Exam 1 (ch. 1-4)
deciding if a company will produce automobiles by robotics or manual labor answers the economic question of:
"how will the products be produced?"
if the price of monthly satellite TV service increases from $40 to $50, the percentage change is:
25 percent
when Canada buys lemons from Mexico instead of growing lemons in heated greenhouses,
Canadian consumers will gain because lemon prices will drop
a small change in a variable is:
a marginal change
the Latin phrase ceteris paribus means that when a relationship between two variables is being studied:
all other variables are held fixed
in considering the relationships between price and quantity demanded, ceteris paribus directs the economist to assume that
all other variables remain unchanged
an economy in which government bureaucracy decides how much of a good to produce, how to produce the good, and who gets the good is known as a
centrally planned economy
trade results from
comparative advantage
suppose that only one curve shifts. If you observe that the equilibrium price and equilibrium quantity decreased, then the market experienced a
decrease in demand
when supply increases and the supply curve shifts to the right, equilibrium price _____ and equilibrium quantity______
decreases; increases
the decrease in the price of wool would be reflected by a movement _______ on the market supply curve for wool
down and to the left
one role government can play in addressing market failure is to
enforce the rules of exchange
in a market based economy, the government
enforces property rights
the effort used to coordinate the factors of production is a description of:
entrepreneurship
the knowledge and skills acquired by a worker through education and experience is a description of which factor of production?
human capital
if the population increases, the market demand for most products will
increase
after the government deceased cigarette taxes in several Canadian provinces, demand for cigarettes ________ in these provinces, shifting the demand curve to the ________
increased; right
if an economy is represented by a point along its production possibilities curve
it can produce more of one product only if it produces less of another product
if the adverse weather conditions last longer than usual, the impact on the supply curve for cocoa pods, shifting the supply curve to the ________ due to a _______ in cocoa yields
left; decrease
the cost savings from outsourcing often lead to _____ for consumers and ______ for the outsourcing company
lower prices; more output
specialization and trade exploit differences in productivity across workers and
make everyone better off
the marginal principle implies that an individual should produce or consume where
marginal benefit equals marginal cost
the face value of money or income is called it ______ value
nominal
in a market economy, what encourages firms to develop new products and production processes?
patents
when economists assume that people are rational and respond to incentives, they mean:
people act in their own self-interest
one common source of market failure is
pollution
If real salaries increase but nominal salaries do not, this means that:
prices have fallen
the principle that "as one input increases while the other inputs are held fixed, output increases at a decreasing rate" is known as the
principle of diminishing returns
suppose that the bakers of bread face a decrease in the price of flour (an input). In the market for bread, this will cause the _______ and the equilibrium price to ______
supply of bread to increase; decrease
microeconomics is best described as the study of
the choices made by individual households, firms, and governments.
suppose that consumers expect that the price of a product will increase in the future. The result is that
the current demand for the product increases
suppose that a new advertising campaign extolling the virtues of apple juice is successful, and a major freeze destroys half of the country's apple crop. What happens to the price and quantity of apple juice?
the equilibrium price of apple juice rises and the equilibrium quantity of apple juice might rise or fall
if the demand for jelly decreases, and the price of grapes rises
the equilibrium price of jelly might rise or fall, and the equilibrium quantity of jelly falls
macroeconomics is best described as the study of
the nation's economy as a whole
a change in quantity supplied of a product is the result of a change in
the price of the product
when there is a change in the quantity demanded it means that
the quantity a consumer is willing to buy changes when the price changes
when the price of almonds falls
the quantity of almonds demanded increases, ceteris paribus
the price of pineapples has risen dramatically. Which of the following is likely to happen?
the quantity of pineapples supplied will increase
suppose that you lend $1,000 to a friend and he or she pays you back one year later. What is the opportunity cost of lending money
the real interest rate that would have been earned on the money
olives are used to produce olive oil. If the price of olives increases
the supply of olive oil decreases
suppose that in 2011, 3 million plasma TVs were purchased at $950 each, while in 2012 4 million plasma TVs were purchased at $800 each. What might have caused this change?
there was an advance in plasma TV manufacturing technology
suppose that a market for a product is in equilibrium at a price of $5 per unit. At any price above $5 per unit
there will be an excess supply of the product
in the U.S., which of the following government programs assist workers find jobs when they lose their jobs due to trade?
trade adjustment assistance program
the opportunity cost of something is:
what you sacrifice to get it
