Economics 1st test

Which of the following statements is/are reflecting decision-making on the margin?

- One more day in this cottage will be nice, but how much will the cost of the rental rise? - If we double the order to a dozen doughnuts, we will pay only twenty percent more.

Scarcity is imposed on individual households in the form of

- the prices of the goods that we may purchase. - income (budget) limitations.

Scarcity is a condition that is everywhere and always, since it is based upon two assumptions that reflect permanent universal conditions. The assumptions are that

- the world has limited productive resources - more output satisfies more wants

Suppose that there are only two types of output in North Korea: nuclear missiles and consumer goods. All else constant, as the nation produces more missiles

-the greater is the opportunity cost of consumer wants satisfied. - every additional missile will reduce consumer goods production by more and more.

Refer to the figure below. If the government set a price ceiling of $40, there would be:

16 units sold

If Pepsi goes on sale, what will happen to the demand for Coca-Cola?

Demand for Coca-Cola will decrease.

How does a price floor set above the equilibrium price affect quantity demanded and quantity supplied?

It results in a greater quantity supplied than the quantity demanded, otherwise known as excess supply.

Which of the following events can shift the level of demand (demand is the relationship between price and quantity demanded)?

Population grows in a particular market area.

Identify the macroeconomic issue among the following statements.

The average cost of producing electricity nationally is rising.

A restaurant chain sponsors a charity that provides for children with cancer to be treated with their parents present. How would the use of company funds for this purpose be justified by a business whose goal is to maximize profit?

The money spent is worth the boost it gives to corporate image.

Identify the microeconomic topic(s) among the following.

The price that a farmer asks for her watermelons.

Suppose the local government is concerned about the health of local school children, and for that reason imposes a price ceiling of $3 on yogurt. Based on the graph below, which of the following is true?

The quantity demanded will be 5 yogurts. Correct! There will be a shortage of 2 yogurts. Correct! The quantity supplied will be 3 yogurts.

A rock star intentionally sets her ticket prices below what would be necessary to sell out her shows. How might this be justified by a manager whose goal is to maximize long-term profit?

The revenue sacrificed is worth the boost it gives to her image as lines form for tickets.

The local government is concerned about poverty so it institutes a minimum wage of $9 per hour. If the demand and supply for labor are given in the graph above, there will be

a surplus of 6 workers.

Supply and demand for bushels of wheat (millions) are shown in the following table. A $9.00 government mandated price floor would result in: Price Qd Qs $5.00 26 16 $6.00 24 18 $7.00 22 20 $8.00 21 21 $9.00 20 22 $10.00 19 23 $11.00 18 24

an excess supply of 2 million bushels of wheat.

An increase in the quantity supplied can be the result from

an increase in price.

According to the law of supply, assuming other factors are held constant

as the price of bread increases, the quantity of bread supplied will increase.

Due to limits on our time, money, and effort, we are best off when we allocate those things...

by constantly assessing the opportunity costs of our choices.

Complete the following sentence: If people think that the price of televisions will decrease in the near future, that belief may cause a(n)

decrease in the demand for televisions today.

A price ceiling creates ________ when it is set ________ the equilibrium price.

excess demand -- below

Decreased competition due to fewer producers in a market will cause

higher prices due to an decrease in the quantity supplied at every price.

A price floor attempts to keep prices ________.

higher than the equilibrium price

The theory of rational behavior

is an assumption that economists make to have a useful model for how decisions are made.

Natural resources, or land, can include the fertility of the land, minerals below it, and what other aspects?

livestock

Price ceilings attempt to make consumer prices ________. ​

lower

Marginal cost is necessary to consider in a rational decision, and should be compared to

marginal benefit.

Economic capital is productive, so it does not include______?

money

When certain assumptions are used to create a model of reality, its value can be tested and determined by

predicting outcomes.

The downward slope of a demand curve illustrates the pattern that as ________ decreases, ________ increases.

price : quantity demanded

The production possibilities model shows an inverse relationship between the amount of one thing that can be produced and the amount of something else because

production of different types will compete for limited resources.

Financial capital, like money, is simply a tool. Once financial capital is converted to economic capital (invested), it produces a resource that is

productive

The distinguishing feature of economic capital (as opposed to financial capital, like money) is that it is

productive.

A supply curve is a graphical illustration of the relationship between price and

quantity supplied.

The advantages that society gains through trade lie in the ability to

refine tasks associated with production.

Refer to the figure below. If the government set a price ceiling at $10, there would be a(n):

shortage of 24 units.

Price ceilings typically result in ________.

shortages

An Uber driver faces costs for driving that include sunk costs like insurance that contribute to the average cost per mile of $.50. Yet when a rider offers to pay less than that for a ride, the driver agrees because

sunk costs like auto insurance (in this case) do not increase as driving increases.

When quantity demanded decreases in response to a change in price

there is a movement from one point to another along the demand curve.

The house that Jeanne inherited from her mother can rent for $1500/month, but Jeanne decides to allow her brother to stay there for only $500 per month. This decision carried with it a

zero monetary cost but a $1000 per month opportunity cost.