Economics Exam #1 (Ch 1-4)

A firm will most likely decrease the price of its output if the:

quantity supplied of the good exceeds the quantity demanded

Quantity supplied is the:

quantity that producers are willing and able to sell at a given price.

price ceilings:

usually result in a shortage of the product in the market

equation to find surplus

1/2bh

x=0 ; if y=14+.6x then the y-intercept is?

14

__________ advantage exists when one country can produce more of a good than another country.

Absolute

markets work as if they are "guided by an invisible hand" according to:

Adam Smith

The process of converting factors of production into goods and services is called:

production

T or F: A decrease in the product's price will cause an increase in demand

False

T or F: Each of us is motivated by the same incentives?

False; *different

Jill plant flowers in her yard to supply a local florist. Her neighbors enjoy the flowers. Therefore:

Jill is creating an Extertal benefit for her neighbor

A comparative advantage in the production of copper by other nations would MOST likely lead to:

an import of copper

illegal maximum price that can be charge for a product or service is known as a(n):

Price ceiling

What should shift any demand curve to the right?

an increase in national income

In the context of the production possibilities frontier, opportunity cost can be measured by the:

Slope of the frontier

what would be the effect on the equilibrium price and equilibrium quantity of new housing if mortgage interest rates rise in the cost of building a house rise simultaneously?

The equilibrium price cannot be predicted, but the equilibrium quantity will fall.

T or F: opportunity costs influence ALL economic decisions?

True

What would increase the supply of pork sausage?

a decrease in the price of ingredients used to produce it

from a demand curve, consumer surplus is the area:

above the market price and below the demand curve

When we analyze the relationship between inflation and the money supply, we assume that:

all other factors that affect the rate of inflation remain constant

The law of supply

as prices rise, the quantity supplied rises.

which of the following to keep them market from ending up in equilibrium

buyers have in adequate information about products

If a nation selects a product mix focused on ___________ goods, the production possibilities frontier will expand at a greater rate than if the nation produced mostly _____________ goods.

capital ; consumption

The price that results when quantity demanded is just equal to quantity supplied is known as:

equilibrium price

Y=e+fX ; Which letter represents the slope?

f

if both the demand and supply decrease, but the decrease in demand is greater than the decrease in supply, then the equilibrium price ___________ and equilibrium output ________.

falls ; falls

T or F: Increasing domestic labor costs would limit the specialization that accompanies international trade?

false

T or F: Irrational behavior requires thinking at the margin, is a keep principal of economics?

false

if the surgeon general announce that wearing baseball caps will women eight dandruff, then centeris paribus, the equilibrium price of baseball caps would:

increase

The customers income level is low, it is more likely the consumer will purchase ___________ goods.

inferior

Does this pair match? land & lease payment

no

public goods are difficult to provide in the private market because they have the characteristics of:

non-rivalry and nonexclusivity

Absolute Advantage

one country can produce more of a good than another county

A market exists when:

people exchange money for goods and services

The gap between the supply curve in the market price is called:

producer surplus

total surplus is calculated as:

producer surplus plus consumer surplus

If consumers believe that an item will not be available in the future, then demand will shift:

right and the equilibrium quantity will rise

A decrease in supply causes the equilibrium price to ____________ and the equilibrium quantity to ____________.

rise ; fall

An increase in demand causes the equilibrium price to __________ and the equilibrium quantity to _________.

rise ; rise

if a transaction imposes external costs, then:

too much is being produced relative to the socially optimal amount

T or F: Money is NOT an economic factor of production?

true

When should the government intervene in the economy?

when the market fails to provide goods efficiently

Micro economics is concerned with issues such as..

which job to take, smaller issues, not the big picture.