Econ Exam 1

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Economics is all about making choices. The reason we have to choose one thing over another is:

economic resources are scarce

Marginal analysis is a cost-benefit calculation that

focuses on the differences between one feasible alternative and the next feasible alternative

Law of Supply

in almost all cases, the quantity supplied rises when the price rises (holding all else equal)

If opportunity cost were to suddenly increase, total cost would

increase and net benefit would decrease

The Law of Supply states that as the price of a good increases, ceteris paribus, the ______ of that good increases. This can be shown graphically with _____ supply curve of numerically in a table using a ______

quantity supplied ; upward-sloping ; supply schedule (the relationship that exists between these two variables can be described as positively related)

The market supply is the ____ of all the supply curves of potential producers and would be graphed to ____ of the individual curves

sum ; right

Holding all else​ constant, if the number of cell phone manufacturers suddenly decreased due to increased​ regulations, then

supply would shift​ leftwards, equilibrium price would​ decrease, and equilibrium quantity would decreas

how would a decrease in demand affect the equilibrium price in a market?

the equilibrium price decreases

The concept of diminishing marginal benefits states that

the more you consume of a good, your willingness to pay for an additional unit declines

Which of the following would an economist use when conducting empirical analysis?

data

If an economic experiment works in a randomised controlled trial​ seting, its policy findings are readily applicable to real life​ scenarios:

False

When you have a randomised controlled trial in​ economics, the only difference between the two groups is the treatment because both groups have been randomly assigned.

False

Suppose the production of foreign-owned factors operating in the united states exceeds the production of the US owned factors operating abroad For the united states,

GDP is larger than GNP

Which is true regarding marginal analysis?

If total cost is rising, marginal cost could be falling.

What is meant by randomization in the context of an economic​ experiment?

Subjects are assigned by​ chance, rather than by​ choice, to a group

How would the equilibrium price in a market be affected if there were a large increase in supply and a small increase in demand​?

The equilibrium price decreases.

How would the equilibrium price in a market be affected if there were a large decrease in supply and a small decrease in demand​?

The equilibrium price increases.

When optimizing for total value, opportunity cost must be _______ to total cost. Assuming _______ benefits, the lowest cost option is the optimal choice.

added ; equal

When a cost-benefit analysis is done:

all relevant options must be considered

marginal analysis _____ always picks out the _____ optimum as minimization of total cost

always ; same

Which of the following is true regarding the concept of causation?

it describes how on event can bring about the change in another

an argument against evidence-based economics would be

it is only an approximation, often based on averages

Willingness to accept is the _____ price that a seller is willing to get paid to sell an extra unit of a good. Willingness to accept is the same as the _____ cost of production

lowest ; marginal

A competitive market will

move towards equilibrium quantity because both producers and consumers act in their own best interest.

A demand curve has a _____ slope due to the Law of demand. The law of demand is based off of a consumer's willingness to pay _____ as a marginal units are consumed.

negative ; less

Advising the residents of a town to choose a toll road over a freeway extension due to a limited budget and high trucking usage is an example of:

normative economics (analysis that recommends what an individual or society ought to do)

Making a prediction today about the worlds population in 20 years based on current growth trends is an example of:

positive economics (describing what has happened or predicting what will happen, such as predicting changes to the worlds population)

A supply curve has a ______ slope due to the law of supply. The law of supply states that supplies _____ as price increase.

positive; increase

The Law of Demand states that as a price of a good increases, certeris paribus, the ______ decreases. This can be shown graphically with a ______ demand curve or numerically in a table using a ______.

quantity demanded ; downward-sloping ; demand schedule (the relationship that exists between these two variables can be described as negatively related)

An aggregated demand curve is created by summing _______________ on the individual demand ________.

quantity demanded at each price ; curves

One reason free-riders exist could be that:

the private benefit exceeds the private cost

All of the following would fall under the study of microeconomics except:

the stock market's response to an interest rate increase (macroeconomics design government policies that improve overall, or "aggregate" economic performance, such as market reactions to changes in interest rates)


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