Econ Midterm 1

you decide whether to eat one more slice of pizza based on how hungry you feel. This statement best represents this economic concept

"how much" is a decision at the margin

a friend comes up to you and offers a free ticket to a professional baseball game that night. you decide to attend the game. the game takes five hours and costs you $15 for transportation. if you had not attended the game, you would have worked at your part-time job fir $8 an hour. what is the cost to you of attednding the game

$55

in a single day, George can bake 10 cakes and Greta can bake 5 cakes. We know that ___ has a ____ advantage in baking cakes

George; absolute

Which of the following is NOT one of the five principles for understanding how individual choices interact?

Markets always lead to efficiency

this is correct

a change in quantity demanded is a movement along the demand curve, and a change in demand is a shift of the demand curve

the primary difference between a change in supply and a change in quantity supplied is that

a change in quantity supplied is a movement along the supply curve, while a change in supply is a shift in the supply curve

if an economy has to sacrifice only one unit of good X for each unit of good Y produced throughout the relevant range, then its production possibility frontier has

a constant negative slope

if chicken and beef are substitutes, then a fall of price of chicken will bring about

a decrease in the demand for beef

what is not an increase in demand for good X?

a decrease in the price of good X

pizza and hamburgers are substitutes; a rise in the price of a pizza causes ____ in the equilibrium price of a hamburger and ___ in the equilibrium quantity of hamburgers

a rise; an increase

a decrease in supply mean

a shift to the left of the entire supply curve

consider tow competing motorcycles manufacturers, HD and Honda, if HD raises prices of its motorcycles, we can except

a shift to the right in the demand curve for Hondas and higher prices for Hondas

which of the following will raise the price of milk

a shift to the right of the demand curve for milk

when the economy turns down and the incomes of many people decrease, vacationers are more likely to take car trips than to fly. what provides one possible explanation for this phenomenon

air travel is a normal good and travel by car is an inferior good

an economy is efficient when

all opportunities to make some people better off without making other people worse off have been taken

Which of the following statements is true?

an economic situation is in equilibrium when no individual would be better off taking a different action

which of following would shift the demand curve for new textbooks to the right

an increase in college enrollment

what would cause an increase in the demand for natural gas

an increase in consumer incomes

raclettee is a popular wintertime dish in switzerland. is is essentially melted Raclette cheese over boiled new potatoes. If the price of Raclette cheese decreased, we would expect to see

an increase in demand for new potatoes

not a cause of an increase in the supply of cornflakes

an increase in the price of cornflakes

if the price of mozzarella cheese (an ingredient in pizza) declines, there will be

an increase in the supply of pizza

input costs associated with manufacturing hair replacement treatments decrease over time; this would lead to

an increase in the supply of such treatments, lower prices, and an increase in the equilibrium quantity

the production possibility frontier will shift outward for al of the following reasons EXCEPT

an increase in unemployment rate

the effect of a natural disaster can be shown by ___ the production possibility frontier

an inward shift of

an economy is said to have a comparative advantage in the production of a good if it can produce that good

at a lower opportunity cost than another economy

A choice made _____ is a choice whether to do a little more or a little less of something.

at the margin

the production possibility frontier will shift outward because of

better technology that improves workers productivity

if an economy has to sacrifice increasing amounts of good X for each additional unit of good Y produced, then its production possiblity frontier is

bowed out

Jim is being paid $7.25 an hour to work at a restaurant. In the circular flow this is an example of a

business buying resources in the factor market

a resource is anything that

can be used in production

Economissts tend to believe that to change people's behavior you must

change their incentives

Thinking in economic terms, when Mary Sweet-Tooth is deciding whether to eat another brownie, she:

compares all the benefits and costs of eating another brownie

becasue of trade, a country may:

consume outside its production possibility frontier

an increase in the demand for gasoline today caused by concerns that gasoline prices will be higher tomorrow is most likely attributable to a change in

consumer expectations

which of the following illustrates the law of demand

consumers buy more personal computers because prices have fallen

resources are being used efficiently when

every opportunity to make people better off without making others worse off has been seized

what is a positive statement

fact; the federal government pays for 46% of US health care costs

when the nations that constitute the Organization of Petroleum Exporting Countries restrict the supply of oil to increase their profits, the oil market

fails because there is no longer an efficient allocation of resources

the importance of an economic model is that is allows us to

focus on the effects of only one change at a time

When markets don't achieve efficiency:

government may intervene to improve society's welfare.

manny is attending college and majoring in econ. by doing so, manny is improving his

human capital

the production possibility frontier illustrates that

if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced

a technological advance in the production of automobiles will ____ the ____ automobiles

increase; supply of

the law of demand states that other things equal, as the price

increases, the quantity demanded will decrease

the market for corn is in equilibrium, which is most likely to INCREASE the equilibrium price of corn

increasing production price of corn

you might have an income from a new job, you decide to purchase more T-bone steak and less hamburger, hamburger because an

inferior good

in the movement along a production possibility frontier, the opp cost to society of getting more of one good

is measured by the amount of the other good that must be given up

You are planning to study eight hours this week for your economics final and are considerin studying a ninth hour you shoudl:

make your decision based on the cost of the next best alternative use of your time compared to the benefit of one more hour of study

the market for corn in Kansas is considered to be competitive. This means there are ___ buyers and ___ sellers of corn in Kansas

many; many

a simplified representation that is used to study a real situation is called a

model

which of the following is NOT a resource in the production of rice

money

What is false about circular flow diagram

money flows from households to firms as households offer factors of production for sale

economists use the term equilibrium to describe when

no individual would be better off taking a different action or no individual has an incentive to change his or her behavior

what is a normative statment

opinion; the best way to encourage growth in the economy is through government spending

Your elderly grandma tells you: "I haven't been taking my beloved walks because I'm concerned about falling and getting hurt. See, there is always a cost to doing something. But if you don't do anything, then there is no cost." Your grandma does not understand the economic concept of:

opportunity cost

as long as people have different _____, everyone has a comparative advantage in something

opportunity cost

which of the following is NOT one of the four principles for understanding individual choice?

overall spending sometimes gets out of line with the economy's productive capacity

which of the following influences does NOT shift the supply curve

people deciding that they want to buy more of the product

a key theme fundemental to all of econ is that

people have unlimited wants but limited mean to satisfy them

Market equilibrium is found at the

price where quantity demanded equals quantity supplied

The ____ illustrates the trade-offs facing an economy that produces only two goods

production possibility frontier

we are forced to make choices because of

scarcity

what is the difference between a shortage and scarcity

scarcity will almost always exist, but a shortage will exist only if the price is kept below the equilibrium level

if steak and potatoes are complements, when the price of steak goes up, the demand curve for potatoes

shifts to the left

when building a model, economists

simplify reality to highlight what really maters

Gains from trade arise because of

specialization in production

in the market for wheat, if the price of ethanol (which is made from corn, a substitute in production) increased dramatically, the ___ wheat would ___

supply of; decrease

the demand for meals at a local applebee's will shift to the left if

the Olive Garden offers a 10% discount coupon in the local newspaper

in one hour, the US an produce 25 tons of steel or 250 automobiles. In one hour, japan can produce 30 tons of steel or 375 automobiles. This info implies that

the US has a comparative advantage in the production of automobiles

what happens if there is an increased demand for corn tortillas and at the same time a new corn seed becomes a available that dramatically increases the yield per acre

the change in price is indeterminate; quantity increases

whenever a choice is made

the cost of that choice is opp cost

a production possibility frontier that is a straight line sloping down from left to right suggests that

the opportunity costs of the products are constant

when a chef prepares a dinner for a customer, which of the following is physical capital

the oven

you own a grocery store. peanut butter is an inferior good, what do you suppose would happen to the price and quantity sold of peanut butter as incomes fell during a recession

the price and quantity would both increase

excess supply occurs when

the price is above the equilibrium price

supposed supply increases and demand decreases. What is the most likely effect on price and quantity

the price will decrease, but quantity may increase, decrease, or stay the same

You decide to join the economics club, but this means you can't join the accounting club because it meets at the same time. This statement best represents this economic concept:

the real cost of something is what you must give up to get it

How people choose among the alternatives available to them is

the study of microeconomics

it is certain that the equilibrium price will fall when

the supply curve shifts to the right and the demand curve shifts to the left

One parent picks up the child from day care while the other parent goes to the grocery store and begins to make dinner. This is an example of the principle that

there are gains from trade

The basic concern of microeconomics is

to study the choices people make

For a student who owns his or her own home and doesn't plan to live in the dorm, the cost of going to college is:

tuition, the cost of books, forgone income

Marla will make $10 by tutoring for an additional hour, but she will lose an hour of studying for her economics test. Marla decides to study rather than tutor. Marla's choice indicates that she:

values an additional hour of studying more than the $10 she would earn tutoring

for an economist, the cost of something is

what you gave up to get it

Khalil is offered a free ticket to the opera. His opportunity cost of going to the opera is:

whatever Khalil would have done had he not gone to the opera

a new fast-food restautant offered a free meal (valued at $5) a week for a year to its first 100 customers. Ramona camped out for 48 hours before the openng to be one of the first 100 customers. The cost of the free meal a week for a year for Romana was

whatever else she would have done with the 48 hours

margo spends $10,000 on one year's college tuition. The opp cost of spending one year in college for Margo is

whatever she would have purchased with the $10,000 plus whatever she would have earned had she not been in college