Midterm 1 Macroeconomics

Jamie must give up the production of 100 ties to produce 50 additional sweaters. The opportunity cost of producing four ties is ______ sweaters

2

GDP may be calculated as the sum of

consumer spending, investment spending, government purchases of goods and services, and exports minus imports

The marginal principle breaks quantity decisions into iterative decisions that use the

cost-benefit principle

GDP is the total dollar values of all

final goods and services produced in the economy in a given period

In the US, the curcular flow diagram does NOT illustrate

growing income inequality

Economic growth per capita economic growth is

growth per person

When there is a shortage of highly skilled workers in a particular region

highly skilled workers can negotiate higher salaries

When sellers and buyers adjust the quantities supplied and demanded in response to a price change prices is functioning as an

incentives

Take can be beneficial to trade partners because it:

enables more goods and services to be obtained at a lower opprtunity cost

The rule of 70 is a simple rule of thumb for

evaluating long-term growth rates

domestically produced goods and services sold to people in other countries are known as

exports

Gabriella starts using a new baking technique, and she can now do twice as much of everything. In a single day, Gabrielle can now bake 10 muffins or 8 cookies, rather than the 5 muffins and 4 cookies she could previously bake. Gabriella's production possibly frontier has ______, and her opportunity cost of making cookies _____

shifted right, is unchanged

Jent is deciding the direction she wants to take her business, Jeni's Ice Cream, over the course of the next year, She could develop a new flavor of ice cream to sell in grocery stores, or she could open a new company-owned location. The cost of research, development, and bringing the the flavor to market would be $200,000. Jens spent $75,000 developing the last new flavor profile. which was unsuccessful If she can't develop the new flavor, the start-up cost for the new store location would be $50,000. Over the course of the next year, operating costs for already existing locations will be $100,000. What is Jen's opportunity cost of developing a new ice cream flavor?

$150,000

Marius and Jennifer are going to sell cupcakes and muffins at their annual fundraiser bake sale. In one day. Marius can make 40 cupcakes or 20 muffins, and Jennifer can make 15 cupcakes or 15 muffins. What is Marius's opportunity cost of producing one cupcake?

0.5 muffin

Jamie must give up the production of 75 ties to produce 25 additional dress shirts. The opportunity cost of producing four dress shirts is ____ ties A. 71 B. 79 C. 12 D. 4

12

Suppose we observe an increase in both the price of ping tables and the quantity of ping pong tables bought and sold. Which statement would explain an observation?

An increase in the demand for ping pong tables

Nissan manufactures sedans and pickup trucks. As one of Nissan's economists, you're in charge of ensuring efficient management of costs. In the past, if Nissan devoted all of its resources fo manufacturing sedans, it could produce 480,000 sedans per year at one manufacturing plant. If Nissan devoted all of its resources to manufacturing trucks, it could produce 240.000 trucks per year. A new production technique now allows Nissan to produce either 600.000 sedans or 360.000 trucks per year. How would Nissan's production possibilities frontier reflect this new production technique?

An outward shift of the production possibilities frontier

You have an absolute advantage in producing a product if you:

Can produce the product using the fewest inputs

equation that breaks down GDP into four sources of aggregate spending

GDP = C + I + G + X - IM

An increase in demand and an increase in supply will lead to an _____ in the equilibrium quantity and an _____ in the equilibrium price

Increase; indeterminate change

A decrease in demand and an increase in supply will lead to an ______ in the equilibrium quantity and an ____ in the equilibrium price

Indeterminate change, decrease

What is true when the price is functioning as a message

It communicates information to buyers and sellers

How is the economic surplus generated by a decision calculated?

It is the total benefits minus costs arising from the decision

If they spend all night writing poems, Leticia can write 10 poems, and Isabella can write 5. If they spend all night making necklaces, Leticia can make 6, and Isabella can make 4. We know that:

Leticia's opportunity cost of writing poems is less than Isabella's

You own a food truck, and you've been operating in the parking lot of your friend's business. You pay your friend $900 per month to park at their business, and your food truck revenue is $6,000 per month. You're considering whether you should continue to park in your friend's lot or move to another location. Your revenue in the new location would be $10,500 per month, but you'd have to pay $1.500 per month to park there. You would also have to buy more fresh ingredients to meet the increased sales, so your monthly operating costs would increase by $600. If you choose to keep parking in your friend's lot, are you correctly applying the cost-benefit principle?

No, because you could not increase your economic surplus by moving to the location

What happens to the equilibrium price and quantity when demand decreases at the same time supply increases, but the relative size of the shifts is not known?

The equilibrium price falls, and the change in the equilibrium quantity is ambiguous

What happens to the equilibrium price and quantity when demand decreases and simultaneously supply increases, and the demand shift is smaller than the supply shift?

The equilibrium price falls, and the equilibrium quantity rises

What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases, and the relative size of the shifts is not known?

The equilibrium price rises, and the change in the equilibrium quantity is ambiguous

What happens to the equilibrium price and equilibrium quantity when demand and supply decrease simultaneously but the relative size of the shifts are not known?

The equilibrium quantity falls, and the change in equilibrium price is ambiguous

What happens to the equilibrium price and equilibrium quantity when demand and supply increase simultaneously, but the relative size of the shifts are not known?

The equilibrium quantity rises, and the change in the equilibrium price is ambiguous

According to the interdependence principle, when faced with a decision, you should ask what

What else might my decision affect, and what else might affect my decision?

We expect that price will fall when

The quantity supplied is greater than the quantity demanded

We have to make choices because

The resources available to us are limited

If resources are scarce,

They are insufficient to provide enough goods and services to satisfy all human material wants and needs.

You are considering a beach trip for spring break. Which event would shift your individual demand curve for a room near the beach to the right

To reward you for a successful semester, your family gives you money for spring break

Stock in a company is

a share in ownership in the company

Kit Kats are cheaper than usual. This could be because there is

a surplus of kit kat

The person who can produce a product using the fewest inputs has ___ in that product

an absolute advantage

Real GDP per capita is

an incomplete measure of a country's standard of living

The rational rule principle summarizes the marginal principle. It says that if something is worth doing keep doing it until your marginal

benefit equals your marginal cost

Decisions made about quantities are:

best made suing marginal principle

The principle of comparative advantage to interactions

between people as well as in business production decsions

When we refer to price as a message, this means that price

communicated information

Specialization will increase output when it based on

comparative advantage

What is the basis of specialization?

comparative advantage

When your employees receive work assignments based on who has the lowest opportunity cost in performing each task, the for the work assignment is:

comparative advantage

When you assign tasks to employees based on comparative advantage, the tasks go to those with the

lowest opportunity cost

The cost of sensors used in making radio frequency identification (RFID) ships falls, and a successful ad campaign makes using "tap" technology in credit card usage more fashionable. As a result, the equilibrium price of RFID chips _____, and the equilibrium quantity ____

may increase, decrease, or stay the same; increase

Perdue supplies processes chicken to grocery stores and restaurants. The price of organic chicken is rising, and the price of conventional chicken had fallen slightly. Perdue analysis concludes that consumers are finding organic chicken increasingly more valuable. For perdue, price acted as ____

message

When price changes act as a line of communication between buyers and sellers, price is functioning as a

message

opportunity cost

money or benefits lost by not selecting a particular option during the decision-making process

Decisions should reflect the _____ costs, rather than just the ___costs

opportunity, financial

Equilibrium is the

point at which there is no tendecny for change

prices in wheat futures market provide

prediction of future price of wheat

In markets, prices provide all of these EXCEPT: prodctivity information incentives messages

productivity

An equilibrium price is a price where the

quantity supplies equals the quantity demanded

Sunk costs are the costs that are incurred

regardless of which decision is made

Suppose the market for gasoline is in equilibrium. You have heard that the price of crude oil is rising because of Organization of Petroleum Exporting Countries (OPEC) restrictions. You are also aware that the number of drivers is rising. Knowing this, you predict that the price of gasoline will ______, and the quantity of gasoline bought and sold will _____

rise; rise or fall

Absolute advantage

the ability to produce a good using fewer inputs than another producer

A knowledge problem exists when

the information needed to make a good decision is not avaliable to a decision maker

Carla and June are team leaders at a construction company. Carla's team can build a single-family home in 3 months and a commercial retail space in 6 months, June's team builds a single-family home in 4 months and a commercial retail space in 5 months. How many commercial retail spaces will be built in 15 months with the specialization?

three

The topics stutied in macroeconomics include

unemployment, economic growth, and inflation

The marginal princple helps individuals decided

wheather to do a bit more of an activity or a bit less of it

Economists convert cost and benefits into money equivalents by evaluating an individual's

willingness to pay

______ is assessed by asking "what is the ______ I am willing to pay to get this benefit, or avoid that cost?"

willingness to pay; most