Econ test 1
the equilibrium price will rise.
When the supply curve shifts to the left and there is no change in demand:
wants are unlimited and resources are scarce, so trade-offs have to be made.
Whether studying the output of the U.S. economy or how many classes a student will take, a unifying concept is that:
excess supply.
If price is above the equilibrium price, then there will be:
macroeconomics
Which branch of economics is most likely to study differences in countries' growth rates?
positive; uncertain
If demand increases and supply decreases, the change in the equilibrium price will be ______, and the change in the equilibrium quantity will be ______.
sellers, dissatisfied with growing inventories, will lower their prices.
In a free market, if the price of a good is above the equilibrium price, then;
people must make trade-offs.
An implication of scarcity is that:
how people make choices in the face of scarcity and the implications of those choices for society as a whole.
Economics is best defined as the study of:
they have to make trade-offs.
Economists recognize that because people have limited resources:
economic surplus; $3,000
Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.
$30
Suppose that Tom bought a bike from Helen for $195. If Helen's reservation price was $185, and Tom's reservation price was $215, the total economic surplus from this transaction was:
an increase in supply of laptops.
Suppose that the technology used to manufacture laptops has improved. The likely result would be:
$75.
Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is:
marginal benefit
The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity.
complements
If the demand for cucumbers falls when the price of tomatoes rises, then we know that tomatoes and cucumbers are:
will have no effect on the market.
A price ceiling that is set above the equilibrium price:
with well-defined goals who tries to fulfill those goals as best as he or she can
A rational person is someone:
$35
Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:
the substitution effect of a price change
As coffee becomes more expensive, Joe starts drinking tea instead of coffee. This is called:
more firms can cover their opportunity cost of producing the good.
As the price of a good rises:
$4.
For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:
the income effect of a price change.
You can spend $10 for lunch and you would like to purchase two cheeseburgers. When you get to the restaurant, you find out the price for cheeseburger has increased from $5 to $6, so you decide to purchase just one cheeseburger. This is best described as:
the wage for teachers in that district is lower than the equilibrium wage.
You have noticed that there is a persistent shortage of teachers in an inner-city school district in your state. Based on this observation, you suspect that:
the seller's opportunity cost of producing an additional unit.
A seller's reservation price is generally equal to:
market for the good.
Buyers and sellers of a particular good make up the:
centralized economy
If a country's economic decisions are made by an individual or small number of individuals, then it has a:
inferior good.
If an increase in income leads to a decrease in the demand for ground beef, then ground beef is a(n):
predict how people will behave.
Positive economic principles are those that:
largest price the buyer would be willing to pay for it.
The buyer's reservation price for a particular good or service is the:
more of a good as its price falls
The demand curve illustrates the fact that consumers tend to purchase:
the next-best alternative that must be foregone.
The opportunity cost of an activity includes the value of:
An increase in the price of a substitute.
What might cause a demand curve to shift to the right?
largest economic surplus.
If individuals are rational, they should choose actions that yield the:
an excess demand for bananas.
The price of bananas will increase in response to:
increase; upward
The quantity that sellers wish to sell tends to ______ as price increases, and so the supply curve is ______ sloping.
change in quantity demanded.
A movement along a demand curve from one price-quantity combination to another is called a:
the benefits of seeing the movie are greater than the costs of seeing the movie.
According to the Cost-Benefit Principle, you should go see the latest Star Wars movie with your friends this week-end if:
the benefits of studying for an additional hour exceed the costs of studying for an additional hour.
According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:
normal good.
If the demand for a good decreases as income decreases, then the good is a(n):
substitutes
If the demand for olives falls when the price of cheese falls, then we know that cheese and olives are:
buyers, hoping to ensure they acquire the good, will bid the price higher.
In a free market, if the price of a good is below the equilibrium price, then;
a black market might develop.
In a market in which the government has set a price ceiling below the equilibrium price:
the choices made by individuals the implications of those choices
Microeconomics differs from macroeconomics in that microeconomics focuses on:
normative principles tell us how people should behave, and positive principles tell us how people will behave.
One thing that distinguishes normative economic principles from positive economic principles is that:
5
Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is:
its benefits exceed its costs.
The Cost-Benefit Principle indicates that an action should be taken if, and only if:
a positive economic principle.
The Cost-Benefit Principle is:
consistent with the cost-benefit model because most people intuitively weigh costs and benefits.
The fact that most people make some decisions based on intuition rather than calculation is:
there is neither excess demand nor excess supply.
When a market is in equilibrium:
at least $1.75 but less than $2.
When a slice of pizza at the student union sold for $2, Moe did not purchase any. When the price fell to $1.75, Moe purchased a slice each day for lunch. Thus, we can infer that Moe's reservation price for a slice of pizza is:
equilibrium quantity will rise.
When the demand curve shifts to the right and supply doesn't change:
It reflects sellers' reservations prices.
Which of the following is NOT true of a demand curve?
Whether the federal budget should be balanced.
Which of the following would not be studied in microeconomics?
