ECO 2023 Exam 1
the marginal benefit is equal to the price of the product
A consumer is willing to purchase a product up the point where
the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job to other causes
Consider the following 2 factors: A. study conducted by Forrester Research estimates that between 2000 and 2015, 3.3 million jobs in the US will have been outsourced B. over this same period of time, the number of jobs expected to be created is more than 450 million and the jobs due to all the causes is estimated at 430 million The statements suggest that:
South Korea has an absolute advantage in both products
Does either China or South Korea have an absolute advantage and if so, in what product?
final goods and services in the product market
Households purchase...
the supply curve shifted to the left resulting in an increase of the equilibrium price
Hurricane Katrina damaged a large portion of oil refining and pipeline capacity in the Gulf coast states. In the market for gasoline,
normal good
If an increase in income leads to an increase in the demand for peanut butter, then the peanut butter is a
the supply curve for apples has shifted to the right
If in the market the supply for apples has decreased then
the firm has an incentive to decrease supply now and increase supply in the future
If the firm expects that price of its product will be higher in the future than it is today
a decrease in the quantity demanded of grapefruit
If the price in grapefruit rises, the substitution effect due to the price change will cause
China
If the two countries specialize and trade, who should export wheat?
weighing the costs and benefits of a decision before deciding if it should be pursued
Making optimal decisions "at the margin" requires
$75
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 from the purchase is
the supply of lobster is greater in the summer than in the spring
The demand for lobster is lower in the spring than in the summer. if the price of lobster is higher in the spring than the summer then,
False
True or False: Economic resources include financial capitial and money
they assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time
What best describes an assumption economists make about human behavior
half a garden cultivated
What is George's opportunity cost of mowing a lawn?
if the price of gasoline rises, a smaller quantity will be bought
Which of the following is a positive economic statement
each faces the problem of scarcity which necessitates trade-offs in making economic decisions
Which of the following is correct about the economic decisions consumers, firms, and the government have to make
George has an absolute advantage in both tasks (there is only one G option!)
Which of the following statements is true about George and Jack
economic surplus
______ is equal to the sum of consumer surplus and producer surplus
a change in the price of toothpaste
a movement along the demand curve for toothpaste would be caused by
factor market
a worker is hired in a
when the quantity demanded for the product exceeds the quantity supplied
an increase in the equilibrium price of a product will result..
both the equilibrium price and quantity of MP3 players will increase
assume that both the demand curve and teh supply curve for MP3 players shift right but the demand curve shifts more than the supply curve, as a result...
any buyer who is willing and bale to pay the price will find a seller for the product
at a products equilibrium price
a statement that is true about competition in a market
competitions forces firms to produce and sell products as long as the margin benefit to consumers exceeds the marginal cost of production
the market price was zero
consumer surplus in a market for a product would be equal to the area under the demand curve if
the marginal benefit equals the marginal costs from the last unit sold
economic efficiency in a competitive market is achieved when
marginal benefit equals marginal costs
economic surplus is maximized in a competitive market when
a black market
economists refer to a market where buying and selling take place at prices that violate government price regulations as
producing more of one good means less of another good can be produced
every society faces economic trade-offs. this means...
a decrease in the price of corn
farmers can plant either corn or soybeans in their fields. which of the following would cause the supply of soybeans to increase?
a decrease in the quantity of MP3 players demanded
holding everything else constant, an increase in the price of MP3 players will result in
an inferior good
if a decrease in income leads in the demand for macaroni, then the macaroni is
as long as the marginal benefit it receives is just equal to or greater than $200
if the marginal cost of producing a television is constant at $200, then a firm should produce this item...
a decrease in quantity demanded
if, in response to an increase in the price of chocolate, the quantity demanded of chocolate decreases economists would describe this as
the more resources devoted to any activity, the payoff from allocating yet more resources to that activity increases by progressively smaller amounts
increasing marginal opportunity cost implies that
households
sells resources in the factor market
produce a combination of goods that lies outside its own production possibilities frontier
specializing in the production of a good or service in which one has a comparative advantage enables a country to do all of the following expect
scarcity
stems from the incompatibility between limited resources and unlimited wants
the price received is at least EQUAL to the additional cost of producing the product
suppliers will be willing to supply a product only if
at least $60,000
ted quits his $60,000 a-year job to be a stay at home dad. What is the opportunity cost of his decision
comparative advantage
the ability to produce a goods or service at a lower opportunity cost than any other producer
human capital
the accumulated skills and training workers have
tax incidence
the actual division of the burden of a tax buyers and sellers in a market is called
marginal cost
the additional cost to a firm of producing one more unit of a good or service is called
is equal to the total amount producer surplus in the market
the area above the market supply curve and below the market price
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
macroeconomics
the branch of economics which studies the behavior of the entire economies and policies that affect the economy as a whole is called
the study of economics
the choices people make to attain their goals, given their scarce resources
consumer surplus
the difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
producer surplus
the difference between the lowest a firm would have been willing to accept and the price it actually receives from the sale of a product is called
the principle of opportunity cost
the economic cost of using a factor of production is the alternative use if that factor that is being given up
opportunity cost
the highest valued alternative that must be given up to engage in an activity
the price of a good on a consumer's purchasing power
the income effect of price change refers to the impact of a change in
increase; quantity; decrease
the law of demand implies, holding everything else constant that as the price of bagels _____ , the ________ of bagels demanded will ________
a price floor
the minimum wage is an example of
technology
the process used to produce goods and services
the maximum attainable combination of two products that may be produced in a particular time period with available sources
the production possibilities frontier shows
deadweight loss
the reduction in economic surplus resulting from not being in competitive equilibrium
wages and salaries
the resource income earned by those who supply labor services is called
marginal benefit
the revenue received from the sale of an additional unit of a product is called
measures the opportunity cost of producing one more unit of a good
the slope of a production possibilities frontier...
scarcity
the study of economics arises due to
the area above the market supply curve and below the market price
the total amount of producer surplus in a market is equal to
-what goods and services to produce -how will these goods and services be produced -who receives them
three fundamental questions that any economy must address are
must be set below the equilibrium price
to affect the market outcome, a price ceiling
the willingness of consumers to buy a product at different places
what does a demand curve show
the willingness of consumers to purchase a product at different prices
what does each point on the demand curve show?
competition among sellers
what generates productive efficiency
one and a half lawns mowed
what is Jack's opportunity cost of cultivating a garden?
2/3 of a garden cultivated
what is Jacks opportunity cost of mowing lawn?
a worker hired by an auto manufacture
what is an example of a factor of production
the machines workers have to work with
what is counted as "capital" in economics
2 lawns mowed
what is george's opportunity cost of cultivating a garden?
has always existed and will continue to exist
what is the basic economic problem of scarcity
an "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity" is represented by a movement along a given demand curve
what is the difference between "increase in demand" and an "increase in quantity demanded"
productive efficiency
when goods and services are produced at the lowest possible cost _________ occurs
whether or not consumers will buy its products
which of the following is NOT an example of an economic trade-off that a firm has to make
a fashion designer should be allowed to copyright designs to promote innovation
which of the following is a normative statement
assumptions
which of the following is part of an economic model
at equilibrium, quantity demanded equals quantity supplied
which of the following is the correct way to describe equilibrium in a market?
a decrease in the price of flour
which of the following would cause the equilibrium price of white bread to decrease and the equilibrium quantity of white bread to increase
can produce more of something than others with the same resources
you have absolute advantage whenever you