Quiz 3

Macroeconomics is the :

" Big picture " view of our economic system

What are the two types of profit ?

Accounting profit Economic profit

may be defined as the quantities that consumers are willing and able to buy in the market at different prices

Demand

What is not a factor of production ?

Elasticity

Major factor ( s ) that cause the demand curve to shift include :

Expectations

True / False A cross - price elasticity of 1.0 indicates two goods can be classified as independent .

False

True / False A shortage occurs when a firm charges a price that is too high .

False

True / False An implicit cost involves payments to suppliers of resources .

False

If the income elasticity of demand is -0.5 , the goods are :

Inferior

is the application of basic economic principles to decisions within the firm .

Microeconomics

If the price elasticity of demand is 1.3 , the demand is :

Price elastic

True / False If demand is price elastic , total revenue increases when price decreases .

True

If the cross price elasticity of demand is 1.9 , the items are :

Substitutes

True / False Economics is defined as the study of how scarce resources are combined to meet the needs of people in a society of unlimited wants .

True

Explanations for the existence of profits in our market - oriented , capitalistic economy include : a . Risk - taking b . Control of scarce resources c . Some people have access to information that is not widespread d . All of the above

d . All of the above

As producers and consumers meet in the marketplace , an equilibrium quantity and price is determined . The process is called

price discovery