Econ midterm 1
According to the rule of 70, if GDP per person is growing at a rate of roughly 4% approximately how many years will it take for average income to double?
18 years
Including intermediate goods in calculations of GDP is?
double counting
Comparative advantage explains why people:
Specialize and trade
Economists use money equivalents to compare costs and benefits because money is:
A common measuring stick
What do price changes act as a line of communication between buyers and sellers, price is functioning as:
A message
Which item is not included in calculations of GDP?
A monthly Social Security payment
Hershey's Kitcat candy bars are cheaper than usual. This could be because there is?
A surplus of kit Kats
Cornell can type reports faster and more accurately than Alice, so Cornell has a blank and typing reports
Absolute advantage
The cost benefit printable will lead you to make an unselfish decision if you
Account for unselfish motivations
Because price is blank, they provide useful business in intelligence:
Aggregate information
The person who can produce a product using the fewest input has blank in that product
An absolute advantage
Purdue supplies processed chicken to grocery stores and restaurants. The price of organic chicken is rising and the price of conventional chicken has fallen slightly. Produce shifts production to supply more organic chicken. For Purdue, the higher price acted as what?
An incentive
Real GDP per capita is:
An incomplete measure of a countries standard of living
Suppose we observe an increase in both the price of ping-pong tables and the quantity of ping-pong tables by and sold. Which statement would explain this observation?
An increase in the demand for ping-pong tables
The rational role summarizes the marginal principle. It says that if something is worth doing, keep doing it until you're marginal:
Benefit equal your marginal cost
Decisions made about quantities are:
Best made using the marginal principle
The principle of comparative advantage applies to interactions:
Between people as well as in business production decisions
The cost benefit principal evaluates blank costs and benefits and willingness to pay consideration to quantify blank cost and benefits
Both monetary and non-monetary; Only nonmonetary
Do you have an absolute advantage in producing a product if you:
Can produce the product using the fewest inputs
When we refer to price as a message this means that price:
Communicate information
Which is true when the price is functioning as a message?
Communicate information to buyers and sellers
Specialization will increase output when it is based on:
Comparative advantage
What is the basis of specialization?
Comparative advantage
When your employees receive work assignments based on who has the lowest opportunity cost in performing each task, the basis for the work assignment is:
Comparative advantage
Laptop computer purchased by a private individual for personal use
Consumer spending
GDP may be calculated as the sum of:
Consumer spending, investment spending, Government purchases of goods and services, and export minus imports
The marginal principle breaks quantity decisions into iterative decisions that use the:
Cost benefit principle
One price functions as a message, it?
Create a line of communication between buyers and sellers
The market value of a good or service refers to the
Current dollar value of that good or
When price functions as an incentive, it:
Encourages buyers and sellers to change the quantity they buy and sell
The circular flow of income shows that total spending is blank total income
Equal to
What happens to the equilibrium price and quantity when demand decreases at the same time supply increases, but the relative size of the shift is not known?
Equilibrium price falls and the change in the equilibrium quantity is ambiguous
Hey surplus occurs when
Equilibrium price is below the current price
The market for yogurt is initially in equilibrium. Yogurt producers successfully advertise to encourage yogurt consumption. At the same time yogurt producers exit the market. Standard demand and supply analysis tells us what?
Equilibrium price of yogurt will rise but we cannot determine how the equilibrium quantity will be affected
The rule of 70 is a simple rule of thumb for?
Evaluating long-term growth rates
The problem of determining what goods and services society should produce:
Exists because there are not enough resources to provide all the goods and services that people want
Domestically produced goods and services sold to people in other countries are known as what?
Exports
GDP is the total dollar value of all:
Final goods and services produced in the economy in a given period
Which equation brakes GDP down into the force sources of aggregate spending?
GDP equals C +I + G plus X minus IM
If we add together consumer spending on goods and services, investment spending, government purchases of goods and services, and the value of exports, then subtract the value of imports, we have measured the nations:
Gross domestic product
In the US economy the circular flow diagram does not illustrate
Growing income inequality
Economic growth per capita economic growth is:
Growth per person
If you need to make a decision and all the information needed to make a good decision is not available, than you:
Have a knowledge problem
Sam used to take a bus across the state a few times a year to visit her cousin but recently she has been spending more to take faster and more comfortable trains. What most likely causes change in her behavior?
Her income rose
When you assign tasks to employees based on comparative advantage, the tasks go to those with the?
Highest opportunity cost
When there is a shortage of highly skilled workers in a particular region:
Highly skilled workers can negotiate higher salaries
In the circular flow diagram a person or group of people who share their income is a:
Household
Hey seller at a farmers market wants $10 for a bag of 10 apples. Do you think his price is too high so you counter with an offer of six dollars for the bag. The seller than offers you a much smaller bag of five apples for six dollars. You bargain again and the seller lets you buy the 10 apples for eight dollars. This scenario is an example of what?
Market in action
Household do not derive income from:
Import
When people focus on their comparative advantage and then trade for other things, they
Improve their standard of living or increase their leisure time
When sellers and buyers adjust the quantity supplied and demanded in response to a price change, price is functioning as a:
Incentive
If steak is a normal grade, when income rises, the equilibrium price will blank in the equilibrium quantity will blank:
Increase and increase
Suppose a technological improvement lowers the cost of producing guava candy. At the same time, preferences for guava candy degrees. Equilibrium quantity of guava candy will
Increase, decrease, or remain the same, depending on the relative magnitude of the ships of the demand and supply curves
An increase in demand an increase in supply will lead to a blank in the equilibrium quantity and a blank in the equilibrium price
Increase; indeterminate change
A decrease in demand and an increase in supply will lead to a In the equilibrium quantity and a. And the equilibrium price
Indeterminate change; decrease
After Sean received a promotion and a raise she used public transportation less and ride sharing services more. Prasanna public transportation is a blank good and ridesharing is blank good
Inferior and a normal
The topic studied in macroeconomics include?
Inflation
Asking what else allows the blank principle to be boil down to a simple question:
Interdependence
Trade can be beneficial to trading partners because:
It enables more goods and services to be obtained at a lower opportunity cost.
How is the economic surplus generated by a decision calculated?
It is the total benefit minus total costs arising from the decision
Asking one more allows the blank principal to be analyzed as a simple question
Marginal
What institution allows people to trade with others who have different comparative advantages without meeting them are communicating directly with them?
Markets
Although he mostly prefer to make a home cooked meals, you order take out a couple of times a week. However during the week prior to midterm and final exams, you order Uber eats every day. Why
Markets allow you to trade tasks and spend less time doing things with high opportunity costs
When price functions as a communication line between buyers and sellers around the world, it is functioning as a?
Message
Decisions should reflect what costs rather than just the blank cost?
Opportunity and financial
Equilibrium is the:
Point at which there is no tendency for change
Market series playoffs are linked the weather and uncertain event occurs are called what market?
Prediction
Prices in wheat futures markets provide:
Predictions of future price of wheat
In markets prices provide all of these except:
Productivity
Graphically, the equilibrium quantity is the?
Quantity corresponding to the intersection of the demand and supply curves
And equilibrium price is a price where the:
Quantity supplied equals the quantity demanded
Sunk costs are cost that are incurred:
Regardless of which decision is made
Hey Central and fundamental theme in economics is that?
Resources are limited in cannot satisfy all the ways of society wants to use them
Markets allocate what?
Resources goods and services
Suppose the market for gasoline is an equilibrium. You have heard that the price of oil is rising because of restrictions. You are also aware that the number of drivers is rising. Knowing this, you predict that the price of gasoline will. , and the quantity of gasoline bought and sold will. ?
Rise; rise or fall
Sam can mow the lawn in two hours. Bill takes three hours to mow the same line. What can you conclude from this information?
Sam has an absolute advantage over bill and mowing the lawn
Opportunity cost arises from the fundamental economic problem of what?
Scarcity
Internal markets which are markets that manager set up with organization are:
Set up to allocate resources of a company more efficiently, often not using real money
Stock in a company is:
Share of ownership in the company
Which would most likely be a micro economic question?
Should I go to business school or take a job
When ever a good is purchased:
The cost of the good is it opportunity cost
Which item would not be included in GDP
The dollar value of a repair job done by your cousin on her own car
What happens to the equilibrium price and quantity when demand decreases and simultaneously supply increases, and the demand shift is smaller than the supply shift?
The equilibrium price falls in the equilibrium quantity rises
What happens to the equilibrium price and quantity when demand increases and simultaneously supply decreases and the relative size of this shit is not known?
The equilibrium price rises and the change in the equilibrium quantity is ambiguous
What happens to the equilibrium price and equilibrium quantity when demand and supply decrease simultaneously, but the relative size of the shifts are not known?
The equilibrium quality falls and the change in equilibrium price is ambiguous
What happens to the equilibrium price and equilibrium quantity when demand and supply increase simultaneously but the relative size of the shits are not known
The equilibrium quantity rises in the change in the equilibrium price is ambiguous
A knowledge problem exists when?
The information needed to make a good decision is not available to a decision maker
You are conducting pricing research for Apple regarding the iPad. Which statement about the roles of Prices is false?
The price provides information about specific exchanges only rather than an aggregate summary
For you, Thai food in Indian food are normal kids. Which of it would not shift or individual demand curve for Thai food to the right?
The prices Indian restaurant charge for
We expect that price will fall when?
The quantity supplied is greater than the quantity demanded
When faced with a quantity decision, the economic surplus is always maximized by following what?
The rational rule
We had to make choices because:
The resources available to us are limited
What best describes GDP?
The total market value of all final goods and services produced in the economy during a given year
Sam decides to upgrade to a new electric assistive bicycle that is better suited to his commute to work. He sells his old mountain bike to Bill, who pays Sam $100 for it. When they complete the transaction:
They are both better off
If resources are scarce:
They are insufficient to provide enough goods and services to satisfy all human material wants and needs
You are considering a beach trip for spring break. Which event would shift your individual demand curve for a room near the beach to the right?
To reward you for a successful semester, your family gives you money for spring break
Transfer payments or payments that:
Transfer income from one person to another
The topics studied in macroeconomics include
Unemployment, economic growth, and inflation
The marginal principal helps individuals decide?
Weather to do a bit more of an activity or a bit less of it
According to the inter-dependents principal, when faced with a decision you should ask what?
What Else my my decision affect and what else might affect my decision
Ralph is offered a free ticket to the Yankees game, a ticket he cannot resell. His opportunity cost of going to the baseball game is what?
Whatever Ralph would've done had he not gone to the game
Am I spent 40,000 for one years a tenant at University. The opportunity cost of one year at university for Emma is?
Whatever she would've purchased with the $40,000 plus whatever she would have earned had she not attended university
Economists convert costs and benefits into money equivalent by evaluating an individuals:
Willingness to pay
Blank is assessed by asking what is the blank I am willing to pay to get this benefit or avoid that cost?
Willingness to pay and most
When do you participate in market transactions:
You and you're trading partner both give something of value to the other
You can spend $300 on either a pair of new Air Jordan sneakers or a new skateboard. If you choose to buy the air Jordans, the opportunity cost is?
Your enjoyment of the new skateboard