MicroEco Exam 1 Review

Orange juice drinkers want to consume more orange juice at a lower price. Which of the following events would have this effect? A. A decrease in he price of orange juice processing B. An increase in the cost of fertilizer used for orange groves C. A decrease in income, assuming orange juice is a normal good D. A decrease in the population

A. A decrease in he price of orange juice processing

Which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase? A. A decrease in the price of flour B. An increase in the price of flour C. An increase in the price of rye bread, a substitute for white bread D. An increase in the price of butter, a complement for white bread

A. A decrease in the price of flour

In general, the term "ceteris paribus" means A. All else equals B. Holding everything else variable C. Unsettled mathematical paradigms D. Both A and B

A. All else equal

If a demand curve shifts to the right, then A. Demand has increased B. Quantity demanded has increased C. Demand has decreased D. Quantity demanded has decreased

A. Demand has increased

Which of the following statements about scarcity is true? A. Scarcity refers to the situation in which unlimited wants exceed limited resources B. Scarcity is not a problem for the wealthy C. Scarcity is only a problem when a country has too late a population D. Scarcity only arises when there is a wide disparity in income distribution

A. Scarcity refers to the situation in which unlimited wants exceed limited resources

Tax incidence is A. The actual division of the burden of a tax between buyers and sellers in a market B. The potential division of the burden of a tax between buyers and sellers in a market C. The actual division of the burden of a tax between buyers and government in a market D. The potential division of the burden of a tax between buyers and government in a market

A. The actual division of the burden of a tax between buyers and sellers in a market

If the price of automobiles was to increase, then A. The demand for gasoline would decrease B. The demand for gasoline would increase C. The supply of gasoline would increase D. The quantity of gasoline demanded would decrease

A. The demand for gasoline would decrease

The law of demand implies, holding everything else constant, tat as the price of beagle increases, A. The quantity of bagels demanded will decrease B. The demand for bagels will decrease C. The quantity of bagels demanded will increase D. The demand for bagels will increase

A. The quantity of bagels demanded will decrease

The primary difference between absolute and comparative advantage is

Absolute advantage refers to the ability to produce more of a good or service using the same amount of resources and comparative advantage refers to the ability to produce a good or service at a lower opportunity cost

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as A. A decrease in demand B. A decrease in quantity demanded C. A change in consumer income D. A decrease in consumers' taste for chocolate

B. A decrease in quantity demanded

The area _ the market supply curve and _ the market price is equal to the total amount of producer surplus in a market. A. above; above B. above; below C. below; above D. below; below

B. Above; below

Which of the following is the correct way to describe equilibrium in a market? A. At equilibrium, demanded equals B. At equilibrium, quantity demanded equals quantity supplies C. At equilibrium, market forces no longer apply D. At equilibrium, scarcity is eliminated

B. At equilibrium, quantity demanded equals quantity supplies

Suppose that demand curve for a product is vertical and the supply curve is upward sloping. If a per-unit tax is imposed in the market for this product A. Sellers bear the entire burden of the tax B. Buyers bear the entire burden of the tax C. The tax burden will be shared equally between buyers and sellers D. Buyers share the burden of the tax with government

B. Buyers bear the entire burden of the tax

Which of the following covers the study of topics such as inflation or unemployment? A. Microeconomics B. Macroeconomics C. Both Microeconomics and macroeconomics give equal emphasis to these problems D. None of the above

B. Macroeconomics

In economics, the term _ means "additional" or "extra" A. Allocative B. Marginal C. Equity D. Optimal

B. Marginal

Economic models do all the following except A. Answer economic questions B. Portray reality in al its minuet details C. Make economic ideas explicit and concrete for use by decision makers D. Simplify some aspect of economic life

B. Portray reality in all its minute details

Opportunity cost is A. When consumers and firms use all available information as they act to achieve their goals B. The highest valued alternative that must be given up to engage in an activity C. When unlimited wants exceeds the limited resources available to fulfill those wants D. The idea that because of scarcity, producing more of one good or service means producing less of another good or service

B. The highest valued alternative that must be given up to engage in an activity

Which of the following is evidence of surplus of bananas? A. Firms raise the price of bananas B. The price of banana is lowered in order to increase sales C. The equilibrium price of bananas rise fur to an increase in demand D. The quantity of bananas demanded is greater than the quantity supplied

B. The price of banana is lowered in order to increase sales

By definition, economics is the study of A. How to make money in the stock market B. How to make money in a market economy C. The choices people make to attain their goals, given their scarce resources D. Supply and demand

C. The choices people make to attain their goals, given their scarce resources

In January, buyers of gold expect that the price of gold will rise in February. What happens in the gold market in January, holding all else constant? A. The supply curve shifts to the right B. The demand curve shifts to the left C. The demand curve shifts to the right D. The quantity demanded increases

C. The demand curve shifts to the right

The idea that because of scarcity, producing more of one good or service means producing less of another good or series refers to the economic concept of A. Optimization B. Efficiency C. Trade-off D. Equity

C. Trade-off

Frieda is at her local florist to buy a dozen roses. She is willing to pay $75 for the roses, and buys them for $75. Frieda's consumer surplus from the purchase is A. $150 B. $75 C. $37.50 D. $0

D. $0

Paul goes to sportsmart to buy a new tennis racquet. He is willing to pay $200 for a new racquet, but buys one on sale for $125. Paul's consumer surplus for the purchase is A. $325 B. $200 C. $125 D. $75

D. $75

According to the law of supply, A. There is a positive relationship between price and quantity supplied B. As the price of a product increases, firms will supply less of it to the market C. As the price of a product increases, firms will supply more of it to the market D. A and C

D. A and C

Economist assume that individuals A. Behave in unpredictable ways B. Will never take actions to help others C. Prefer to live in society that values fairness above all else D. Are rational and respond to incentives

D. Are rational and respond to incentives

The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called A. Producer surplus B. The substitution effect C. The income effect D. Consumer surplus

D. Consumer surplus `

The production possibilities frontier model shows that A. If consumers decide to buy more of a product, its price will increase B. A market economy is more efficient in producing goods and services than is a centrally planned economy C. Economic growth can only be achieved by free market economies D. If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

D. If all resources are fully and efficiently utilized, more of one good can be produced only by producing less of another good

In a city with rent-controlled apartments, all of the following are true except A. Apartments usually rent for rates lower than the market rate B. Apartments are often in shorter supply than they would be without rent control C. It usually takes more time to find an apartment than it would without rent control D. Landlords have an incentive to rent more apartments than they would without rent

D. Landlords have an incentive to rent more apartments than they would without rent

Economists reason that the optimal decision is to continue any activity up to the point where the A. Marginal benefit is zero B. Marginal benefit is greater that the marginal cost C. Marginal cost is zero D. Marginal benefit equals the marginal cost

D. Marginal benefit equals the marginal cost

Trade-offs force society to make choices, particularly when answering the following three fundamental questions:

One, what goods and services will be produced? Two, how will these goods and services be produced? Three, who will receive these goods and services produced?

__ is concerned with what is, and _ is concerned with what ought to be. Economics is about _, which measures the cost and benefits of different courses of action.

Positive, normative, positive

One of the basic facts of life is that people must make choices as they try to attain their goals. This unavoidable fact comes from a reality an economist calls A. Unemployment B. Scarcity C. Rationality D. Unlimited resources

Scarcity

Assume there is a shortage in the market for digital music players. Which of the following statement correctly describes this situation?

Some consumers will be unable to obtain digital music players at the market price and will have an incentive to offer to buy the product at a higher price

Suppose that in October, market analysts predict that the price of platinum will fall in November. What happens in the platinum market in October, holding everything else constant?

The supply curve shifts to the right