MICROECONOMICS CHAPTERS 1 & 2 UNIT TEST STUDY GUIDE
Which of the following is a microeconomics question?
How will Apple decide on a selling price for the iPad?
The resource income earned by those who supply ________ is called wages.
Labor
Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?
25 pedicures
Which of the following is a positive economic statement?
Scarcity necessitates that people make trade
Which of the following statements is true about scarcity?
Scarcity refers to the situation in which unlimited wants exceed limited resources.
Which of the following is a macroeconomics question?
What determines the growth rate of gross domestic product?
The three fundamental questions that any economy must address are:
What goods and services to produce; how will these goods and services be produced; and who receives them
Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products
What to produce?
An example of a factor of production is
a worker hired by Dell.
Economists assume that individuals
are rational and respond to incentives.
A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.
bowed outward
The ________ demonstrates the roles played by households and firms in the market system.
circular flow model
Which of the following is part of an economic model?
data
The natural resources used in production are made available in the
factor market
Which of the following is part of an economic model?
hypotheses
The branch of economics which studies the behavior of entire economies is called
macroeconomics
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
marginal revenue
The branch of economics which studies how households and firms interact in markets is called
microeconomics
The branch of economics which studies how households and firms make choices, interact in markets and how government attempts to influence their choices is called
microeconomics
The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.
opportunity cost
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost.
If the production possibilities frontier is linear, then
opportunity costs are constant as more of one good is produced.
Households ________ final goods and services in the ________ market.
purchase; product
By definition, economics is the study of
the choices people make to attain their goals, given their scarce resources.
The production possibilities frontier shows
the maximum attainable combinations of two products that may be produced in a particular time period with available resources.
Who receives the most of what is produced in a market economy?
those who are willing and able to buy them
Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is the marginal cost of moving up from the 1-color application to the 3-color application?
$40
Which of the following is a positive economic statement?
The minimum wage law causes unemployment.
Which of the following is a problem inherent in centrally planned economies?
There is too little production of low quality goods and services.