Macroeconomics Ch. 1, 2, 3, & 4

if a nation has an absolute advantage in the production of a good,

it can produce that good using fewer resources than its trading partner

the claim that, with other things being equal, the quantity demanded of a good falls when the price of that good rises

law of demand

the claim that, other things being equal, the quantity supplied of a good increases when the price of that good rises

law of supply

if pasta is an inferior good, then the demand curve shifts to the ______ when _____ rises

left, consumer's income

if a shortage exists in the computer market, then the current price must be _____ than the equilibrium price. for equilibrium to be reached in the market, you wold expect ___________

lower; buyers to offer higher prices

if the economy goes into a recession and incomes fall, what happens in the markets for inferior goods?

prices and quantities both rise

suppose you find $20. if you choose to use the $20 to go to the football game, your opportunity cost of going to the game is

$20 (because you could have used the $20 to buy other things) plus the value of your time spent at the game

when Mateo and Sophia produce efficiently and make a mutually beneficial trade based on comparative advantage,

Mateo mows more and Sophia washes more

between Mateo and Sophia, who has the comparative advantage in car washing, and who has the comparative advantage in lawn mowing?

Sophia in washing, Mateo in mowing

in an hour, mateo can wash 2 cars or mow 1 lawn, and Sophia can wash 3 cars or mow 1 lawn. who has the absolute advantage in car washing, and who has the absolute advantage in lawn mowing?

Sophia in washing, neither in mowing

an inferior good is one for which an increase in income causes a(n)

a decrease in demand

which of the following shifts the supply curve for pizza to the right?

a decrease in the price of cheese, an input to pizza

which of the following shifts the demand for watches to the right?

a decrease in the price of watch batteries if watch batteries and watches are complements

the best definition of a market is

a group of buyers and sellers of a good or service

which of the following will not shift a country's production possibilities frontier outward?

a reduction in unemployment

which of the following statements is true?

a self-sufficient country at best can consume on its production possibilities frontier

if Megan's manager is interested in a graphical presentation of the relationship between the price and quantity of televisions supplied, you would advise your colleague to construct __________ using the data provided. however, if Megan's boss is more interested in the detailed numbers used to construct this visual representation, you would instead advise your coworker that a ________ would be more appropriate

a supply curve; supply schedule

which of the following is most likely to produce scientific evidence about a theory?

a tenured economist employed at a leading university analyzing the impact of bank regulations on rural lending

a decrease (leftward shift) in the supply for a good will tend to cause

an increase in the equilibrium price and a decrease in the equilibrium quantity

which of the following might lead to an increase in the equilibrium price of jelly and a decrease in the equilibrium quantity of jelly sold?

an increase in the price of grapes, an input into jelly

which of the following will shift the demand curve for pizza to the right?

an increase in the price of hamburgers, a substitute for pizza

which of the following moves the pizza market up along a given supply curve?

an increase in the price of pizza

if an increase in consumer incomes leads to a decrease in the demand for camping equipment, then camping equipment is

an inferior good

suppose that in the United States, producing an aircraft takes 10,000 hours of labor and producing a shirt takes 2 hours of labor. In china, producing an aircraft takes 40,000 hours of labor and producing a shirt takes 4 hours of labor. what will these nations trade?

china will export shirts, and the United States will export aircraft

before frank and ruby engage in trade, each of them

consumes at a point on his or her production possibilities frontier

after frank and ruby engage in trade, each of them

consumes at a point outside his or her production possibilities frontier

because you understand the law of demand, you can deduce that the correct graphical representation of the demand for records must be ____. moreover, you know that at a price of $10 per record, the ________ is five million records

d2; quantity demanded

a graphical object showing the relationship between the price of a good and the amount of the good that buyers are willing and able to purchase at various prices

demand curve

a table showing the relationship between the price of a good and the amount that buyers are willing and able to purchase at various prices

demand schedule

an increase in _____ will cause a movement along a given supply curve, which is called a change in _____

demand, quantity supplied

suppose two economist are arguing about policies that deal with unemployment. One economist says " the government could lower unemployment by one percentage point if it would just increase government spending by 50 billion dollars ."the other economist responds, "that's ridiculous. if the government spent an additional 50 billion dollars, it would reduce unemployment by only one-tenth of 1 percent, and that effect would only be temporary!" these economists

disagree because they have different scientific judgements

the market for which product best fits the definition of a perfectly competitive market?

eggs

suppose there is an increase in both the supply and demand for personal computers. furthermore, suppose the supply of personal computers increase more than demand for personal computers. in the market for personal computers, we would expect the

equilibrium quantity to rise and the equilibrium price to fall

in a perfectly competitive market,

every seller takes the price of its product as set by market conditions

true or false: the market for internet exhibits the two primary characteristics that define perfectly competitive markets

false

which of the following products would be least capable of producing an externality?

food

high and persistent inflation is caused by

governments increasing the quantity of money too much

productivity can be increased by

improving the education of workers

an increase in the price of beef provides

information that tells producers to produce more beef

a perfectly competitive market has

many buyers and sellers

which of the following is not a factor of production?

money

a decrease in the price of scones

movement along

an increase in the price of beer

movement along

a nation will typically import those goods in which

other nations have a comparative advantage

identical products, as well as a large number of buyers and sellers, are characteristics of a _______ market. in such markets, sellers of goods _______ influence the prevailing market price, giving them the role of price ________ in the market

perfectly competitive; cannot; takers

suppose a frost destroys much of the Florida orange crop. at the same time, suppose consumer tastes shift toward orange juice. what would we expect to happen to the equilibrium price and quantity in the market for orange juice?

price will increase; quantity is ambiguous

suppose both buyers and sellers of wheat expect the price of wheat to rise in the near future. what would we expect to happen to the equilibrium price and quantity in the market for wheat today?

price will increase; quantity is ambiguous

the amount of a good that buyers are willing and able to purchase at a given price

quantity demanded

the amount of a good that sellers are willing and able to supply at a given price

quantity supplied

a change in tastes of consumers that makes them desire more beer

shift

a change in technology that makes it less costly to produce scones

shift

a decrease in the number of consumers

shift

a decrease in the number of producers

shift

positive statements are

statements of description that can be tested

because people respond to incentives, we would expect that if the average salary of accountants increases by 50 percent while the average salary increases by 20 percent,

students will shift majors from education to accounting

a graphical object showing the relationship between the price of a good and the amount that sellers are willing and able to supply at various prices

supply curve

a table showing the relationship between the price of a good and the amount of it that sellers are willing and able to supply at various prices

supply schedule

the discovery of a large new reserve of crude oil will shift the ____ curve for gasoline, leading to a _____ equilibrium price

supply, lower

a rational person does not act unless

the action produces marginal benefits that exceed marginal costs

which of the following issues is related to microeconomics?

the impact of oil prices on auto production

suppose a country's workers can produce 4 watches per hour or 12 rings per hour. if there is no trade

the opportunity cost of 1 watch is 3 rings

a change in which of the following will not shift the demand curve for hamburgers?

the price of hamburgers

if the price of a good is equal to the equilibrium price,

the quantity demanded is equal to the quantity supplied and the price remains unchanged

which of the following statements is normative?

the unemployment rate should be lower

Kayla can cook dinner in 30 min and wash the laundry in 20 min. her roommate takes twice as long to do each task. how should the roommate allocate the work?

there are no gains from trade in this situation

in which of the following cases is the assumption most reasonable?

to address the benefits of trade, an economist assumes that there are two people and two goods

which of the following statements about trade is true?

trade can benefit everyone in society because it allows people to specialize in activities in which they have a comparative advantage

you have spent $1,000 building a hot-dog stand based on estimates of sales of $2,000. the hot-dog stand is nearly completed, but now you estimate total sales to be only $800 . you can complete the hot-dog stand for another $300. should you complete the hot-dog and? (assume that the hot-dogs cost you nothing)

yes