Econ

positive economics

"is descriptive"

Microeconomics is the study of

how individual households and firms make decisions.

Macroeconomics is the study of

how the economy is impacted as a whole

the main issue in economics is

how to deal with scarcity

Suppose the price of a good falls by 35% and the price elasticity of demand is 3. we expect quantity demanded to...?

increase by 105%

When we are modeling opportunity costs in production, we assume that the marginal cost of producing additional units of a good are typically ______. When we are modeling preferences of consumers, we assume that the marginal benefit of consuming additional units of a good are typically ______.

increasing; decreasing

price elasticity of demand

is a units free mesaure measures the price sensitivity of quanitty demanded.

an economy produces face masks. if the economy achieves allocative efficiency, then

it produces the quantity on the PPC where MB and MC are equal

whether it is happiness, satisfaction, or something else, we assume rational individuals are intrinsically motivated to ________ some goal or objective

maximize

as the price decreases along a linear demand curve, the price elasticity of demand becomes

more inelastic

normative economics

"is prescriptive"

when an economy produces more smartphones and fewer cars, it is answering what question?

"what"

suppose you put 120 in a savings account for 2 years with a growth rate of 2% per year. How much MORE would you have at the end of those 2 years if the growth rate was 3% instead of 2%?

$2.46

Suppose that when the price of good X increases from $600 to $720, the quantity demanded of good Y decreases from 67 to 15. Using the midpoint method, the cross-price elasticity of demand is about

-6.98, and X and Y are complements

When the price of good A is $50, the quantity demanded of good A is 500 units. When the price of good A rises to $70, the quantity demanded of good A falls to 400 units. Using the midpoint method, the price elasticity of demand for good A is

.67, and an increase in price will result in an increase in total revenue for good A

When the price of a movie download increases by 3 percent, the quantity demanded of movie downloads decrease by 4 percent, then the price elasticity of demand for movie downloads is _____.

1.33

In January, the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February, the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March, the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. Using the midpoint method, the price elasticity of supply of Willy's dark chocolate candy bars was about

1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increase from $2.50 to $3.00

Suppose that a worker in Cornland can grow either 40 bushels of corn or 10 bushels of oats per year, and a worker in Oatland can grow either 5 bushels of corn or 50 bushels of oats per year. There are 30 workers in Cornland and 30 workers in Oatland. If the two countries do not trade, Cornland will produce and consume 600 bushels of corn and 150 bushels of oats, while Oatland will produce and consume 20 bushels of corn and 1300 bushels of oats. If each country made the decision to completely specialize in producing the good in which it has a comparative advantage, then the combined yearly output of the two countries would increase by

580 bushels of corn and to bushels of oats

Tyree receives a bonus at work and his income increases by $40,000 a year. As a result, Tyree decreases the quantity of T shirts he buys and increases the quantity of movies he buys/rents. For Tyree, A. movies are normal goods. B. movies and T shirts are complementary goods. C. movies and T shirts are substitute goods. D. movies are inferior goods.

A

Which of the following might lead to an increase in the equilibrium price of grape jelly and a decrease in the equilibrium quantity of grape jelly sold? A. an increase in the price of grapes, an input into grape jelly B. an increase in consumers' incomes, as long as grape jelly is a normal good C. an increase in the price of strawberry jelly, a substitute in consumption for grape jelly D. an increase in the price of peanut butter, a complement in consumption to grape jelly

A

Which of the following would not cause a decrease in demand for toaster pastries? A. an increase in price of toaster pastries B. a decrease in price of breakfast bagels, a good substitutable for toaster pastries C. a decrease in income of buyers, assuming toaster pastries are a normal good D. an increase in price of toasters, a good complementary to toaster pastries

A

When the price of a pair of black shoes increases by 10 percent, the quantity demanded of a pair of black shoes decrease by 4 percent, then the price elasticity of demand for a pair of black shoes is A. elastic B. Unit elastic C. inelastic

C. inelastic

Suppose there is an increase in both the supply and demand for personal computers. In the market for personal computers, we would expect the A. change in the equilibrium quantity to be ambiguous and the equilibrium price to rise. B. equilibrium quantity to rise and the equilibrium price to fall. C.equilibrium quantity to rise and the equilibrium price to rise. D. equilibrium quantity to rise and the change in the equilibrium price to be ambiguous.

D

Which of the following statements is true about the impact of an increase in the price of lettuce? A. The supply of lettuce will decrease. B. The demand for lettuce will decrease. C. The equilibrium price and quantity of salad dressing will rise. D. The equilibrium price and quantity of salad dressing will fall.

D

according to per-worker production function, we should expect an increase in productivity in each of the following scenarios except

a decrease in natural resources per worker.

the opportunity cost of growth is

a reduction in current consumption

a market is best defined as

an environment where buyers and sellers interact to trade

what causes a movement up along the per-worker production function?

an increase in the amount of capital

productive efficiency is characterized by

any point along the PPC

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at income elasticity of demand for Ramen noodles, yours would

be positive and your roommates would be negative

The overriding reason why households and societies face many decisions is that a. goods and services are not scarce. b. people, by nature, tend to disagree. c. incomes fluctuate with business cycles. d. resources are scarce.

d

The art in scientific thinking -- whether in chemistry, economics, or biology -- is

deciding which assumptions to make

a decrease in the price of a good will

decrease quantity supplied

coffee and tea are substitutes in consumption. if the price of coffee increases ,then the _______for tea ______

demand for, increases

Bo buys and sells real estate. Two weeks ago, he paid $400,000 for a house on Cypress Street, intending to spend $50,000 on repairs and then sell the house for $500,000. Last week, the city government announced a plan to build a new landfill on Cypress Street just down the street from the house Bo purchased. As a result of the city's announced plan, Bo is weighing two alternatives: He can go ahead with the $50,000 in repairs and then sell the house for $390,000, or he can forgo the repairs and sell the house as it is for $350,000. Thinking rationally, he should

forgo the repairs and sell the house as it is for $350,000.

a .5% change in the growth rate would...?

have a significant effect on long-run output (real GDP) over time

the law of demand states:

other things equal, when the price of a good falls, the quantity demanded of the good rises.

what three considerations go into making strategic decisions

others decisions ones own benefits ones own costs

The price elasticity of supply measures the sensitivity of the

quantity supplied to a change in the price

along the supply curve, price and _____ are _____ related

quantity supplied, directly

If Shen produces both paninis and burgers, then when production is efficient,

she can produce more paninis only by producing less burgers

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

the cost of the parking permit is part of the opportunity cost of attending college if you would not have to pay for parking otherwise

allocative efficiency is characterized by

the point where the marginal benefit and the marginal cost of production are equal

when the quantity demanded has increased at every price, it might be because

the price of a complementary good has decreased.

because we face scarcity, every choice involves

trade-offs