Economics- Arias
decreases; decreases
A decrease in demand _____ the equilibrium price and _____ the equilibrium quantity.
demand curve
A function that shows the quantity demanded at different prices.
8.94 percent
If GDP for a certain economy is $1,510 billion at the end of year 4 and $1,645 billion at the end of year 5, the economy's growth rate between the two years is:
produce less of the other
If a country is producing on its stable PPF, to produce more of one good, it must:
the market value of all final goods and services produced within a country in a year.
gross domestic product (GDP)
To determine how rapidly a country's production is rising or falling over time, we would have to calculate:
the growth rate of GDP.
Quantity supplied would decrease.
If the demand for oil decreased:
Their wages will fall
In the real world, what will happen to workers' wages in the sector with decreased demand as a result of trade?
trade leading to specialization which increases productivity.
Most of us can earn in one day of nonfarm work enough money to purchase more food than we could possibly grow ourselves in a year. This is the result of:
a research organization based in Cambridge, Massachusetts, is considered the most authoritative source on identifying U.S. recessions.
National Bureau of Economic Research (NBER)
such as nominal GDP, have not been adjusted for changes in prices.
Normal GDP
market
Producer surplus is the difference between the _____ price and the minimum price at which a producer would be willing to sell a particular quantity.
supply curve
A function that shows the quantity supplied at different prices.
it uses fewer resources than other producers
A producer has an absolute advantage in the production of a good if
shortage
A situation in which the quantity demanded is greater than the quantity supplied.
surplus
A situation in which the quantity supplied is greater than the quantity demanded.
total consumer surplus
Adding up consumer surplus for each consumer and for each unit, we can find?
a shift of the entire demand curve (up and to the right)
An increase in demand is ?
output produced within the United States by permanent U.S. residents.
Both U.S. GDP and U.S. GNP include:
reduce supply and raise prices.
By the early 1970s, nationalizations in the OPEC countries made it possible for OPEC countries to act together to:
increases by $250 billion.
Ceteris paribus, if government spending increases by $50 billion and consumption increases by $200 billion, then GDP:
Increase the division of knowledge
Every increase in world trade is an opportunity to
is GDP divided by a country's population.
GDP (gross domestic product) per capita
is the market value of all final goods and services produced within a country in a year.
Gross Domestic Product
measures what is produced by the labor and property supplied by U.S. permanent residents wherever in the world that labor or capital is located, rather than what is produced within the U.S.
Gross national product (GNP)
the price that they agreed on for the guitar must fall somewhere between how much Oliver values the guitar and how much Tobey values the guitar
If Oliver sells a guitar to Tobey and both men feel that they benefited from the transaction:
This is a surplus, because the quantity supplied is greater than the quantity demanded.
Imagine that a major car company is producing large, fuel-inefficient SUVs during a period of rising gas prices. As a result, dealerships are overstocked with inventory that is not selling. How can we BEST describe this phenomenon?
$1,200
In May 2012 a used car dealership bought a classic car for $2,000. The dealership cleaned it up, repaired it, and eventually sold it to you in August 2012 for $3,200. You are a permanent U.S. resident, and the dealership is located in the United States and owned by a permanent U.S. resident.
is exports minus imports
Net exports
have not been adjusted for inflation.
Nominal variables:
occurs when valuable goods and services are produced but no explicit monetary payment is made.
Nonpriced production
eight
Suppose that in Mexico it takes four labor hours to produce one shirt and 10 labor hours to produce one computer. Suppose that in the United States it takes three labor hours to produce one shirt and x labor hours to produce one computer. Which of the following values of x will give the United States the comparative advantage in the production of shirts?
7.5 shirts and 7.5 computers → It would take Mexico 120 labor hours to produce this much output.
Suppose that in Mexico it takes four labor hours to produce one shirt and 12 labor hours to produce one computer. Suppose that in the United States it takes four labor hours to produce one shirt and three labor hours to produce one computer. If both countries have 60 labor hours available, completely specialize according to comparative advantage, and trade 7.5 shirts for 7.5 computers, which of the following gives Mexico's total consumption after trade?
3.00 → This means the opportunity cost of one shirt is 1 ÷ 3 = 0.33 computers.
Suppose that in Mexico it takes three labor hours to produce one shirt and nine labor hours to produce one computer. Suppose that in the United States it takes two labor hours to produce one shirt and five labor hours to produce one computer. In terms of shirts, what is the opportunity cost of a computer produced in Mexico?
$27. At $27, quantity demanded will be equal to quantity supplied.
Suppose that when good L is free, buyers will demand 1,000 units of it, but the quantity demanded falls by 40 units for every $3 increase in the price. If the quantity supplied is fixed at 640 units, the equilibrium price will be:
substitutes
Two goods for which a decrease in the price of one leads to a decrease in demand for the othe
Market price would rise.
What would happen if the supply of oil decreased?
there are gains from trade
When a good is transferred from a person who does not value it very much to someone who values it a lot:
Inferior Good
When an increase in income decreases the demand for a good, we say the good is a
Normal Good
When an increase in income increases the demand for a good, we say the good is a
A(n) _____ good is one that is sold to a firm and then bundled or processed with other goods for sale at a later stage.
intermediate
Some goods and services that are sold to firms and then bundled or processed with other goods or services for sale at a later stage.
intermediate goods and services.
private spending on tools, plant, and equipment used to produce future output; i.e., the purchase of new capital goods
investment spending
Consumer surplus
is the consumer's gain from exchange.
To compare levels of production from different years, the appropriate measure to use is:
real GNP
variables such as real GDP, that have been adjusted for changes in prices by using the same set of prices in all time periods
real variables
Complements
are things that go well together: French fries and ketchup, sugar and tea, iPhones and iPhone apps.
the short-run movements in real GDP around its long-term trend
business fluctuations or business cycles
The supply of goods is bought by the buyers with the highest willingness to pay. The supply of goods is sold by the sellers with the lowest costs. Between buyers and sellers, there are no unexploited gains from trade and no wasteful trades.
free market maximizes the gains from trade by?
spending by all levels of government on final goods and services not including transfers
government purchases
spending by all levels of government on final goods and services not including transfers.
government purchases
a price index that can be used to measure inflation.
The GDP Deflator
supply curve
The _____ shows the quantity supplied at various prices.
a movement along a fixed demand curve
an increase in the quantity demanded is a?
Each person in society J knows the same number of facts as each person in society K, but K has more knowledge in aggregate.
Suppose the 100 people in society J all know the same 10 facts, but the 100 people in society K specialize, so that there are two facts that they all know, but each person also knows eight unique facts. Which of the following is TRUE?
There are 10 facts known in society C and 100 people, which results in an average of 0.1 facts per person. In society D, there are five common facts and 50 specialized facts. That is 55 total facts, which results in an average of 5.5 per person.
Suppose the 100 people in society C all know the same 10 facts, but the 10 people in society D specialize, so that there are five facts that they all know, but each person also knows five unique facts. If the standard of living is roughly equivalent to the total number of societal facts known per person, how many times better is the standard of living in society D?
There are 792 more facts known in society K than in society J.
Suppose the 100 people in society J all know the same 10 facts, but the 100 people in society K specialize, so that there are two facts that they all know, but each person also knows eight unique facts. Which of the following is TRUE?
There are 802 total facts known in society K. → And there are only 10 facts known in society J.
Suppose the 100 people in society J all know the same 10 facts, but the 100 people in society K specialize, so that there are two facts that they all know, but each person also knows eight unique facts. Which of the following is TRUE?
total consumer surplus
The consumer's gain from exchange, or the difference between the maximum price a consumer is willing to pay for a certain quantity and the market price.
up because of an increase in demand.
The industrial revolution under way in China and India has induced millions of people to buy automobiles for the first time. This will drive oil prices:
both U.S. GDP and U.S. GNP.
The market value of the output produced in the United States by a permanent U.S. resident is included in:
A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale—retail sales.
The official NBER definition of a recession is as follows:
equilibrium price
The price at which the quantity demanded is equal to the quantity supplied.
Producer surplus
The producer's gain from exchange, or the difference between the market price and the minimum price at which a producer would be willing to sell a particular quantity.
total producer surplus
The producer's gain from exchange, or the difference between the market price and the minimum price at which a producer would be willing to sell a particular quantity.
equilibrium quantity
The quantity at which the quantity demanded is equal to the quantity supplied.
quantity demanded
The quantity that buyers are willing and able to buy at a particular price
quantity supplied
The quantity that sellers are willing and able to sell at a particular price.
the sellers with the lowest costs.
When the free market maximizes the total gains from trade, the supply of goods is sold by:
The market quickly converged to equilibrium.
Which happened in Vernon Smith's test of the market model?