Econ-Exam 1

Which circumstance will cause a movement down along a demand curve?

a decrease in the product price

___________ and ___________ help to explain the wealth of nations.

institutions; human creativity.

Subsidies on domestically produced sport utility vehicles cause a(n) _____ in the supply of _____ sport utility vehicles.

increase; domestic

A shift in the demand curve is NOT caused by

technology

(Figure: Determining Surplus and Loss) In the graph, consumer surplus is _____ in equilibrium and _____ at a price of $5.

$160; $40

How large is the deadweight loss under a price floor of $75?

$7500

The table below shows the demand of three individuals in a market. Assuming they are the only buyers, what is total market demand if the price is $20?

5 units

Which of the following statements is correct?

A country's unemployment rate has a stable and inverse relationship with the inflation rate.

An Incentive

Is a motivation resulting in a decision

In class, we covered the concept of Pareto efficiency. Which of the following best fits the definition covered in lecture?

It is impossible to make someone better off without making someone else worse off (better off and worse off refer to measurable outcomes of economic welfare).

Which of the following is correct regarding Supply and Demand? (MC is marginal cost, MB is marginal benefit, WTS is willingness to sell, and WTP is willingness to pay)

S = MC = WTS; D = MB = WTP.

(Figure: Understanding Price Ceilings and Floors) In the graph, a price floor of $75 would result in:

a surplus of 600 units

A positive claim ________.

can be proven true or false.

The difference between what someone in the market would be willing to pay and the market price is:

consumer surplus

If a price ceiling is set below the equilibrium price, then it will

create a market shortage.

As a discipline, economics is focused primarily on _________.

decision-making under various constraints

When the supply curve shifts out (to the right) and the demand curve shifts in (to the left), the equilibrium price will:

decrease

An increase in supply causes the equilibrium price to _____ and the equilibrium quantity to _____

fall; rise

If both demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price _____ and equilibrium output _____.

falls; falls

Markets are _________ on their own.

generally not perfectly efficient

If a price floor is set below the market price, it will

have no effect

Prices do NOT help consumers decide:

how much of a product to produce.

The shift in demand from A to B is called a(n):

increase in demand.

A common-pool resource is both _______ and _______.

rival; non-excudable

Opportunity cost is best defined as:

the next best alternative

At any price below the equilibrium price

the quantity demanded exceeds the quantity supplied in the market (and this creates a shortage).

Fundamentally, all economic decision-makers are faced with

unlimited wants and scarce resources

Uvaldo is deciding which brand of energy drink to buy. According to market economics, he would benefit MOST from basing his decision on which brand has the most:

value relative to its price.

Which of the following is not a microeconomic topic:

Analyzing the factors that affect the unemployment rate over time

Which of the following is an example of a positive statement?

A higher tax on gasoline burdens firms more than those in poverty

When analyzing a bowed-out PPF, it is clear that economic efficiency is

Achieved when it is not possible for society to make more of one good without making less of another good.

The latin phrase "ceteris paribus" means ________.

All else held constant.

A rational choice

Compares the marginal cost and marginal benefit associated with a decision

When a tax is imposed on buyers in a market, then which of the following will occur?

The tax will be split depending on the relative elasticities of supply and demand.

Darrell's opportunity cost of producing a pizza is ½ a salad. Susan's opportunity cost of producing a salad is ½ a pizza. Suppose that Darrell specializes in pizza production and Susan specializes in salad production. Which of the following is a price at which both Darrell and Susan would benefit from trading?

1 salad for 1 pizza

Suppose that you observe a sustained increase in the price of oil in the global market in 2020. Simultaneously, the technology used in the production of electric cars steadily improves. As a result, which of the following outcomes would you predict in the market for electric cars? Ceteris paribus...

Eq increases; Ep uncertain

You have the choice of going to the mall for the day, staying at home to clean your room, or taking a day-trip vacation to the coast. If you decide to take the day-trip to the coast, the opportunity cost of the trip is

Going to the mall or staying home, depending on which you would have done otherwise

Which of the following is not a macroeconomic question? -Will the Federal Reserve continue to lower interest rates? -How will the Federal government's increase in spending affect the U.S. debt in the long run? -Will the President of the U.S. roll back the tariffs on China? -How will the introduction of the new iPad affect the price of tablets in the U.S. market?

How will the introduction of the new iPad affect the price of tablets in the U.S. market?

Which of these is the BEST example of a pure public good?

National defense

You pay an entrance fee of $10 to eat at an all-you-can eat buffet. What is the marginal cost associated with getting a fourth plate of food?

While the nominal marginal cost is $0, there are other real marginal costs to consider like bloating, weight gain, and other potential health problems to which the fourth plate of food contributes.

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see

both the price of butter and quantity of butter fall.

Which scenario is the MOST likely effect of a decrease in the price of tablet computers on the market for laptop computers (a substitute)?

decreased equilibrium price and decreased equilibrium quantity

The supply curve:

shows a positive relationship between price and quantity supplied.

Governments can ________ make markets more efficient.

sometimes