Econ Osei
On a downward-sloping linear demand curve, total revenue reaches its maximum value at the
midpoint of the demand curve
Goods with many close substitutes tend to have
more elastic demands
Suppose a gardener produces both tomatoes and squash in his garden. If he must give up 8 bushels of squash to get 5 bushels of tomatoes, then his opportunity cost of 1 bushel of tomatoes is
1.6 bushels of squash
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. toaster 10 Mixer 20 The opportunity cost of 1 toaster for Miguel is
1/2 mixer
Which of the following could be the price elasticity of demand for a good for which an increase in price would decrease revenue? 0.6 0.9 1 2.6
2.6
Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue?
4
If the price elasticity of demand for a good is 0.3, then a 20 percent decrease in price results in a
6 percent increase in the quantity demanded
A 1.9 B 0.8 Which of the following is consistent with the elasticities given in the Table
A is a luxury and B is a necessity
A circular-flow model and production possibilities frontier are similar in that
Both make use of assumptions
Cross-price elasticity is used to determine whether goods are substitutes or complements
true
Economic growth causes a production possibilities frontier to shift outward
true
Elasticity measures how responsive quantity is to changes in price.
true
If an economy can produce more of one good without giving up any of another good, then the economy's current production point is inefficient
true
Microeconomics and macroeconomics are closely intertwined
true
Price elasticity of demand along a linear, downward-sloping demand curve decreases as price falls.
true
At the midpoint of a straight line demand curve, the price elasticity of demand is
unit elastic
Which of the following transactions takes place in the markets for the factors of production in the circular-flow diagram?
Dylan receives a salary for his work as a financial analyst for an investment firm.
In considering how to allocate its scarce resources among its various members, a household considers
Each member's desires, efforts and abilities
Suppose that demand for a good decreases and, at the same time, supply of the good decreases. What would happen in the market for the good?
Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous
When a seller expects the price of its product to decrease in the future, the seller's supply curve shifts left now.
False
Economists face an obstacle that many other scientists do not face. What is that obstacle?
It is often impractical to perform experiments in economics
A society allocates its scarce resources to various uses. These scarce resources include
Land,Labor,capital
Which of the following is a principle concerning how people interact?
Markets are usually a good way to organize economic activity
Which of the following is an example of a normative, as opposed to positive, statement?
Medicaid for all would be a good thing for U.S. Citizens
What would happen to the equilibrium price and quantity of coffee if the wages of coffee-bean pickers fell and the price of tea fell?
Price would fall, and the effect on quantity would be ambiguous
Which of the following is an example of a positive, as opposed to normative, statement?
Prices rise when the government prints too much money
Which of the following statements is an example of a positive, as opposed to normative, statement?
Reducing emissions reduces days missed from school due to asthma.
A country club usually only allows members to purchase tickets for its celebrity golf tournament, but the club is considering allowing non-members to purchase tickets this year. The demand and supply schedules are as follows: If both members and non-members are allowed to purchase tickets to this year's celebrity golf tournament, then what will be the equilibrium price? EP= QS and Qd
$25
For the rancher, the opportunity cost of 1 pound of meat is 4 hours/lb 10 pounds of meet
0.4 pounds of potatoes
If a 20% increase in price for a good results in a 15% decrease in quantity demanded, the price elasticity of demand is .15/.20
0.75
Which of the following statements about the circular-flow diagram is correct?
The diagram leaves out details that are not essential for understanding the economic transactions that occur between households and firms.
For a particular good, an 8 percent increase in price causes a 4 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The market for the good is broadly defined
Which of the following events would cause a movement upward and to the right along the supply curve for mangos?
The price of mangos rises.
For a particular good, an 8 percent increase in price causes a 12 percent decrease in quantity demanded. Which of the following statements is most likely applicable to this good?
The relevant time horizon is long
Suppose that two demand curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct?
The steeper demand curve represents a demand that is inelastic relative to the demand represented by the flatter demand curve.
A decrease in supply will cause an increase in price, which will cause a decrease in quantity demanded.
True
An increase in demand will cause an increase in price, which will cause an increase in quantity supplied.
True
Which of the following statements about trade is false?
With trade, one country wins and one country loses
If a surplus exists in a market, then we know that the actual price is
above the equilibrium price, and quantity supplied is greater than quantity demanded
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate 150/16 airplanes 50/48 cars
airplanes and import cars
When we move along a given demand curve,
all nonprice determinants of demand are held constant.
The opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the
amount of the other good that must be given up.
Which of the following is likely to have the most price inelastic demand?
athletic shoes
On a given Production Possibilities Frontier, the economy has the ability to produce at which points
both on and inside the PPF
If demand is price inelastic, then
buyers do not respond much to a change in price.
Economic models
can be useful, even if they are not particularly realistic.
Once the demand curve for a product or service is drawn, it
can shift either rightward or leftward
Iowa and Nebraska can both produce corn and soybeans, and can switch between the production of corn and soybeans at a constant rate. The table illustrates the amount of corn or soybeans each state can produce in one growing season. From the table we know that Nebraska has a Output produced in one growing season Corn Soybeans Iowa 30 45 Nebraska 40 80
comparative advantage in the production of soybeans and Iowa has a comparative advantage in the production of corn.
The cross price elasticity coefficient for a two goods, X and Y is 4. What type of goods are X and Y?
complements
Which of the following events must cause equilibrium price to rise?
demand increases and supply decreases
For a good that is a necessity,
demand tends to be inelastic
In building economic models, economists often omit
details
Which of the following can cause the PPF to shift inward?
drought
Which types of models are built with assumptions?
economic models as well as models in other disciplines such as physics and biology
Studying which of the following is helpful in learning to think like an economist?
examples of economics in the news. Theory case studies.
A decrease in the price of blueberries will decrease both the equilibrium price and quantity in the market for blueberry muffins.
false
For international trade to benefit a country, it must benefit all citizens of that country.
false
If a country has a lower opportunity cost than its potential trading partner, the country should decide to be self-sufficient.
false
If demand is perfectly elastic, the demand curve is horizontal, and the price elasticity of demand equals 1
false
The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.
false
The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price
false
In the markets for goods and services in the circular-flow diagram
firms provide households with output.
Which of the following is likely to have the most price elastic demand?
fountain ink pens
By definition, imports are
goods produced abroad and sold domestically
Serena Williams should probably not mow her own lawn because
her opportunity cost of mowing her lawn is higher than the cost of paying someone to mow it for her.
If muffins and bagels are substitutes, a higher price for bagels would result in a(n)
increase in the demand for muffins.
A decrease in the price of a good would
increase the quantity demanded of the good.
If the demand for textbooks is inelastic, then an increase in the price of textbooks will
increase total revenue of textbook sellers.
If an economy is producing at a point within the production possibilities frontier, the economy is deemed to be producing at
inefficient level
The price elasticity of demand for bread is
influenced by whether consumers view bread as a necessity or luxury.
Absolute advantage is found by comparing different producers'
input requirements per unit of output.
When demand is perfectly inelastic, the price elasticity of demand
is zero, and the demand curve is vertical.
A decrease in demand is represented by a
leftward shift of a demand curve
When studying how some event or policy affects a market, elasticity provides information on the
magnitude of the fact on the market
The sum of all the individual demand curves for a product is called
market demand
Frequently, in the short run, the quantity demanded of a new good introduced in the market is
not very responsive to price changes
In the simple circular-flow diagram, households
own the factors of production
Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that
people face tradeoffs
The highest form of competition is called
perfect competition
The difference between economists speaking as scientists or policy advisers boil down to the difference between
positive statements and normative statements
Assume a market is perfectly competitive. When a new producer enters the market, the
price in the market decreases.
The phenomenon of scarcity stems from the fact that
resources are limited
Resources are..
scarce for households and scarce for economies.
Fundamentally, the study of economics is about
scarcity
When economists are trying to explain the world, they are
scientists
Suppose there is a decrease in the price of steel. We would expect the supply curve for steel beams to
shift rightward
The cross‑price elasticities of demand are probably most positive for:
shoe repairs and news shoes
In competitive markets, which of the following is not correct?
some sellers can set prices
Which of the following would cause price to decrease?
surplus of a good
Today's demand curve for gasoline could shift in response to a change in
the expected future price of gasoline.
In the circular-flow diagram, in the markets for
the factors of production, households are sellers and firms are buyers.
When quantity demanded has increased at every price, it might be because
the price of a complementary good has decreased.
For a vertical demand curve,
the slope is undefined, and the price elasticity of demand is equal to 0.
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate. We could use the information in the table to draw a production possibilities frontier for Maya and a second production possibilities frontier for Miguel. If we were to do this, measuring toasters along the horizontal axis, then
the slope of Maya's production possibilities frontier would be -0.5 and the slope of Miguel's production possibilities frontier would be -0.5
A market supply curve shows
the total quantity supplied at all possible prices
Which of the following is not a reason people choose to depend on others for goods and services
to allow people to produce outside their production possibilities frontiers
An increase in the price of a substitute good will shift the demand curve for a good to the right
true
The circular-flow diagram is a
visual model of the economy
An income elasticity of demand for mass transit of ‑0.6 means that the demand for mass transit:
will fall if income rises
A positive economic statement such as "Pollution taxes decrease the quantity of pollution firms generate"
would require data but not values to be evaluated.
