econ midterm

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many people buying bigger houses, and lamp sales increase

change in demand

the process of specialization and trade has positive net benefits and is therefore beneficial to everyone

false

though they may face higher prices, consumers usually see an increase in product quality when price ceilings are imposed

false

suppose rent is too high and imposes a price ceiling of 750$/month, the price ceiling results in a

shortage

consequences of rent controls

shortage of affordable housing, reductions in apartment quality, inefficient allocation of apartments

what does the investment component of GDP measure

spending on goods to be used in future production

special interest group

tend to be smaller than the population and very well organized and exert disproportionate political influence

suppose a classmate claims that the reason he knows nothing about politics is rational ignorance. What does he mean?

that the cost associated with becoming informed is greater than the benefit

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

absolute advantage

the ability to produce a good using fewer inputs than another producer

the commission paid to the seller of a preciously owned collectors skateboard

included in GDP

old navy purchases mannequins to display cloths

included in US GDP

absolute advantage can be determines by comparing different producers

input requirements per unit of output

domestically manufactured business computer

investment

The demand curve

is a graphical representation of the relationship between price and quantity demanded

which statement accurately characterizes the distribution of real GDP per capita internationally

real GDP per capita varies greatly across countries

real GDP per capita is NOT an adequate measure of

the well-being of each person in an economy.

which is an issue that makes central banking difficult for the FED

there is a lag between when policies are enacted and when the effects of those policies can be seen

which statement is NOT a likely result of this (college meal change) price ceiling

there will be food surpluses at many of the restaurants as quantity supplied exceeds quantity demanded at a price of 1$ per meal

people enter into contracts because

they are better off

What is the great economic problem?

to satisfy as many wants as possible with our limited resources

At the tome of the Great Depression, fiscal and monetary policy were not well understood

true

Had the US government used fiscal and monetary policy more effectively, many economists believe that the Great Depression would not have been as severe

true

a democratic government in a country without press censorship will be more responsive to the public in a food-availability crisis

true

as the standard of living increases people will demand democracy and more economic freedom and at the same time become less rationally ignorant

true

being able to place voter views on a linear spectrum is a key assumption of the median voter theorem

true

booms and busts are natural responses to ever-changing economic conditions

true

countries specialize in the production of goods for which they have a comparative advantage

true

it can be mutually beneficial for two nations to specialize in goods for which they have a comparative advantage and then trade with one another

true

price ceilings result in a reduction in mutually beneficial exchanges

true

rational ignorance helps special interest groups push projects through that are, in monetary terms, low in benefit and high in cost

true

rational ignorance is one reason why better0-looking politicians tend to get more votes

true

the incumbent party is favored in an election when personal disposable income is increasing

true

the incumbent party is favored in an election when the economy is doing well in the year of the election

true

the median voter theorem implies that the candidate who reflects the views of the median voter tends to win in a majority rule election

true

the price of lamps increases, and lamp sales in Urtown drop

change in quantity demanded

the price of lamps increase, so lamp producers increase the number of lamps they produce

change in quantity supplied

lamps become much more profitable to make, so furniture makers make fewer tables and more lamps.

change in supply

domestically manufactured personal computer

consumption

ticket to sporting event and 55-cent taco

consumption

Honda's assembly and dale of cars in the US

Included in US GDP

A farmer produces both beans and corn on her farm. If she must give up 1616 bushels of corn to be able to get 66 bushels of beans, then her opportunity cost of 11 bushel of beans is

2.67 bushels of corn

Which demonstrates a scenario with no opportunity cost?

ALL Answers are correct: It's Friday night and you stay up late talking and hanging out with your friends. The chemistry club is giving out free pizza for lunch to all who come to their table to get it. Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook that she would probably never open. Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous.

growth disasters

Argentina and Nigeria

growth miracles

Japan and South Korea

In economics, what is meant by "optimal decisions are made at the margin?"

The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.

Why we we have a higher standard of living now then 100 years ago

There has been economic growth in our society

does not create incentives for growth

a command economy, civil conflict

all else equal, which scenario would exhibit a country with the most economic growth

a country known to be able to resolve most trials and legal issues within a year

which fable from Aesop best illustrates the moral idea that incentive spurs effort

a hound chased a rabbit

which of these examples provides the best evidence that inflation has occurred

a person whose salary has increased is able to purchase fewer goods and services

a downward fluctuation in the economy

a recession

at a price of 12$ per movie, (over equilibrium)

a surplus occurs

which term best describes the situation that, relative to England, France can produce beef at a lower cost of production(can produce beef using fewer inputs)

absolute advantage

The US nominal gross domestic product is

all final goods and services within a given time period

which statement is the best description of a business cycle

alternating periods of increasing and decreasing economic output

What is inflation

an increase in the overall price level

a new building for Tony Hawk Industries

included in GDP

Label each scenario by deciding whether the opportunity cost has increased or decreased. Emily is deciding between her two favorite restaurants. One makes Indian food and the other makes Chinese food. The Indian restaurant has just raised its prices. The opportunity cost of Chinese food has.

decreased

political instability corrupt government trade restrictions

do not encourage investments in physical and human capital

In what ways does GDP per capita not provide an accurate representation of living standards

does not measure production that occurs outside of the market economy, account for changes in environmental quality, account for how people distribute their time between work and leisure

an outbreak of mad cow disease causes americans to abstain from eating beef

downward pressure on price

sub-zero weather in New York, where the super bowl is being played, causes people to become disinterested in watching the super bowl live. What happens to ticket price in the scalping market

downward pressure on price

the nile river floods this year at an exceptional amount of silt to the soil, resulting in increased crops of cotton.

downward pressure on price

In which field do researchers focus on investigating the phenomena of growth?

economics

Margaret owns a stuffed animal shop. At first, it is just her daughter Allison and her hand‑sewing stuffed bears, stuffed sharks, and stuffed giraffes in the spare bedroom. Over time, Margaret decides to rent a larger shop and hire more workers to help out, increasing to a staff of 20 people. Everything is still hand sewn. She notices, however, that her stuffed animal output increased much more than tenfold despite her work force increasing by that amount. However, any more than 20 workers slows down production.

economies of scale

Property rights Dependable legal system competitive markets

encourage investments in physical and human capital

a gardener can either produce beans or corn in her garden, the gardener's opportunity cost of a bushel of beans multiplied by her opportunity cost of a bushel of corn is

equal to one

a new skateboard for you niece

included in GDP

Price ceilings result in resources being allocated to activities with the highest possible value

false

With enough planning, fiscal and monetary policy can prevent recessions

false

a nation will not have a comparative advantage in a product if it does not also have an absolute advantage in the production of that good

false

a problem with price ceilings is that they lead to surpluses

false

absolute advantage is the source of the potential gains from specialization and trade

false

democracies tend to have a higher percentage of rationally ignorant citizens than non-democracies do

false

special interest groups have lower information benefits than the average voter

false

the incumbent party is favored in an election when inflation is high in the year of the election

false

the median voter theorem applies if voters are equally concerned about two political issues, such as education and taxes

false

what does it mean if sellers use blat to allocate goods and services?

goods and services are allocated using a system based on informal connections and favors. sellers allocate goods to people who can compensate them by offering another scarce good in exchange

public school teachers salary

government purchases

which scenario would least likely change an individuals behavior

in an effort to make people eat healthier, the city of Bakersville tells its residents to eat wheat bread instead of white bread

growth rate of output per capita will

increase as the country benefits from high marginal product of capital

capital

increase output at a diminishing rate

Label each scenario by deciding whether the opportunity cost has increased or decreased. Jacob has a bagel or a muffin for breakfast. Muffins are on sale, so they cost $1$1 less than usual. The opportunity cost of eating a bagel has

increased

Label each scenario by deciding whether the opportunity cost has increased or decreased. Justin decides to take the bus to school instead of driving to school. The price of gasoline has just decreased. The opportunity cost of taking the bus has

increased

Label each scenario by deciding whether the opportunity cost has increased or decreased. Taylor has to take time off work to study. Since her wage has increased from $10$10/hour to$15$15/hour, the opportunity cost of studying has

increased

a commitment by a nations central bank to print money to pay for government expenditures

inhibits economic growth

creation of a price floor on sugar

inhibits economic growth

government confiscation of farmland

inhibits economic growth

income tac rates of 90%

inhibits economic growth

a significant amount of oil discovered in texas

input

an upgrade of computers for Mikey's Motors

input

recent graduate with an engineering degree

input

unskilled migrant worker from latin america

input

a good produced in the current time period but put into a firms inventory instead of being sold

is considered unsold inventory and counted as a part of investment in current GDP

which best describes technological knowledge

knowledge used to produce goods and services

what happens after price ceilings on housing

landlords will begin decreasing the quality of apartments by not making repairs or paying for upkeep

because of differences in firms' ability to make changes to quantity supplied, the long-run supply curve for housing is modeled as a line that is ____ steep than (as) the short-run supply curve

less

therefore supply is _____ elastic in the short run than (as) in the long run

less

developing countries

may grow faster than developed countries because they lack the most basic tools and capital investment leads to higher productivity growth

In the long run, the shortages of available housing resulting from rent controls are _______ pronounced than(as) they are in the short run

more

one explanation for this is that in the long run, firms can make changes to the amount of housing they provide _____ easily than (as) they can in the short run

more

doll house sold abroad

net exports

what is the difference between real and nominal gross domestic product

nominal GDP for a given year is measured in dollars of that year, whereas real GDP is measured in dollars of some base year

a previously owned collectors skateboard

not included in GDP

a ticket for the X games bought from a person on a street corner

not included in GDP

a used copy of the Tony Hawk video game

not included in GDP

a used skateboard you buy for your brother

not included in GDP

wheels used to produce a skateboard that will be sold new

not included in GDP

GM's assembly and sale of cars in mexico

not included in US GDP

Ocean spray purchases plastic to make bottles

not included in US GDP

resale of used textbooks to college students

not included in US GDP

sale of Mrs Baird's Bakery

not included in US GDP

bonds issued by an automaker

ouput

contributions to social security

output

decrease in property taxes

output

profits of a large investment company

output

the condition of the economy in an election year can predict votes in a presidential election

political business cycle

Lawrence stands an hour in line at the local butchers shop to obtain a mutton cutlet. Long waiting lines could result from a

price ceiling

Steve decides not to rent out his second home since he is not allowed to set the rate above $1000 per month even though he knows he could find renters willing to pay much more. Select the term that best fits the scenario.

price ceiling

a 24-hour diner is now open only 20 hours a day. this could result from a

price ceiling

a shortage in the market for tie-dye shirts could result from a

price ceiling

if your favorite restaurant downsizes its portion sizes, this could be the result of a

price ceiling

Garret is an undergraduate looking for a job to pay for college. As Garret seeks employment, he is glad to know that he will be paid at least $7.25 per hour. Select the term that best fits the scenario.

price floor

a surplus of workers in the labor market could result from a

price floor

suppose an airline offers unnecessarily lavish flights. this could result form a

price floor

GDP deflator measures

price level

creates incentives for growth

private property ownership, a market economy, legally protected investments

clearly defined property rights

promotes economic growth

creation of a system of patent law

promotes economic growth

the use of competitive market to allocate goods and services

promotes economic growth

Betserai has so much money he can make kites, what explains this.

rapid rises in price levels made the Zimbabwean dollar near worthless in terms of purchasing power

voters are often uninformed on election issues

rational ignorance

which is not a problem that arises for society from individuals rational ignorance

rational ignorance reduces the total amount if human capital available to society with negative impacts on output and long-run growth

price floor result on increasing college student meal prices

some restaurants like Le Cordon Bleu will create rustic chicken and imported cheese paninis at 10$ a sandwich to satisfy the refined demands of college students instead of its old 5$ ham and cheese specials

how does rational ignorance reduce social welfare

special interests are able to get projects with higher costs than benefits passed because voters fail to acquire sufficient understanding of the complex issues

Productivity is best seen because of

specialization

Daniel is a baker who has decided to create his own brand of chain restaurants, Short and Sweet. He negotiates with three suppliers for weeks and ultimately signs contracts with these suppliers. Francis, who owns a new sugar plantation, agrees to sell Daniel freshly refined sugar on the condition that Daniel helps him advertise his brand of sugar. Diana runs an orchard and provides Daniel with fruit. She enters into the partnership knowing that she can dramatically increase her profits if she can sell fruit to Daniel. Lastly, Ryan, who owns a mill, decides to purchase a new piece of machinery so that he can sell Daniel flour at a lower price than his competitor. The end result of Daniel's interactions with his suppliers is that folks in his neighborhood have a chance to buy delicious baked goods at reasonable prices.

the invisible hand

in the economic context what are institutions

the laws, social norms, and conventions of a culture

when price ceilings are imposed, consumers pay lower explicit prices but often face higher costs in terms of waiting in line foe goods and services

true

an impending nuclear war causes people to stock up on twonkies, a popular snack cake provided by many companies.

upward pressure on price

what can be determined off of GDP and mortality rates that goes with standard of living

wealthiest countries have lowest mortality rates


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