilibrium price and a decreased equilibrium quantity.
National income (NI) is calculated by adjusting GDP for depreciation. investment and net exports. Social Security insurance contributions and transfer payments. corporate and personal income taxes.
depreciation.
The law of supply is the principle that the relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus, is inverse. direct. no relationship. independent.
direct.
The ability of an economy to produce greater levels of output per time period is called positive economics. negative economics. economic growth. the law of specialization.
economic growth.
There is news that the price of Tucker's Root Beer will increase significantly next week. If the demand for Tucker's Root Beer reacts only to this factor and shifts to the right, the position of this demand curve has reacted to a change in tastes. income levels. the prices of related goods. the number of buyers. expectations.
expectations.
The circular flow of economic activity is a model of the flow of goods, resources, payments, and expenditures between the sectors of the economy. influence of government on business behavior. influence of business on consumers. role of unions and government in the economy.
flow of goods, resources, payments, and expenditures between the sectors of the economy.
A rightward shift in the demand curve is called a(an) decrease in output. decrease in demand. increase in demand. increase in income.
increase in demand.
*Because of scarcity* - it is impossible to satisfy every desire and choices must be made. - the available supply of time, goods, and resources is greater than human wants. - every desire is fulfilled. - there are no limits on the economy's ability to satisfy unlimited wants.
it is impossible to satisfy every desire and choices must be made.
The principle that the opportunity cost increases as the production of one output expands is the law of increasing opportunity costs. law of demand. law of supply. law of increasing returns to scale.
law of increasing opportunity costs.
A curve that is derived by summing horizontally individual demand curves is called aggregate supply. market supply. aggregate demand. c
market demand.
Gross domestic product is officially measured by adding together the quantity of each good and service produced by U.S. residents. market value of all final goods and services produced within the borders of a nation. quantity of goods and services produced by companies owned by U.S. citizens. None of the answers above are correct.
market value of all final goods and services produced within the borders of a nation.
Which words best complete the following sentence? A rational decision maker always chooses the option for which marginal benefit is marginal cost. less than equal to unrelated to more than
more than
The income that people earn in resource or factor markets is called national income. personal income. disposable personal income. transfer payments. net national product.
national income.
A cost imposed on people other than the consumers of a good or service is a price floor. negative externality. positive externality. price ceiling.
negative externality.
Gross domestic product (GDP) includes intermediate as well as final goods. foreign goods as well as domestically produced goods. used goods sold in the current time period. only final goods and services.
only final goods and services.
The largest component of GDP is personal consumption expenditures. government spending. durable goods. net exports.
personal consumption expenditures.
Which word or phrase best completes the following sentence? Marginal analysis means evaluating changes from a current situation. positive or negative infinite no maximum
positive or negative
A surplus occurs when the quantity demanded exceeds the quantity supplied. price is below the equilibrium price. price is at the equilibrium. price is above the equilibrium.
price is above the equilibrium.
A shortage occurs when the quantity supplied exceeds the quantity demanded. price is below the equilibrium price. price is at the equilibrium. price is above the equilibrium.
price is below the equilibrium price.
Based on the circular flow model, money flows from households to businesses in factor markets. product markets. neither factor nor product markets. both factor and product markets.
product markets.
Increased production, but not increased inflation, will result in higher nominal GDP. money GDP. real GDP. current dollar GDP.
real GDP.
Opportunity cost represents the best alternative sacrificed for a chosen alternative. has no relationship to the various alternatives that must be given up when a choice is made in the context of scarcity. represents the worst alternative sacrificed for a chosen alternative. represents all alternatives not chosen.
represents the best alternative sacrificed for a chosen alternative.
In the study of economics, investment means the accumulation of capital that is used to produce goods and services. owning stocks and bonds. the principle that the opportunity cost increases as the production of one output expands. the effect of stock prices on the production possibilities curve.
the accumulation of capital that is used to produce goods and services.
GDP includes the negative attributes in our quest for more goods and services, such as soil erosion and deforested landscape. all quality improvements resulting from higher-quality goods replacing inferior goods. the cleanup expenses associated with pollution. the value of leisure time.
the cleanup expenses associated with pollution.
If the underground economy is sizable, GDP will understate the economy's performance. overstate the economy's performance. fluctuate unpredictably. accurately reflect this subterranean activity.
understate the economy's performance.
Suppose each of the seven dwarfs buys four mugs of ginger ale per week from Snow White's café, when the price per mug is $2. If the seven dwarfs are the entire market demand for Snow White's ginger ale, which of the following is the correct value for market quantity demanded of ginger ale per week at a price of $2? 4 8 28 7
28
If a price ceiling is set at $10, and the equilibrium market price is $8, which price will consumers actually pay? $10 $8 $18 $2
8
Which of the following causes a shortage to become larger? An increase in market price An increase in supply A decrease in demand A decrease in price
A decrease in price
With an upward-sloping supply curve, which of the following is true? An increase in price results in a decrease in quantity supplied. An increase in price results in an increase in supply. A decrease in price results in a decrease in quantity supplied. A decrease in price results in an increase in supply.
A decrease in price results in a decrease in quantity supplied.
Which of the following is an example of an organization using marginal analysis? A hotel manager calculating the average cost per guest for the past year A farmer hoping for rain A government official considering the effect an increase in military goods production will have on the production of consumer goods A businessperson calculating economic profits
A government official considering the effect an increase in military goods production will have on the production of consumer goods
*Which of the following best illustrates the application of the model-building process to economics?* - On a Sunday morning talk show, two economists with differing political agendas argue about the best way to solve the Social Security problem. - A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model. -A Ph.D. student in economics makes up data on the lumber market and develops a model for his dissertation that seems to be consistent with the data. - Economists come to believe that some economic models are true simply because prominent leading economists say they are true.
A labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypotheses in the model.
*Which of the following best describes an entrepreneur?* - A person who works as an office clerk at a major corporation - A person who combines the factors of production to produce innovative products - A special type of capital - Wealthy individuals who provide savings that stimulates the economy
A person who combines the factors of production to produce innovative products
Which of the following is not an example of a capital input? - A person's skills and abilities, which can be employed to produce valuable goods and services -Factories and offices where goods and services are produced - Tools and equipment - Computers used by a company to record inventory, sales, and payroll
A person's skills and abilities, which can be employed to produce valuable goods and services
Which of the following would be counted as a final good for inclusion in GDP? A piece of glass bought this year by a consumer to fix a broken window. A sheet of glass produced this year by Ford to use for windows in a new car. A tire produced this year and sold to a car maker for a new car sold this year. None of the answers are correct.
A piece of glass bought this year by a consumer to fix a broken window.
*Which of the following illustrates the concept of scarcity?* - More clean air is wanted than is available in large polluted metropolitan areas such as Mexico City. - There is usually more than one use of your "free" time in the evening. - There are many competing uses for the annual budget of your city, county, or state. - All of the above are correct *
All of the above are correct
Which of the following careers could result from majoring in economics? Management Banking Government All of the above is correct.
All of the above is correct.
Which of the following results from an increase in the price of a one-week vacation at beach resorts on the coast of Mexico? An increase in the supply of bicycle tires in Toledo, Ohio An increase in the demand for vacations at resorts on Caribbean islands An increase in the supply of vacation opportunities at resorts on the coast of Mexico A decrease in the demand for vacations at resorts on Caribbean islands
An increase in the demand for vacations at resorts on Caribbean islands
Which of the following would not cause market demand for a normal good to decline? An increase in the price of a substitute An increase in the price of a complement A decline in consumer income Consumer expectations that the good will go on sale in the near future An announcement by the Surgeon General that the product contributes to premature death
An increase in the price of a substitute
Which of the following causes the demand for veggie burgers to increase? A decline in the price of veggie burgers An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers An increase in the price of burger buns A technological innovation that lowers the cost of producing veggie burgers
An increase in the price of tofu burgers, perceived as a substitute by veggie burger consumers
Why don't competitive markets do a good job providing public goods? Because people do not receive benefits from public goods Because firms cannot produce enough goods to satisfy market demand Because public goods generate negative externalities and pollution taxes reduce the incentive for firms to supply public goods Because it is difficult to exclude people from gaining benefits from public goods without paying for them; so market demand does not reflect the benefits to society from the public good
Because it is difficult to exclude people from gaining benefits from public goods without paying for them; so market demand does not reflect the benefits to society from the public good
Which of the following reasons could explain why an economy would be operating inside its production possibilities curve (PPC)? Because shrinking population has reduced the number of productive workers in the economy Because technological innovations have increased the productivity of labor and capital Because damage to natural resources, such as damage caused by deforestation leading to erosion of topsoil, has shrunk the land resource Because of unemployment or underemployment of labor, perhaps due to discrimination against employing workers of a certain race or gender
Because of unemployment or underemployment of labor, perhaps due to discrimination against employing workers of a certain race or gender
Suppose X and Y are substitutes. If the price of Y increases, how will this change the market equilibrium for X? Both equilibrium price and quantity decline. Both equilibrium price and quantity rise. Equilibrium price declines, and equilibrium quantity rises. Equilibrium price rises, and equilibrium quantity falls.
Both equilibrium price and quantity rise.
If goods A and B are complements, and the price of good B rises, how will this affect the market equilibrium for good A? Price will rise, and quantity will fall. Price will fall, and quantity will rise. Both price and quantity will rise. Both price and quantity will fall.
Both price and quantity will fall.
Which of the following is the last step in the model-building process? - Collect data and test the model. - Develop a model based on simplified assumptions. - Identify the problem. - Formulate an assumption.
Collect data and test the model.
Which of the following is true in ski towns such as Crested Butte, Colorado, and Whistler, British Columbia during the peak winter ski season as compared to May and June? Demand for motel rooms is higher. Demand for motel rooms is lower. There is a surplus of motel rooms. The price of motel rooms will be lower.
Demand for motel rooms is higher.
Which of the following is the second step in the model-building process? Collect data and test the model. Develop a model based on simplified assumptions. Identify the problem. Include all possible variables that affect the model.
Develop a model based on simplified assumptions.
Which national income account should be examined to discover trends in the after-tax income that people have to save and spend? Gross domestic product (GDP) Gross national product (GNP) National income (NI) Disposable personal income (DI)
Disposable personal income (DI)
*Which of the following is the best definition of economics?* - Economics is the study of how to manage corporations to generate the greatest return on shareholder investment. - Economics is the study of how to manage city and county government to generate the greatest good to its citizens. - Economics is the study of how society chooses to allocate its scarce resources. - Economics is the study of how to track revenues and costs in a business.
Economics is the study of how society chooses to allocate its scarce resources.
Which of the following is not an example of market failure? Lack of competition Externalities Efficient equilibrium Extreme income inequality
Efficient equilibrium
Suppose the federal government provides wheat farmers with a price floor above the market equilibrium price of wheat, creating a surplus. Which of the following causes a reduction in the surplus of wheat? Elimination of the price floor An increase in the price of wheat A decrease in the demand for wheat An increase in the supply of wheat
Elimination of the price floor
Which of the following increases the supply of corn? The farm workers' union successfully negotiates a pay increase for corn harvest workers. The Surgeon General announces that eating corn contributes to heart disease. Congress and the President eliminate subsidies formerly paid to corn farmers. Farmers who grow soybeans can also grow corn, and the price of soybeans drops by 75 percent.
Farmers who grow soybeans can also grow corn, and the price of soybeans drops by 75 percent.
The most broadly based price index is the real GDP price index. consumer price index. producer price index. GDP chain price index.
GDP chain price index.
Which of the following is a shortcoming of GDP? GDP excludes changes in inventories. GDP includes an estimate of illegal transactions. GDP excludes nonmarket transactions. GDP excludes business investment spending.
GDP excludes nonmarket transactions.
If a production possibilities curve (PPC) has capital on the vertical axis and consumer goods on the horizontal axis, which of the following is true? There is a trade-off between emphasizing the production of capital today to benefit people today versus emphasizing the production of consumer goods today that will generate benefits in the future. Greater emphasis on the production of capital today leads to future inward shifts in the PPC, thus decreasing the wealth of people in the future. Greater emphasis on the production of consumer goods today leads to greater outward shifts in the PPC, thus increasing the wealth of people in the future. Greater emphasis on the production of capital today leads to greater outward shifts in the PPC, thus increasing the wealth of people in the future.
Greater emphasis on the production of capital today leads to greater outward shifts in the PPC, thus increasing the wealth of people in the future.
Three different economies have made choices about the production of capital goods. Which of the following is most likely to produce the greatest growth in the production possibilities curve (PPC)? Capital goods produced at the exact rate needed to replace worn-out capital. Greater production of capital goods than what is needed to replace worn-out capital. Less production of capital goods than what is needed to replace worn-out capital. More production of consumption goods that replace worn-out capital.
Greater production of capital goods than what is needed to replace worn-out capital.
Which of the following represents positive economics? - Policy X is fair. - Outcome Y is the best objective to achieve. - If policy X is followed, then outcome Y results. - All of the above are positive economic analyses.
If policy X is followed, then outcome Y results.
*Which of the following describes the ceteris paribus assumption?* -If we increase the price of a good, reduce consumer income, and lower the price of substitutes and if quantity demanded is observed to fall, we know that the price increase caused the decline in quantity demanded. -If the federal government increases government spending and the Federal Reserve Bank lowers interest rates, we know that the increase in government spending caused unemployment to fall. -If a company reduces its labor costs, negotiates lower materials costs from its vendors, and advertises, we know that the reduced labor costs are why the company's profits are higher. -If we decrease the price of a good and observe that there is an increase in the quantity demanded, holding all other factors that influence this relationship constant.
If we decrease the price of a good and observe that there is an increase in the quantity demanded, holding all other factors that influence this relationship constant.
Which word indicates that an economist is using positive economics? - Good - Bad - If-then - Should
If-then
Low-income families consume proportionately more of which of the following kinds of goods? Luxury goods Substitute goods Normal goods Inferior goods
Inferior goods
*Which of the following are factors of production?* - The outputs generated by the production process transforming land, labor, and capital into goods and services - Resources restricted to the land, such as natural resources that are unimproved by human economic activity - Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories) -Just labor and capital in industrialized countries, where natural resources are no longer used to produce goods and services
Land (natural resources), labor (human capital, entrepreneurship), and capital (constructed inputs such as factories)
If society allows firms to freely pollute the environment, which of the following is true? Market equilibrium output will be too high relative to the efficient output level. Market equilibrium output will be too low relative to the efficient output level. Market equilibrium output will be equivalent to the efficient output level. The efficient output level can be achieved by giving firms a subsidy for the pollution they generate.
Market equilibrium output will be too high relative to the efficient output level.
Which of the following would eliminate scarcity as an economic problem? - Moderation of people's competitive instincts - Discovery of new, sufficiently large energy reserves - Resumption of steady productivity growth - None of the above is correct
None of the above is correct
Which of the following items is included in the calculation of GDP? Purchase of 100 shares of Microsoft stock Purchase of a used car The value of a homemaker's services Sale of Gulf War military surplus None of the above would be included.
None of the above would be included.
A production possibilities curve is drawn based on which of the following assumptions? Resources are fixed and fully employed, and technology advances at the rate of growth of the economy overall. Resources such as nonrenewable resources will decline, but labor remains fully employed and technology is unchanged. Resources can vary; most resources experience times of unemployment; and technology advances, particularly during wartime. Resources such as labor and capital will grow and are fully employed, and technology is unchanged. None of the answers correct.
None of the answers correct.
An economy can produce various combinations of food and shelter along a production possibilities curve (PPC). First, increase the production of shelter along the PPC; then continue to shift more and more production to shelter. Which of the following will most likely happen to the opportunity cost of a unit of shelter? Opportunity cost will increase because as more and more shelter is produced, labor and capital that is highly productive at producing food is being shifted to shelter production, and so more and more food is being given up to produce a unit of shelter. Opportunity cost is the amount of labor (but not capital) that is used to produce the extra shelter. Opportunity cost must stay constant if we are to stay on the production possibilities curve (PPC). Opportunity cost includes all options given up to produce shelter.
Opportunity cost will increase because as more and more shelter is produced, labor and capital that is highly productive at producing food is being shifted to shelter production, and so more and more food is being given up to produce a unit of shelter.
Which of the following decreases supply in the market for pizza? Pizza shop employees successfully organize a union and negotiate a pay increase. The Surgeon General announces that eating pizza reduces the incidence of stomach cancer. Cheese prices drop because price supports for dairy farmers are removed. Some hot sandwich shops can also make and sell pizzas, and consumer demand for hot sandwiches declines sharply, reducing the profitability of producing hot sandwiches.
Pizza shop employees successfully organize a union and negotiate a pay increase.
Which of the following is a type of economic analysis? Positive Resources Association None of the above is correct.
Positive
In moving from a shortage toward the market equilibrium, which of the following is true? Price falls. Price rises. Quantity demanded increases. Quantity supplied decreases.
Price rises.
If the cost of producing a good rises for sellers, how will this affect the market equilibrium for that good? Price will rise, and quantity will fall. Price will fall, and quantity will rise. Both price and quantity will rise. Both price and quantity will fall.
Price will rise, and quantity will fall.
Which of the following expenditures would not be included in GDP? Purchase of a new lawnmower Purchase of a silver cup previously sold new in 1950 Purchase of a ticket to the latest movie All of the above would be counted in GDP.
Purchase of a silver cup previously sold new in 1950
*Which of the following represents causality rather than association?* - In years that fashion dictates wider lapels on men's jackets, the stock market grows by at least 5 percent. - Interest rates are higher in years ending with a 1 or a 6. - Unemployment falls when the AFC champion wins the Super Bowl. - Quantity demanded goes up when price falls because lower prices increase consumer purchasing power and because some consumers of substitute goods switch.
Quantity demanded goes up when price falls because lower prices increase consumer purchasing power and because some consumers of substitute goods switch.
Which of the following is not a type of economic analysis? - Positive - Resources - Normative - None of the above
Resources
Assume no price ceiling exists in a market. Then a price ceiling is established below the market equilibrium. What would result? Shortage Equilibrium Surplus Exchange price
Shortage
Which of the following is included in personal income but not in national income? Compensation for workers Proprietors' income Corporate profits Social Security payments
Social Security payments
Which resource is not an example of capital? Equipment Machinery Physical plants Stocks and bonds
Stocks and bonds
Suppose Big-Cat and Fat-Cat are rival cat food brands and the price of Fat-Cat is reduced. Following this price drop, is there a shortage or a surplus of Big-Cat at the old price of Big-Cat? Shortage Surplus Neither because equilibrium exists Neither because a price drop cannot cause a shortage or a surplus
Surplus
An economy can produce various combinations of food and shelter along a production possibilities curve (PPC). Suppose a technological innovation resulted in a new, higher-yielding crop that generated more bushels of grain for a given set of land, labor, and capital resources. If this innovation did not affect the productivity of shelter production, which of the following would be true? The PPC will shift outward equally along both axes of the graph. The PPC will rotate inward along the food axis, but will not shift on the shelter axis. The PPC will rotate outward along the food axis, but will not shift on the shelter axis. The PPC will not change.
The PPC will rotate outward along the food axis, but will not shift on the shelter axis.
Suppose an economy can produce various combinations of fish and bread. If more people with strong fishing skills became employed in this economy, how would the production possibilities curve (PPC) change? The PPC would shift outward on the fish axis, but would not change on the bread axis. The PPC would shift outward equally along both the fish and bread axes. The PPC would shift inward on the bread axis, but would not change on the fish axis. The PPC would shift inward equally along both the fish and bread axes.
The PPC would shift outward on the fish axis, but would not change on the bread axis.
Suppose the city of Arcata, California, imposes rent control so that rents cannot exceed $1,000 per month on one-bedroom rental units. Suppose $1,000 had also been the equilibrium rental price in Arcata before a huge new apartment complex was built in the nearby town of McKinleyville, where rents are $800 per month. Which of the following is most likely true? There will be a shortage of rental housing in Arcata at the rent control price of $1,000. There will be a lasting surplus of rental housing in Arcata after the new apartment complex is built in McKinleyville. The equilibrium rental price in Arcata will fall below $1,000; thus, rent control will not affect the rental market in Arcata. The equilibrium price of $1,000 per month in Arcata will not change.
The equilibrium rental price in Arcata will fall below $1,000; thus, rent control will not affect the rental market in Arcata.
Suppose the average equilibrium monthly rental price of apartments and rooms in a college town has been steady at $600, but then the college expands enrollment from 10,000 to 12,000. Suddenly, there is a shortage of rental housing at the prevailing price of $600. Which of the following is most likely true? The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and more rental units available on the market. The shortage occurred because supply increased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market. The shortage occurred because demand decreased, and a new market equilibrium will feature lower rental prices and fewer rental units available on the market. The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and fewer rental units available on the market.
The shortage occurred because demand increased, and a new market equilibrium will feature higher rental prices and more rental units available on the market.
*The condition of scarcity* - cannot be eliminated. - prevails in poor economies. - prevails in rich economies. -all of the above are correct.
-all of the above are correct.
