Econ exam 1 key/studyguide

___ occurs when economic benefits are distributed fairly

equity

if Blake can pick more cherries in one hour than Cody, then Blake has a comparative advantage in cherry picking

false

the difference between the consumer surplus and the producer surplus in a market is equal to the dead weight loss

false

the term "market" refers only to trading arrangements that have been approved by the government.

false

the basic economic problem of scarcity

has always existed and will continue to exist.

in a market economy, those who are willing and able to buy what is produced

receive the most of what is produced

The SUPPLY CURVE for umbrellas...

shows the relationship between the price of umbrellas and the quantity of umbrellas supplied.

normative statement

statement which describes how the world SHOULD be

the process used to produce goods and services describes

technology

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer CAN ONLY HAVE COMPARATIVE ADVANTAGE IN 1 CATEGORY

Consumer Surplus (CS)

the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it

producer surplus

the amount a seller is paid for a good minus the seller's cost of providing it

if the price of gasoline increases, what will be the impact in the market for public transportation?

the demand curve for public transportation shifts to the right.

opportunity cost is defined as

the highest valued alternative that must be given up to engage in an activity

A consumer is willing to purchase a product up to the point where

the marginal benefit equals the price of the product

the production possibilities frontier (PPF) shows

the maximum attainable combinations of 2 products that may be produced in a particular time period with available resources

one would speak of a movement along a supply curve for a good, rather than a change in supply if...

the price of the good changes

allocative efficiency refers to

the production of the product-mix most wanted by society.

the circular flow model demonstrates

the roles played by households and firms in the market system

without technological advancement, how can a nation achieve economic growth

through an increase in supplies of factors of production

a technological advancement would shift the supply chart graph...

to the right

The division of the burden of a tax between buyers and sellers in a market is called tax incidence.

true

which of the following is a macro economic question? A)what determines the employment rate? B) how is the production quantity of Digital cameras determined C)what factors determine the price of iPhones? D)what determines the wage benefits of flight attendants.

what determines the employment rate

bret buys a new cell phone for 100$. He receives consumer surplus of 80$ from the purchase. how much does Brett value his cellphone.

$180 the 100 he paid, plus the 80 he was willing to pay

which of the following is a result of government price controls? A) Some people win and some people lose B)price controls benefit poor consumers but harm producers and wealthy consumers. C)price controls increase economic efficiency. D)the deadweight loss from price ceilings is greater than the dead weight loss from price floors

A) some people win and some people lose

the law of demand implies, holding everything else constant that as the price of yogurt, A)increases, the demand of yogurt will increase B increases, the quantity of yogurt demanded will decrease C)decreases, the quantity of yogurt demanded will decrease D)decreases, the demand for yogurt will increase

B)increases, the quantity of yogurt will decrease

consumers make all economic decisions in a mixed economy

False

for most goods and services, the burden of a tax is on the sellers

False

if the demand curve for a product shifts to the right and the supply curve for the product shifts to the left, equilibrium price and equilibrium quantity will both increase

False

If society decides it wants more of one good and all resources are _____ then it has to give up some of the another good and incur some opportunity costs. technology advances resources are underutilized resources are fully utilized new resources are discovered

Fully utilized

If consumers believe the price of hybrid vehicles will decrease in the future, this will cause the demand for hybrid vehicles to decrease now.

True

an increase in the unemployment may be represented as a movement from a point on the PPF to a point inside the frontier

True

Productive efficiency refers to:

Using resources to their fullest

if a decrease in income leads to an increase in the demand for macaroni, then macaroni is

an inferior good

voluntary exchange increases the economic efficiency

because neither the buyer nor the seller would agree to a trade unless they both benefit

in Venezuela, the government attempted to control rising food prices by implementing price ceilings in the market. these price ceilings were set ________ the market prices, which resulted in ______ of food.

below; shortages

economies promotes which of the following as the way to make the best decision?

continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

because minimum wage is a price floor,

it will create a deadweight loss.

economic surplus is maximized in a competitive market when

marginal benefit equals marginal cost

the income effect of a price change results in a

movement along the demand curve due to a change in purchasing power brought about by the price change

if the production possibilities frontier is linear, then

opportunity costs are constant as more of one good is produced