Econ 202 test 1 Cheng

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To obtain the market demand curve for a product, sum the individual demand curves

When the quantity grows rapidly, inflation is a predictable consequence

What is an example of a positive, as opposed to normative, statement

A change in the price of the good or service

What would not shift the demand curve for a good or service

Understand that the opportunity cost of attending college is very high

High School athletes who skip college to become pro athletes

there is movement along a given demand curve

When the price of a good or service changes

Buyers and sellers are price takers

A competitive market is a market in which

the total quantity supplied at all possible prices

A market supply curve shows

the price of a good or service that is being supplied

A movement along the supply curve might be caused by a change in

decrease in quantity demand

A movement upward and to the left along a demand curve is called an

Marginal benefit is greater than the marginal cost

A rational decision maker takes an action only if the

of an increase in price gives producers motivation to supply a larger quantity

A supply curve slopes upward because

Efficiency and Equality

A typical society strives to get the most it can from its scarce resources. At the same time, the society attempts to distribute the benefits of those resources to the members of the society in a fair manner. In other words, the society faces trade-off between

Can be useful in helping economists understand the complex world of international trade between many countries and many goods

An economic theory about international trade that is based on the assumption that there are only 2 countries trading two goods

Demand, Supply

Buyers determine ______________ and sellers determine ____________

a decrease in the price of butter

If toast and butter are compliments, then which of the following would increase the demand for toast

Sum the quantities that individual firms are willing and able to supply at that price

In a market, to find the total amount supplied at a particular price, we must

The enjoyment she would have received had she watched the video

Denise decides to spend 3 hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

make a complex world easier

Economist make assumptions to

group of buyers and sellers

For a market for a good or service to exist, there must be a

shifted to the left

Ford Motor company announces that the next month it will offer $3,000 rebates on new Mustangs. As a result of this information, todays curve for Mustangs

the buyer will make purchases from other seller

If a seller in a competitive market chooses to charge more than the going price, then

people face trade-offs

Mitch has $100 to spend and wants to buy either a new amplifier for his guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $100 so he can only buy one. This illustrates the basic concept that

make assumptions

One thing economist do to help them understand how the real world works is

if the policy changes the cost or benefits of their behavior

People are likely to respond to a policy change

The marginal benefit of an extra diamond far exceeds the marginal benefit of an extra water bottle

People are willing to pay more for a diamond than for a bottle of water because

Resources are specialized, that is, some are better at producing particular goods rather than other goods

Production possibilities frontiers are usually bowed outward. This is because

for soup falls when income rises

Soup is an inferior good if the demand

The nation is not using all available resources

Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that

a decrease in demand for chocolate pudding

Suppose scientists provide evidence that chocolate pudding increases the bad levels of cholesterol who eat it. We would expect to see

Substitute goods

Suppose that a decrease in the price of good X results in fewer units of good Y being demanded. This implies that X and Y are

People respond to incentives

Suppose the state of Tennessee passes a law that increases the tax on alcoholic beverages. As a result, residents in Tennessee start purchasing their alcohol in surrounding states. Which of the following principles does this best illustrate

The total benefit Claire gets from purchasing 3 pairs of flip flops minus the total benefit she gets from purchasing 2 pairs of flip flops

The marginal benefit Claire gets from purchasing a third pair of flip flops is

the sum of quantities demanded by all the buyers at each price of the good

The market demand curve represents the

shifted to the left

When quantity demanded decreases at every possible price, the demand curve has

shifted to the left

When quantity supplied decreases at every possible price, we know that the supply curve has

all non-price determinants of demand are held constant

When we move along a given demand curve

A change in the price of the good or service

Which of the following changes would not shift the supply curve for a good or service

Kendra must decide between going to Colorado or Cancun for spring break

Which of the following statements best represents the principle represented by the adage, "There is no such thing as free lunch?"

Compare the cost of staying one more semester, or the benefits of staying one more semester

You are considering staying in college another semester so that you can complete a major in econ. In deciding whether or not to stay you should

increases as more of the good is produced

when a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good