Exam 1 MICRO ECONOMICS, 1234

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The marginal benefit of a good or service is the _____.

benefit received from consuming one more unit of it

People make rational choices by comparing

benefits and costs

Suppose a country produces only pencils and erasers. Pencil production is efficient if the marginal _______ a pencil equals the marginal _______.

benefit from; cost of a pencil

A junk-food tax would generate a public outcry because it is unfair by ______ of fairness. How much tax revenue would be collected is determined by ______.

both the results view and the rules view; the elasticity of demand for junk food and the elasticity of supply of junk food

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______.

both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs

The production possibilities frontiers is the

boundary between those combinations of goods and services that can be produced and those that cannot

In economics, the term "capital" refers to a. the money in one's pocket. b. buildings and equipment. c. mineral resources. d. consumer goods.

buildings and equipment.

Tax incidence is the division of the burden of tax between _____.

buyers and sellers

Byron, an engineering student, buys four cups of coffee a day, which costs him $8.00. He decides to buy one more cup each day and his expenditure on coffee increases to $10.00. The marginal cost to Byron of a cup of coffee is ________. a. $8 b. greater than $8 and less than $10 c. $2 d. $10

c. $2

Which of the following statements illustrates a rent ceiling? a. A housing shortage due to floods last summer has resulted in a rise in apartment rents in Denver. b. The interest on mortgage loans has gone up to 4.87 percent in 2013. c. Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market. d. In Los Angeles, tenants have to pay a rent as high as $2,200 per month, so people prefer buying houses.

c. Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market.

The figure shows the production possibilities frontier for a firm that produces pet food. Complete the following sentences. Point A (on the PPF) is ________ and point B (way beyond the PPF) is _________. a. attainable; unattainable b. unattainable; unattainable c. attainable; attainable d. unattainable; attainable This PPF ________ illustrate scarcity because _________________. a. does not; there is sufficient dog food and cat food produced to feed everyone's pet b. does not; the firm can produce any quantity it wants if it is willing to pay a high enough price c. does; because the firm can attain the points outside the frontier but not inside the frontier d. does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food

c. attainable; unattainable d. does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food

A market is an arrangement that brings _____ together and enables them to get information and do business with each other. a. sellers and entrepreneurs b. central banks and commercial banks c. buyers and sellers d. governments and producers

c. buyers and sellers

When the price of tomatoes rises from $3 per kilogram to $4 per kilogram, the quantity of tomatoes sold decreases from 15 kilograms to 10 kilograms Total revenue and using the total revenue test, we can determine that the demand for tomatoes is

c. decreases from $45 to S40, elastic

When an effective production quota is applied in the market for rice, the quantity produced ______ and the price ______. a. increases; falls b. increases; rises c. decreases; rises d. decreases; falls When an effective production quota is applied in the market for rice, the marginal social benefit _______ marginal social cost. a. is less than b. equals c. exceeds

c. decreases; rises c. exceeds

Shiela currently produces at point A in the figure (24 printers and 1 modem). Complete the following sentence. If Shiela moves from point A to point C (15 printers and 3 modems), her opportunity cost of a modem ___________. a. decreases b. remains the same c. increases d. is zero

c. increases

An economic model is a description of some features of the economic world that includes _____ features assumed necessary to explain the _____facts. a. all the; observed b. all the; unobserved c. only those; observed d. only those; unobserved

c. only those; observed

The marginal cost of a good or service is the _____. a. total cost of consuming it b. opportunity cost of consuming one more unit of it c. opportunity cost of producing one more unit of it d. total cost of producing it

c. opportunity cost of producing one more unit of it

Draw a demand curve for lattes and label the curve. Use any prices and quantities you wish, but make your demand curve obey the law of demand. The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded. a. other things remaining the same; lower b. even when other factors change; lower c. other things remaining the same; higher d. even when other factors change; higher

c. other things remaining the same; higher (See question 5 Ch 3)

The graph shows the market for pizza. If the price of a pizza is $12, is there a shortage or a surplus and does the price rise or fall? Buyers want to pay the lowest possible price, so why would they be willing to pay more than $12 for a pizza? (equilibrium at $14) If the price of a pizza is $12, a ______ exists and the price ______. a. surplus; falls b. shortage; falls c. shortage; rises d. surplus; rises Buyers want to pay the lowest possible price, so they are willing to pay more than $12 for a pizza because ______. a. at $12 a pizza they cannot find enough pizzas to buy b. they know the price will eventually fall

c. shortage; rises a. at $12 a pizza they cannot find enough pizzas to buy

Define the elasticity of supply and show how it is calculated. Elasticity of supply measures the responsiveness of the quantity supplied to a change in ______, when all other influences on selling plans remain the same. a. the price of a complement b. the consumer's income c. the price of a good d. the price of a substitute The elasticity of supply is calculated by dividing ______ by ______. a. the change in the quantity supplied; the change in the price b. the change in the price; the change in the quantity supplied c. the percentage change in the quantity supplied; the percentage change in the price d. the percentage change in the price; the percentage change in the quantity supplied

c. the price of a good c. the percentage change in the quantity supplied; the percentage change in the price

The what, how, and for whom questions in economics are questions about ______. a. what are the factors of production, how do we pay the factors of production, and who supplies the factors of production b. what goods and services do we produce in the united states and what goods and services do we buy from other countries, how do we ship goods and services into the united states from abroad, and who benefits from shipping goods into the united states c. what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced d. what incomes do we pay the people who produce the goods and services we consume, how to firms generate enough income to pay their employees, and who wants the goods and services that are produced

c. what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

The graph shows the market for game consoles. Draw a point at the market equilibrium. Label it 1. Draw a demand curve that shows what happens if the price of a video game falls. Label the curve D,. Draw a supply curve that shows the effect of a technological advance that cuts the cost of producing game consoles. Label it S, Draw a point at the new market equilibrium. Label it 2. If demand and supply change in the same direction, we —the direction of change of the equilibrium quantity and we ——the direction of change of the equilibrium price.

can predict, cannot predict

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.

cannot;less

Interest is the income paid for the use of _____.

capital

Economic growth comes from _______.

capital accumulation and technological advance

The total revenue test is a method of estimating the price elasticity of demand by observing the ______ that results from ______, when all other influences on the quantity sold remain the same.

change in total revenue; a change in the price

Along a curve showing a linear relationship, for each increase in x of one unit, y

changes by the same amount

Firms

choose the quantities of factors of production to hire

Households

choose the quantity of labor, land, capital, and entrepreneurship to sell or rent

If the cross elasticity of demand for golf clubs with respect to the price of a golf lesson is negative, then golf clubs and golf lessons are ______.

complements

If the cross elasticity of demand for hotdogs with respect to the price of a bottle of ketchup is negative, hot dogs and ketchup are ______.

complements

If the cross elasticity of demand for ski trips with respect to the price of a ski jacket is negative, then ski trips and ski jackets are ______.

complements

Pizza and sausage are ______. Wheat and corn are ______.

complements; substitutes

Capital

consists of tools, instruments, machines, buildings, and other items that have been produced in the past and that businesses now use to produce goods and services. Capital includes semifinished goods, office buildings, and computers. Capital does not include money, stocks, and bonds. They are financial resources.

Why do people specialize and trade? With specialization and trade, people can _______

consume at a point outside their PPF

A substitute is a good that is _____ another good, and a complement is a good that is _____ another good.

consumed in place of; consumed together with

Law of Demand

consumers buy more of a good when its price decreases and less when its price increases

Explain the various ways in which a price ceiling on fertilizer that is set below the equilibrium price would make buyers and sellers of fertilizer better off or worse off. What would happen to total surplus and deadweight loss in this market? When a price ceiling on fertilizer is set below the market equilibrium price, _______.

consumers who find fertilizer at the lower price are better off and consumers who cannot find any fertilizer due to the shortage created by the price ceiling are worse off. All producers are worse off because they sell less fertilizer at a lower price than prior to the price ceiling

Total surplus is the sum of _____ and _____.

consumer surplus; producer surplus

Which of the following statements is an example of elasticity of supply? a. The quality of fruits sold by Safeway is getting better. b. Farmers increase their supply of potatoes when the price of onions rises. c. A 20 percent discount at all Old Navy stores is drawing large crowds. d. A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

d. a 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent

A substitute is a good that is _____ another good, and a complement is a good that is _____ another good. a. produced in place of; sold with b. consumed together with; consumed in place of c. consumed in place of; produced with d. consumed in place of; consumed together with

d. consumed in place of; consumed together with

The benefit of something is the _____. Benefit is determined by preferences - by what a person _____ and the intensity of those feelings. a. sum of the gain and loss that arises from the activity; prefers to gain or lose b. cost of the activity; likes and dislikes c. highest valued alternative that must be given up to get it; wants to give up d. gain or pleasure it brings; likes and dislikes

d. gain or pleasure it brings; likes and dislikes

U.S. imports are _____ produced in _____ and sold in _____. a. goods and services; the United States; any other country b. goods but not services; the United States; any other country c. goods but not services; any other country; the United States d. goods and services; any other country; the United States

d. goods and services; any other country; the United States

When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. Explain how a rise in the price of sawdust influences the supply of logs. A rise in the price of sawdust _________. a. increases the quantity of logs supplied b. decreases the quantity of logs supplied c. decreases the supply of logs d. increases the supply of logs Explain how a rise in the price of sawdust influences the supply of plywood A rise in the price of sawdust _______. a. increases the supply of plywood b. decreases the supply of plywood c. decreases the quantity of plywood supplied d. increases the quantity of plywood supplied

d. increases the supply of logs b. decreases the supply of plywood

Aid May Grow for Laid-Off Workers Expansion of the Trade Adjustment Assistance (TAA) program would improve the social safety net for the 21st century, as advances permit more industries to take advantage of cheap foreign laborlong dasheven for skilled, white-collar work. By providing special compensation to more of globalization's losers and retraining them for stable jobs at home, an expanded program could begin to ease the resentment and insecurity arising from the new economy. Source: The Washington Post, July 23, 2007 Why does the United States engage in international trade if it causes U.S. workers to lose their jobs? Explain how an expansion of the TAA program will make it easier for the United States to move toward freer international trade. The United States engages in international trade because _____. a. it is a means of helping developing countries b. it is pressured to do so by the other advanced countries in the world c. all US firms gain even though US workers lose d. the number of winners exceeds the number of losers, and more jobs are created than are lost The Trade Adjustment Assistance program _____. a. encourages U.S. firms to produce goods in which the United States does not have a comparative advantage b. discourages firms to take advantage of cheap foreign labor c. increases the need for protection d. encourages workers to retrain for jobs in industries in which the United States has a comparative advantage

d. the number of winners exceeds the number of losers, and more jobs are created than are lost d. encourages workers to retrain for jobs in industries in which the United States has a comparative advantage

Demand is _____, when all other influences on buying plans remain the same. a. the quantity of a good that people plan to buy b. the is the quantity of a good that people want but can't afford c. the relationship between the quantity demanded of a good and income d. the relationship between the quantity demanded of a good and the price of the good

d. the relationship between the quantity demanded of a good and the price of the good

Making a choice at the margin means ________.

deciding to do a little bit more or a little bit less of an activity Your answer is correct.D.

Golf clubs and golf lessons are complements. If the price of a golf club increases, the demand for golf lessons will _______.

decrease, and the demand curve for golf lessons will shift leftward

In increase in the price of rubber matting, a complement in the production of paint, will _____ the equilibrium price of paint and _____ the equilibrium quantity of paint

decrease; increase

decreases from 45 to 40; elastic

When the price of tomatoes rises from $3 per kilogram to $4 per kilogram, the quantity of tomatoes sold decreases from 15 kilograms to 10 kilograms. Total revenue _____, and using the total revenue test, we can determine that the demand for tomatoes is _____ .

decreases from $45 to $40; elastic

An increase in the price of a gym membership

decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership

An increase in the price of a gym membership _______.

decreases the quantity of gym memberships demanded and results in a movement up along the demand curve for a gym membership

Suppose that the cost of producing aspirin increases and simultaneously, doctors find that one aspirin per day reduces the risk of heart attacks. The supply of aspirin .......... and the demand for aspirin .......... so that the equilibrium price of aspirin .......... . a. increases; increases; rises b. decreases; increases; rises c. increases; decreases; might rise, fall, or stay the same d. decreases; increases; might rise, fall, or stay the same

decreases; increases; rises

Market failure is a situation in which the market

delivers an inefficient outcome

Market failure is a situation in which the market _____ .

delivers an inefficient outcome

Suppose the two goods, A and B, are complements and normal goods. If income increases or the price of good A falls, the a. demand curve for B shifts leftward. b. demand curve for B shifts rightward. c. supply curve for B shifts leftward. d. supply curve for B shifts rightward.

demand curve for B shifts rightward.

inelastic demand

demand in which changes in price have little or no effect on the amount demanded The price elasticity of demand is less than 1

Marginal benefit ______.

describes preferences

This process of economic growth _______.

does not eliminate scarcity because we still must give up production of one good to increase production of a second good and remain on the new production possibilities frontier

Capital accumulation and technological change bring economic growth: Production that was unattainable yesterday becomes attainable today; production that is unattainable today will become attainable tomorrow. This process of economic growth _______.

does not eliminate scarcity because we still must give up production of one good to increase production of a second good and remain on the production possibilities frontier

If shoes rise in price, the demand curve for shoes .......... and the quantity of shoes demanded .......... . a. shifts leftward; decreases b. shifts leftward; does not change c. does not shift; decreases d. does not shift; does not change

does not shift; decreases

If shoes rise in price, the demand curve for shoes ______, and the quantity of shoes demanded_______.

does not shift;decreases

If a price cut _______ total revenue, demand is ______.

does not change; unit elastic

Economic growth ______ overcome scarcity because ______.

does not; we can produce more goods and services but it is still impossible to satisfy all our wants

allocative efficiency

economic efficiency in which economy/producers produce only those types of goods and services that are more desirable in the society and also in high demand.

To describe preferences

economists use the concept of marginal benefit

The big tradeoff is the tradeoff between

efficiency and fairness

How does the price elasticity of demand influence total revenue when a price cut occurs? If a price cut increases total revenue, demand is________. If a price cut decreases total revenue, demand is______.

elastic; inelastic

If a price cut increases total revenue, demand is ______. If a price cut decreases total revenue, demand is ______.

elastic; inelastic

"Bang per buck"

equalize that marginal utility per dollar across goods

What is producer surplus? How is it measured?

excess of the amount received from the sale of a good over the cost of producing it

producer surplus is the

excess of the amount received from the sale of a good over the cost of producing it

An economy that uses new technology

experiences an outward shift of its PPF

Real flows are the flow of

factors of production from households to firms and the flow of goods and services from firms to households

When a surplus arises, the price ______ to its equilibrium, which _______.

falls; increases the quantity demanded and decreases the quantity supplied

"Oscar stars swag-bags may be taxable" involves a _____ question? "Microsoft announces new operating system" involves a _____ question?

for whom; what

Draw a demand curve for hotdogs. Label it D1. Draw a second demand curve for hotdogs that shows the effect of a rise in the price of a bottle of ketchup if the cross elasticity of demand for hotdogs with respect to the price of a bottle of ketchup is negative. Label it D2. If the cross elasticity of demand for hotdogs with respect to the price of a bottle of ketchup is negative, hot dogs and ketchup are ______. a. substitutes b. normal goods c. complements d. inferior goods

from top left to bottom right, quantity, shifts one left (less quantity) and one up (hot dog price increase) c. complements

4. Land is the _____ that we use to produce goods and services.

gifts of nature or natural resources

Consumption goods and services

goods and services that are brought by individuals and used to provide personal enjoyment and contribute to a person's standard of living. Examples: movies and laundromat services

Substitutes in production are

goods that a firm can produce by using the same resources.

Capital goods

goods that are brought by businesses to increase their productive resources. Examples: cranes and trucks

PPF

graph that compares the production rates of two commodities that use the same fixed total of the factors of production.

Draw a supply curve for sweaters and label it. Use any prices and quantities you wish but make your supply curve obey the law of supply. The law of supply states that other things remaining the same, the higher the price of a good, the _______; and the lower the price of a good, the _______.

greater is the quantity supplied; smaller is the quantity suppled

Human capital

grows as people gain work experience

Capital accumulation is the _____, including _____ capital.

growth of capital resources; human

What are the effects of a minimum wage set below the equilibrium wage? A minimum wage set below the equilibrium wage _______.

has no effect on the equilibrium wage rate or the quantity of labour employed

Will and Ruth grow turnips and potatoes. If will also has an absolute advantage in growing turnips and potatoes, he will

have a comparative advantage one activity but not both

Which of the following statements by Tom demonstrates that his buying plans obey the law of demand

he only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many

A demand curve shows the relation between the _____ and _____ when all other influences on buying plans remain the same.

he quantity demanded a good and its price

The law of demand states that other things remaining the same, the _______ the price of a good, the _______.

higher; smaller is the quantity demanded

What is the relationship between individual supply and market supply? The market supply curve is the ______ sum of the individual supply curves. It is formed by adding ______.

horizontal; the quantities supplied by all the producers at each price

"Today, most stores use computers to keep their inventory records" involves a ____ question?

how

The quantity of labor depends on

human capital

The market for frozen burritos is a competitive market _______.

if many people buy and many firms sell frozen burritos, so no single buyer or seller can influence the price

price as regulates

if the price high QS exceed QD if the price low QD exceed QS

Which of the following is an example of a black market transaction? Annie rents an apartment _____.

in a rent-controlled city by paying $1,000 for an extra set of keys

Land

includes all the "gift of nature" that we use to produce goods and services. Land includes all the things we call natural resources. Land includes minerals, water, air, wild plants, animals, birds, and fish as well as farmland and forests.

Profit (or loss) is the _____ earned by an entrepreneur for running a business

income

Profit

income earned by an entrepreneur for running a business

Wages

income paid for the services of labor

Interest

income paid for the use of capital

Rent

income paid for the use of land

As a country experiences economic growth, investment in capital and advances in technology _________.

increase industrial production but decrease industrial jobs. Jobs are created in the service industry but many workers lack the necessary skills or are unwilling to relocate

An increase in the price of lawn fertilizer, a substitute in production of bug spray, will ______ the equilibrium price of bug spray and ______ the equilibrium quantity of bug spray.

increase; decrease

Online movie rental service Netflix has introduced a new feature to allow customers to watch movies and television series on their personal computers. Netflix competes with video rental retailer Blockbuster, which added an online rental service to the in-store rental service. The offering of online movie viewing ______ the price elasticity of demand for in-store movie rentals. The cross elasticity of demand for online movies and in-store movie rentals is ______. The cross elasticity of demand for online movies with respect to high-speed internet service is ______

increases positive; negative

An increase in the number of fast-food restaurants a. increases the quantity demanded of fast-food meals. b. increases the demand for fast-food meals. c. increases the quantity supplied of fast-food meals. d. increases the supply of fast-food meals.

increases the supply of fast-food meals.

Starting from a point of consumer equilibrium, a rise in income

increases total utility

Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced? The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a jacket ______.

increases. Resources are not equally productive in all activities Your answer is correct.B.

If the two goods, A and B, are substitutes and the supply of good A falls, the price of good A .......... and the demand for product B .......... . a. does not change/decreases b. increases/increases c. increases/decreases d. increases/does not change

increases/increases

Before starring in Guardians of the Galaxy, Chris Pratt had appeared in 11 movies that grossed an average of $7 million on the opening weekend. Guardians of the Galaxy grossed $94 million. The success of Guardians of the Galaxy ______ the opportunity cost of hiring Chris Pratt. Movie producers now have ______ incentive to hire Chris Pratt.

increases; more

A riserise in the price of a cellphone ______ the quantity supplied and ______ supply.

increases; does not change

The fewer the substitutes for a good or service, the more ______ is the demand for it

inelastic

With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per passenger mile and the number of passenger miles decreases from 2.5 million a day to 1.5 million a day. Over the price range of $0.50 to $1.50 per passenger mile, the price elasticity of demand is . 5. Over this price range, the demand for air travel is ______.

inelastic

The shorter the time that has elapsed since a price change, the more _______.

inelastic is demand

What makes the demand for some goods elastic and the demand for other goods inelastic? The fewer the substitutes for a good or service, the more ——-is the demand for it. The smaller the proportion of income spent on a good, the more ———is the demand for it. The shorter the time that has elapsed since a price change, the more—-

inelastic, inelastic inelastic is demand

The demand for a necessity is income ______, and the demand for a luxury is income ______. The level of income a _______ big effect on income elasticities of demand because _______.

inelastic; elastic has; what is a necessity and what is a luxury depends on the level of income

inelastic; inelastic inelastic is demand

When David's income increases by 6 percent, his demand for tickets to professional baseball games increases by 3 percent. David's demand for tickets is income ______. For David, baseball tickets are ______ good.

inelastic; normal

The long-run supply of wheat has an elasticity of supply equal to _______.

infinity

Perfectly elastic

infinity, horizontal

externality

is a cost or a benefit that affects someone other than the seller or the buyer. An external cost arises when an electric utility burns coal and emits carbon dioxide.

A public good

is a good or service from which everyone benefits and no one can be excluded. National defence is an example. A competitive market would underproduce national defence because everyone would try to free ride on everyone else.

income elasticity of demand

is a measure of the responsiveness of the demand for a good or service to a change in income, other things remaining the same. It tells us by how much a demand curve shifts at a given price. Percentage change in quantity demanded --------- Percentage change in income

Cross elasticity of demand

is a measure of the responsiveness of the demand for a good to a change in the price of a substitute or complement, other things remaining the same. Percentage change in quantity demanded ----------- Percentage change in price of a substitute or complement.

price elasticity of demand

is a units-free measure of the responsiveness of the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same. Percentage change in quantity demanded --------------- Percentage change in price.

The opportunity cost of economic growth _______.

is fewer consumption goods today

A rent ceiling set above the equilibrium rent _______.

is ineffective

common resource

is owned by no one but is available to be used by everyone. Atlantic salmon is an example. It is in everyone's self-interest to ignore the costs they impose on others when they decide how much of a common resource to use: It is overused.

supply

is resources and technology to produce something ,, resources and tchnlogy are the constraints that limit what is possible

quantityy demanded

is the amount that consumers plan to buy during a period of time at a particular price

The marginal benefit from a good or service

is the benefit received from consuming one more unit of it

Producer surplus

is the excess of the amount received from the sale of a good or service over the cost of producing it. We calculate producer surplus as the price received minus the marginal cost (or minimum supply-price), summed over the quantity sold.

Consumer surplus

is the excess of the benefit received from a good over the amount paid for it. We can calculate consumer surplus as the marginal benefit (or value) of a good minus its price, summed over the quantity bought.

Entrepreneurship

is the human resource that organizes labor, land, and capital. Entrepreneurs come up with new ideas about what and how to produce, make business decisions, and bear the risks that arise from these decisions.

Human capital

is the knowledge and skill that people obtain from education, on-the-job training, and work experience.

6. Human capital _____ that people obtain from education, on-the-job training, and work experience. _____ that have been produced in the past and that businesses now use to produce goods and services is capital.

is the knowledge and skill; Tools, instruments, machines, buildings, and other items

money price

is the number od dollars that must be givven up

Labor

is the work time and work effort that people devote to producing goods and services. The quality of labor depends on how skilled people are - what economists call human capital.

The world market for crude oil is a competitive market because _______.

it has many buyers and many sellers and no single buyer or seller can influence the price

If the economy achieves allocative efficiency

it produces the quantity on the PPF that is valued most highly

A movie star is an example of the factor of production _______.

labor

Wages are the income paid for the services of _____.

labor

Rent is the income paid for the use of _____.

land

What are the factors of production

land, labor, capital, entrepreneurship

With an effective minimum wage, the labor market becomes _______.

less efficient

How does the time frame over which a supply decision is made influence the elasticity of supply? Explain. In the market for farm crops momentary supply is ______. In the market for farm crops, short-run supply is ______.

less elastic than short-run supply because the quantity supplied depends on decisions made earlier; less elastic than long-run supply because in the long run the quantity supplied responds after all technologically possible adjustments are made

The supply of apples in the short run will be ______ than the supply in the long run and ______ than the momentary supply today.

less elastic; more elastic

total utility

level of satisfaction or fulfillment that a consumer receives through the consumption of a specific good or service. Each individual unit of a good or service has its own marginal utility, and the total utility is simply the sum of all the marginal utilities of the individual units.

Demand is elastic if a price cut increases total revenue. Demand is inelastic if a price rise increases total revenue. Demand is unit elastic if a price cut or rise leaves total revenue unchanged.

look

Goods and services that use rare resources in their production have a ______ elasticity of supply. The greater the amount of time available after a price change, the ______ is the elasticity of supply.

low; greater

The brazilian media reports that bad weather has destroyed one-third of this year's Arabica coffee crop. In the united States, which is a large importer of Arabica Coffee, the effect of the bad weather would

lower the equilibrium price of coffee pots, a coffee complement

In an hour, Simon can catch 10 pounds of tuna or pick 10 pounds of oranges. In an hour, Fred can catch 10 pounds of tuna or pick 20 pounds of oranges. The opportunity cost of catching a pound of tuna is ______ for Simon than for Fred, and the opportunity cost of picking a pound of oranges is ______ for Simon than for Fred So ______ has a comparative advantage in producing ______.

lower;higher simon;tuna

A minimum wage in the Persian Gulf ______.

makes some migrant Indian workers better off and some migrant Indian workers worse off

margin

making a decision by comparing benefit with its costs-making a choice at the margin

Deciding whether or not to study for homework or read emails is

making the choice with the greatest marginal benefit

A competitive market is a market that has _____, so _____ can influence the price.

many buyers and sellers; no single buyer or seller

The marginal benefit curve is a curve that shows the relationship between the _____

marginal benefit from a good and the quantity consumed of that good

Consumer surplus is the ____ of a good in excess of ____, summed over the quantity bought

marginal benefit of a good in excess of the price paid for it

Resources are used efficiently in the sunhat market because when _______.

marginal social benefit equals marginal social cost, total surplus is maximized

A minimum wage creates an inefficient allocation of labour resources because at the quantity of employment ______.

marginal social benefit exceeds marginal social cost

Why does a rent ceiling create an inefficient and unfair outcome in the housing market? An effective rent ceiling creates an inefficient outcome because at the rent ceiling ______.

marginal social benefit exceeds marginal social cost

marginal utility per dollar

marginal utility from a good that results from spending one more dollar on it

Sarah maximizes her total utility when she spends all her available income such that the

marginal utility per dollar is equal for all goods

Consumer surplus is the _____ from a good or service, in excess of the _____, summed over the quantity consumed.

marginal benefit; price paid for it

eBay Saves Billions for Bidders If you think you would save money by bidding on eBay auctions, you would likely be right. Two Maryland researchers calculated the difference between the actual purchase price paid for auction items and the top price bidders stated they were willing to pay. They found that the difference averaged at least $4 per auction. Source: InformationWeek, January 28, 2008 What method is used to allocate goods on eBay? How does the allocation method used by eBay auctions influence consumer surplus? When a consumer chooses to buy an item through an eBay auction rather than at Wal-Mart, his consumer surplus from the eBay purchase is _______ the consumer surplus he would get from the Wal-Mart purchase.

market price greater than

competitive market

market that has many buyers and sellers, so no single buyer or seller can influence the price

budget line

marks the boundary between those combinations of goods and services that a household can afford to buy and those that it cannot afford

The market is efficient if total surplus is

maximum

A supply curve can be interpreted as a

minimum-supply-price curvelong dash—a curve that shows the lowest price at which someone is willing to sell.

Factors of production include all of the following EXCEPT ________.

money

Anything accepted as a means of payment Makes trading efficient Facilitate trade Enable buyers/sellers to get info and do business with each other Hire factors of production Organize factors of production to produce and sell goods and services Govern ownership & use of things people value Provide incentive to specialize/produce

money markets firms property rights

When Apple Inc. expands and rents an adjacent building, the flows are a ______ from firms to households and a ______ from households to firms.

money flow; real flow

When you buy a new e book from Amazon, the flows are a ______ from households to firms and a ______ from firms to households.

money flow; real flow

When Apple Inc. pays the designers of the iPad pays the designers of the iPad, the flows are a ______ from firms to households and a ______ from households to firms.

money flow; real flow

When you buy a new e dash book from Amazonyou buy a new e-book from Amazon, the flows are a ______ from households to firms and a ______ from firms to households.

money flow; real flow

The figure shows the supply curve of sundaes. Draw an arrow to show what happens to firms' plans if the price of a sundae rises but all other influences on selling plans remain the same. If the price of a sundae rises, a _____ the supply curve occurs. If any factor that influences selling plans other than the price changes, then a _____ the supply curve occurs

movement up along; shift of

If the price of a taco rises, a ______ the supply curve occurs. If any factor that influences selling plans other than the price changes, then a ______ the supply curve occurs.

movement up along; shift of

Monday Island produces only tomatoes and papayas. Complete the following sentence. The marginal cost of a tomato is the number of papayas that ______ to get one more ______.

must be forgone; tomato

The United States devotes ______ of its resources to accumulating capital and the remainder to consumption. Hong Kong devotes ______ of its resources to accumulating capital and the remainder to consumption. As a result, Hong Kong's production possibilities have _______ the United States.

one fifth; one third expanded more quickly than

Marginal benefit from a good or service is the benefit received from consuming ______. It is measured by the most that people are willing to pay for ______.

one more unit of it; an additional unit of it

Rational choice

one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

An economic model includes a. only normative statements. b. no use of marginal concepts. c. all known details in order to increase its accuracy. d. only details considered essential.

only details considered essential.

A minimum wage is unfair because _______.

only those people who have jobs and keep them benefit from the minimum wage, and a minimum wage blocks voluntary exchange

Marginal cost

opportunity cost associated with producing one more additional unit of a good

The marginal cost of a good or service is the _____.

opportunity cost of producing one more unit of it

low supply

other things remaining the same, the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied

law of demand

other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demand

The law of supply states that,

other things remaining the same, the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied.

law of demand states

other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the loweerr the price of a good, the greater is the quantity demanded

When new and better ways of producing all goods and services are discovered or when the quantity of capital increases,

our standard of living increases, but we still face scarcity and opportunity cost

symmetry principle

people in similar situations should be treated similarly

The price elasticity of demand is calculated by dividing the _____ by the _____

percentage change in the quantity demanded; percentage change in the price

The price elasticity of demand is calculated by dividing the _______ by the _______ .

percentage change in the quantity demanded; percentage change in the price

William loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, William continues to buy a dozen candy bars every week. William's demand for candy bars is _______.

perfectly inelastic

William loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, William continues to buy a dozen candy bars every week. William's demand for candy bars is _______.

perfectly inelastic

The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the ______, other things remaining the same.

price of a substitute or compelement

What does the cross elasticity of demand measure? The cross elasticity of demand is a measure of the responsiveness of the demand for a good to a change in the ______, other things remaining the same.

price of a substitute or complement

producer surplus is calculated as the _____ a good minus ____, summed over the quantity sold

price received for; its marginal cost

Producer surplus is calculated as the ______ a good minus ______, summed over the quantity sold.

price received for; its marginal cost (or minimum supply-price)

Producer surplus is the _____ a good or service, in excess of the _____ of producing it, summed over the quantity produced.

price of; marginal cost

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?

"At a price of $1 a bottle, we plan to sell 2,000 bottles per day,

which one is law supply

"If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers

A semiconductor is a key component in your laptop, smartphone, and iPad. The table provides information about the market for semiconductors in the United States. Producers of semiconductors can get $18 a unit on the world market. With no international trade, what would be the price of a semiconductor and how many semiconductors would be bought and sold in the United States? Does the United States have a comparative advantage in the production of semiconductors?

$12 and 20 billion semiconductors a year are bough and sold in the United States (Quantity demanded and quantity supplied are equal to eachother at $12) The United States does have a comparative advantage in producing semiconductors.

Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime?

$18.00

Hassan, an engineering student, buys threecups of coffee a day, which costs him$10.50 He decides to buy one more cup each day and his expenditure on coffee increases to $14.00 The marginal cost to HassanHassan of a cup of coffee is _______.

$3.50

implications of scarcity

(1) limited resources and (2) unlimited wants and needs. The resources used to produce wants-and-needs-satisfying goods are finite. The wants and needs satisfied with these resources are unending.

Equilibrium price formula

(ad+bc)/(b+d)

The equilibrium quantity is given by the formula

(a−c)/(b + d)

expected future prices

(change in demand) demand increases and demand curve shifts rightward

income

(change in demand) for a normal goodd, n increase in income increases demand and shifts the curve rightward for an inferior good, an increase in income decreases demand and shifts the demand curve leftward

Eye of the Economy: What We Produce

- Health services, real estate, professional and business services, manufacturing, finance and insurance, education, retail trade, wholesale trade, information, arts/recreation/hotels/food, construction, transportation, utilities, mining, and agriculture - Goods and services: chemicals, computers, food and drink, petroleum coal, machinery, fabricated metal, transportation equipment, plastics and rubber, and motor vehicles

What are the determinants of supply?

- Own price - Technology - State of nature - Number of firms - Price of inputs - Future price expected - Price of related goods produced

What are the determinants of demand?

- Own price (changes quantity demanded) - Income - Population size - Price of related goods - Tastes and preferences - Future price expected -Future income

We divide the vast array of goods and services produced into:

- consumption goods and services - capital goods - government goods and services - export goods and services

When the price of a skateboard increases by 4 percent, the quantity of elbow pads demanded decreases by 2 percent. Calculate the cross elasticity of demand for elbow pads with respect to the price of a skateboard.

-.50 --> they are complements

When the price of a loaf of garlic bread increases by 4 percent, the quantity of lasagna demanded decreases by 2 percent. Calculate the cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread. The cross elasticity of demand for lasagna with respect to the price of a loaf of garlic bread is _______ Garlic bread and lasagna are _______

-.5;Complements

a market toward its equilibrium because

-price regulates buying and selling plans - price adjusts when plans do not match

smaller quanitity for higher price,

-substitution effect - Income effect

demand

-want it -can afford it -plan to buy it

two predication for decaresaes Q

-when demand increases, the price rises and the quantity increases - when demand decreases , the price falls and the quantity decerasess

Before starring as Tony Stark in Iron Man, Robert Downey Jr. had played in 45 movies that had average first-weekend box office revenues of a bit less than $5 million. Iron Man grossed $102 million in its first weekend. The success of Iron Man ______ the opportunity cost of hiring Robert Downey Jr. Movie producers now have ______ incentive to hire Robert Downey Jr.

. increases; more

Practice Problems

...

A rise in the price of a smoothie from $2 to $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day and at today's price of a muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day. 4. Calculate the cross elasticity of demand for muffins with respect to the price of a smoothie. The cross elasticity of demand for muffins with respect to the price of a smoothie is

.555

Perfectly inelastic

0, vertical

In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets. ______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______.

0.2;0.10 Tessa; both Sue and Tessa gain

When the price of air travel increases by 5 percent and the price of a train ride remains unchanged, the quantity of train rides demanded increases by 5 percent. Calculate the cross elasticity of demand of train rides with respect to air travel. The cross elasticity of demand of train rides with respect to air travel is

Dairies make low-fat milk from full-cream milk, and in the process they produce cream, which is made into ice cream. Explain the effect of the following events on the supply of low-fat milk. 1) If the wage rate of dairy workers rises, the supply of low-fat milk _______. 2) If the price of cream rises, the supply of low fat milk ___ 3) If the price of low-fat milk rises, the supply of low-fat milk, _____ (asking about supply not quantity supplied)

1) Decreases because the cost of producing low-fat milk increases 2) Increases because cream and low-fat milk are complements in production 3) does not change because the relationship between price and quantity supplied does not change

Unit elastic

1, The percentage decrease in the quantity demanded equals the percentage increase in prices

change supply

1- the price of factors of production 2-the price of related goods produced 3- expected future prices 4-the number of supplies 5- technology 6- the state of nature

six main factors bring changes in demand

1- the price of related goods 2- Expected future price 3- income 4- expected future income and credit 5- population 6- preference

two predication for decareasess S

1- when supply increases, the price falls and the Q Increases 2- when supply deacreases , the price rises and the quintity decareses

Supply

1-has the resource and technology to produce it 2- can profit from producing 3- plans to produce it and sell it

The table sets out the demand and supply schedules for roses on a normal weekend. 1. If the price of a rose is $6, describe the situation in the rose market Explain how the price adjusts If the price of a rose is $6, there is a ———of roses and the price of a rose —— 2. If the price of a rose is S9, describe the situation in the rose market Explain how the price adjusts If the price of a rose is $9, there is a o ——-of roses and the price of a rose —— 3. What is the market equilibrium? At the market equilibrium, the price of a rose is ——and roses per week ——-are bought and sold.

1. shortage, rises S9, 2.surplus 3. $7, 100

If the quantity demanded of textbooks decreases by 90 percent when the price of a textbook rises by 50 percent, what is the price elasticity of demand for textbooks? The price elasticity of demand for textbooks is

1.8

If the quantity demanded of pizza increases by 20 percent when the price of pizza falls by 2 percent, what is the price elasticity of demand for pizza?

The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60 percent on your exam. If you had studied the night before, you'd have scored 70 percent. What was the opportunity cost of your evening at the movies?

10 percent off your grade.

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $8,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $2,000, visas cost $300, and living expenses are $2,000. What is the opportunity cost of your plan to travel in Europe? What is the opportunity cost

12,300

The table shows the demand schedule for fried chicken. When the price of a basket of fried chicken rises from $ 14.00 to $ 16.00, what is the price elasticity of demand for fried chicken?

When income increases by 5 percent and all prices remain the same, the quantity of smartphones demanded increases by 10 percent. Calculate the income elasticity of demand of smartphones.

f the money price of coffee is $1 a cup and the money price of gum is 50 cents a pack, then the relative price of a cup of coffee in terms of a pack of gum is

Suppose that the price of a cashmere sweater is $100 and Jean's marginal benefit from a cashmere sweater is $300. If Jean buys 1 cashmere sweater, what is her consumer surplus?

200

At one point along a PPF, 10 pizzas and 7 sandwiches can be produced. At another point along the same PPF, 9 pizzas and 10 sandwiches can be produced. The opportunity cost of a pizza between these points is .......... . a. 7/10 of a sandwich b. 10/7 of a sandwich c. 1/3 of a sandwich d. 3 sandwiches

3 sandwiches

A rise in the price of a smoothie from $2 to $3 results in a decrease in the quantity of smoothies demanded from 220 million to 180 million a day, and at today's price of a muffin, $1.50, the quantity of muffins demanded increases from 80 million to 100 million a day

3. Is the demand for smoothies elastic or inelastic? The demand for smoothies is inelastic 1. Calculate the percentage change in the price of a smoothie and the percentage change in the quantity demanded of smoothies. Hint Use the average price and average quantity to calculate the percentage changes The price of a smoothie changes by 40 percent and the quantity demanded of smoothies changes by 20 percent 2. Calculate the price elasticity of demand for smoothies The price elasticity of demand for smoothies is 05

When the price of air travel increases by 22 percent and the price of a train ride remains unchanged, the quantity of train rides demanded increases by 88 percent. Calculate the cross elasticity of demand of train rides with respect to air travel? The cross elasticity of demand of train ride with respect to air travel is ______

(Figure 1) If the price of a denim jacket falls from $80 to $40, while all other influences on buying plans are unchanged, the quantity of denim jackets demanded changes from __ to __

4 mil, 12 mil

Suppose that the price of a cashmere sweater is $250 and Jean's marginal cost of producing a cashmere sweater is $200. What is Jean's producer surplus?

50$

The price at which sellers are not willing to supply a good is $500 per unit. If the supply curve passes through the point (4, 512), what is the equation of the supply curve? The equation of the supply curve is P =_+_QS

500;3

The price at which no one is willing to buy a good is $550 per unit. If the demand curve passes through the point (2, 534), what is the equation of the demand curve? The equation of the demand curve is P = _-_QD

550;8

Elle owns an ice cream parlor. In an hour she can produce 11 milkshakes or 55 ice cream sundaes. Ben also owns an ice cream parlor. In an hour he can produce 5 milkshakes or 20 ice cream sundaes. Calculate Elle's and Ben's opportunity cost of a milkshake. Elle's opportunity cost of 1 milkshake is __ ice cream sundaes. Ben's opportunity cost of 1 milkshake is __ ice cream sundaes. ______ has a comparative advantage in milkshakes and ______ has an absolute advantage in both goods. A. Ben; Elle B. Ben; Ben C. Elle; Ben D. Elle; neither

5;4;A

Suppose that the price of a cashmere sweater is $250 and Jean's marginal cost of producing a cashmere sweater is $175. What is Jean's producer surplus? Jean's producer surplus is

The table provides information on the demand schedules for train travel for Ann, Beth, and Cy, who are the only buyers in the market. Construct the market demand schedule for train travel. Fill in the right column of the table. What is the maximum price that each traveller is willing to pay to travel 20 kilometres? Why? To travel 20 kilometres, each traveller is willing to pay _______. What are the maximum prices that Ann, Beth, and Cy are willing to pay to travel 20 kilometres?

75, 60, 45, 30 an amount per kilometre equal to the marginal benefit from the last kilometre travelled The maximum price that Ann is willing to pay to travel 20 kilometres is $ 5 per kilometre. The maximum price that Beth is willing to pay to travel 20 kilometres is $ 4 per kilometre. The maximum price that Cy is willing to pay to travel 20 kilometres is $ 3 per kilometre.

Consumption goods and services represent...

85% of US production by value and that percentage does not fluctuate much

Sara and Zoe are the only people in an economy. The following data tells you about their purchases of lemonade. Sara buys 0 bottles when the price is $3.00 a bottle, 3 bottles when the price is $2.00 a bottle, and 6 bottles when the price is $1.00 a bottle. Zoe buys no lemonade when the price is $2.00 a bottle, and 3 bottles when the price is $1.00 a bottle. In the market for lemonade, the quantity demanded is _______.

9 bottles at $1.00 a bottle

A curve on a graph shows the relationship between apartment rent in a town and the quantity of apartments that people want at each rent. A new industry enters the town and the population of the town increases. When the population increases, _________. A. The curve shifts B. The price of an apartment falls C. There is a movement downward along the curve D. We can no longer isolate the variable of interest

A decrease in the supply of computers brings a ______ of computers at the original price and a ______ in their price A. Shortage; rise B. Surplus; rise C. Shortage; fall D. Surplus; fall

A price ceiling _______. A. Set below the equilibrium price encourages illegal trading in a black market B. Is a regulation that makes it illegal to offer less than a specified quantity of a good or service for sale C. Always prevents the price from regulating the quantities demanded and supplied D. Is a regulation that makes it illegal to offer more than a specified quantity of a good or service for sale

A relationship with a maximum _______. A. Starts out sloping upward, and then slopes downward B. Starts out sloping downward, and then slopes upward C. Indicates that two variables become less related over time D. Becomes steeper as you move to the right along the curve

American Airlines announced yesterday that it will begin charging passengers $15 for their first piece of checked luggage, in addition to raising other fees and cutting domestic flights as it grapples with record-high fuel prices. The news clip illustrates a change in the supply of flights when it reports that American Airlines is _______. A. Cutting the number of flights with no mention of a change in the airfare B. Charging $15 to check a bag so that it can cut the number of flights C. Paying more for fuel and charging people to check a bag D. Charging $15 for a checked bag, which will cut the number of air travelers

An argument in favor of prohibition and against taxes on illegal drugs is the fact that _______. A. Prohibition sends a signal that might influence preferences B. Penalties for illegal activities with prohibition are less than the penalties for tax evasion C. A black market is easier to maintain under prohibition than under the tax code D. Search activity decreases with prohibition

An increase in the demand for donuts together with a decrease in the supply of donuts brings a ______ of donuts at the original price and a ______ in their price. A. Shortage; rise B. Surplus; fall C. Shortage; fall D. Surplus; rise

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are A. Complements to iPads B. An inferior good C. Substitutes for iPads D. A normal good

By remaining in school, you are paying an opportunity cost that includes _______. A. The wages you could earn if you took a job B. The money you spend on clothes C. The time you spend doing laundry D. The money you spend on late night snacks

Choose the correct statement. A. The opportunity cost of something is the highest-valued alternative that must be given up to get it B. The opportunity cost of an activity is constant, regardless of the time of day at which you pursue the activity C. The opportunity cost of an activity you do not enjoy is zero D. The opportunity cost of doing more of an activity is the opportunity cost of the activity

Economics is all of the following except _______. A. A subject that tells countries what goods they must trade B. A social science C. A subject that arises because we want more than we can get D. A subject that is divided into microeconomics and macroeconomics

Entrepreneurship ______. A. Is the human resource that organizes labor land and capital B. Earns rent C. Is the work time and work effort that people devote to producing goods and services D. Is not a factor of production

Goods and services are ______. A. The objects that people value and produce to satisfy human wants B. The things that one person produces or performs purely for the benefit of other people C. The gifts of nature D. Any objects that get produced or tasks that get performed

If demand is elastic, a 1 percent price cut ______ the quantity sold by ______. A. Increases; more than 1 percent B. Decreases; more than 1 percent C. Increases; less than 1 percent D. Decreases; 1 percent

If the cross elasticity of demand for hotdogs with respect to the price of a bottle of ketchup is negative, hot dogs and ketchup are ______. A. Complements B. Substitutes C. Inferior goods D. Normal goods

If the price of an MP3 player falls from $60 to $20, while all other influences on buying plans are unchanged, the quantity of MP3 players demanded _______? A. Increases B. Decreases C. Remains unchanged

In a black market for housing, the rent paid is _______. A. Close to the unregulated rent if there is loose enforcement of the rent ceiling B. Close to the unregulated rent if there is strict enforcement of the rent ceiling C. Independent of how tightly the rent ceiling is enforced D. Equal to the rent ceiling

In the labor market, the supply curve measures the marginal social cost of labor to _______, and the demand curve measures the _______. A. Workers; marginal social benefit from labor B. Workers; consumer surplus earned by the people who buy the goods produced C. Firms; marginal social benefit from labor D. Firms; consumer surplus earned by the people who buy the goods produced

Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise but does not want to go skiing. Who faces a tradeoff? A. Pam, Pat, and Pru face a tradeoff. B. Pat and Pru face a tradeoff but Pam does not face a tradeoff C. Pam and Pru face a tradeoff but Pat does not face a tradeoff D. Pam and Pat face a tradeoff but Pru does not face a tradeoff

Pam, Pru, and Pat are deciding how they will celebrate the New Year. Pam prefers to go on a cruise, is happy to go to Hawaii, but does not want to go skiing. Pru prefers to go skiing, is happy to go to Hawaii, but does not want to go on a cruise. Pat prefers to go to Hawaii or to take a cruise, but does not want to go skiing. Their decision is to go to Hawaii. What is the opportunity cost of the trip to Hawaii for each of them? A. The opportunity cost for Pam and Pat is a cruise and for Pru it is skiing. B. The opportunity cost for each of them is the airfare to Hawaii minus the cost of a cruise. C. The opportunity cost for Pam and Pat is the airfare to Hawaii minus the cost of a cruise and for Pru, it's the airfare minus the cost of a ski trip. D. The opportunity cost for each of them is the airfare to Hawaii.

Property rights are legally established titles to the ownership, use, and disposal of _____ and goods and services that are enforceable in the courts. A. factors of production B. environmental factors C. capital D. land

Suppose a concert pianist practices the piano for 6 hours every day, but to prepare for an upcoming concert, she decides to practice for an extra hour. The _____ of one more hour of practicing nbsp is _____. A. Marginal cost; an hour of reading, if that is her best alternate use of the time B. Marginal cost; an hour of reading, missing her favorite TV program, and missing her favorite concert broadcast on the radio C. Total cost; 7 hours spent practicing D. Total cost; an hour of reading, and missing her favorite TV program

Suppose that the United States and Cuba decide to open up trade. If each country specializes in the good in which it has a comparative advantage, ______ will gain from that trade because ______. A. Both countries; consumption possibilities in both Cuba and the United States will lie outside their PPFs B. Neither country; their consumption possibilities will not change C. Only Cuba; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change D. Only the United States; consumption possibilities in Cuba will lie outside its PPF and U.S. consumption possibilities will not change

Suppose that when you study 4 hours for an exam your mark is 80 percent. If you study for an extra hour your mark is 85 percent. Choose the correct statement. A. The marginal benefit from studying one more hour is 5 percent B. The marginal cost of studying one more hour is 85 percent C. The marginal increase from studying one more hour is 15 percent D. The marginal benefit from studying one more hour is 80 percent

Taking an MP 3 player to the gym when you work out becomes more popular. As a result, _______. A. The demand for MP 3 players increases B. The demand for MP 3 players decreases C. The quantity of MP3 players demanded increases D. The quantity of MP3 players demanded decreases

The market for frozen burritos is a competitive market _______. A. If many people buy and many firms sell frozen burritos, so no single buyer or seller can influence the price B. Only if the buyers and sellers of frozen burritos are spread around the world and never meet C. If many people buy frozen burritos, but only a few firms sell frozen burritos D. If few people buy frozen burritos, so sellers can hold out for a high price

The opportunity cost of a good is equal to _______. A. The price of the good plus the value of the search time spent finding the good B. The price ceiling C. The price of the good D. The value of the search time spent finding the good

When Yvonne's income increases by 10 percent, her demand for tickets to professional basketball games increases by 20 percent. Yvonne's demand for tickets is income ______. For Yvonne, basketball tickets are ______ good. A. Elastic; a normal B. Elastic; an inferior C. Inelastic; a normal D. Inelastic; an inferior

When selling drugs is illegal, the cost of breaking the law is ______. A. Added to the minimum supply-price B. Subtracted from the minimum supply-price and added to the maximum price buyers are willing to pay C. Subtracted from the minimum supply-price D. Added to the minimum supply-price and subtracted from the maximum price buyers are willing to pay

When the price of a gallon of gasoline falls by 2 percent, Tony increases the quantity he buys by 5 percent. Tony's expenditure on gasoline _______. A. Increases B. Decreases C. Remains the same D. Increases, decreases, or remains the same depending on how much driving he plans to do that week

When you make a choice in your self-interest, _______. A. That choice may also be the best choice for society B. That choice is the one you think is best for everyone else but not for you C. That choice is a selfish choice because it increases your income at the expense of someone else D. That choice is inappropriate if it causes someone else to lose their job

_______ is an example of _______. A. An auto worker; labor B. Martha Stewart; capital C. A sewing machine in a Levi's production plant; land D. A coal mine in West Virginia; entrepreneurship

Which of the following statements is an example of elasticity of supply?

A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

Think about the following news items. Which items involve a microeconomic issue and which involve a macroeconomic issue? A. The U.S. is borrowing less from China comma more from everybody else B. Pay to rise for millions as 19 states increase minimum wage C. 7 ways streaming music will change in 2017 D. Is Hulu Plus a better value for your money than Netflix question mark Statement A involves a ______ issue. Statement B involves a ______ issue. Statement C involves a ______ issue. Statement D involves a ______ issue.

A = macro B = micro C = micro D = micro

Change in the quantity demanded

A change in buyers plans that occurs when the price of a good change but all other influences buyers plans remain unchanged. it is illustrated by a movement along the demand curve .

change in supply

A change in sellers plans that occurs when some influence on those plans other than the price of the good changes. it is illustrated by a shift of the supply curve

Surplus ; fall

A decrease in the demand for tank tops brings a ______ of tank tops at the original price and the market price will ______ .

Buyers and sellers

A market is an arrangement that brings _____ together and enables them to get information and do business with each other.

The main functions of markets include _______. A. selling goods but not factors of production B. enabling buyers and sellers to do business with each other C. building places for business transactions comma such as shopping malls D. promoting the social interest comma but not the self interest

A market is any arrangement that enables buyers and sellers to get information and to do business with each other. An example is the market in which oil is bought and sold. The world oil market is not a place. It is the network of oil producers, oil users, wholesalers, and brokers who buy and sell oil. In the world oil market, decision makers do not meet physically. They make deals throughout the world by telephone, fax, and direct computer link. Markets have evolved because they facilitate trade.

Competitive market

A market that has many buyers and many sellers, so no single buyer or seller can influence the price

Monopoly

A monopoly is a firm that is the sole provider of a good or service. Local water supply and cable television are supplied by firms that are monopolies. The monopoly's self-interest is to maximize its profit, and because it has no competitors, it produces too little and charges too high a price: It underproduces.

Unattainable

A point that is off the PPF

Attainable

A point that is on the PPF

A social arrangement that governs the ownership, use, and disposal of anything that people value

A property right is ______.

_______ is the social institution that helps the Canadian economy achieve allocative efficiency that Cuba might lack. A. Property rights B. Markets C. A rightward-shifting PPF D. Money

A property rights

Which of the following is an example of a price ceiling or price cap?

A regulation requires cable service to be provided for no more than $30 a month.

The graph illustrates the market for tea. The market equilibrium is at point A. After one or more changes, the market equilibrium moves to point B. You predict that the market for tea was most likely influenced by _______.

A rise in household income and a rise in the number of plantations

Which of the following statements illustrates income elasticity of demand?

A salary cut and no other changes has resulted in Mary buying less fast food.

consumed in place of; consumed together with

A substitute is a good that is _____ another good, and a complement is a good that is _____ another good.

The demand for illegal drugs is inelastic. Much of the expenditure on illegal drugs comes from crime. Assuming these statements to be correct, complete the following statements.

A successful campaign that decreases the supply of drugs will ______ the price of illegal drugs and ______ the total amount spent on them. increase; increase A campaign that successfully decreases the supply of drugs will _______ the amount of crime. increase The most effective way of decreasing the quantity of illegal drugs bought and decreasing the amount of drug-related crime is by ______. penalizing drug users, which will decrease demand

Johnny graduates from college and his income increases by $30,000 a year. Nothing else changes. Johnny decreases the quantity of ramen noodles and french fries that he buys and increases the quantity of winter vacations that he buys. For Johnny, _______. A) ramen noodles and french fries are inferior goods B) ramen noodles and winter vacations are inferior goods C) winter vacations and french fries have become substitutes D) ramen noodles and french fries are normal goods

A) ramen noodles and french fries are inferior goods

Both Mia and Mario produce only the item in which they have a comparative advantage. Then they trade one pasta for one pizza.Before specialization and trade started, Mia and Mario were each producing 4 dishes of pasta and 4 pizzas an hour. The total gains from trade are ______ dishes of pasta and ______ pizzas an hour. A. 4, 4 B. 4, 12 C. 12, 4 D. 12, 12

A. 4, 4

Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. II People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.

A. I is inferior, II is normal, III is neither, and IV is bot

Which of the following examples describes microeconomics? A. People prefer buying iPhones over Nokia phones. B. Germany is a country in Western Europe. C. The Federal Reserve is increasing interest rates. D. The Yukon territory of Canada has extreme cold weather.

A. People prefer buying iPhones over Nokia phones.

Economics_________. A. is a subject that studies choices B. studies the performance of countries but not individuals C. is the study of how we cope with our too plenteous resources D. is a subject that studies only the choices of individuals and businesses

A. is a subject that studies choices (Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity, and the incentives that influence and reconcile those choices. Economics divides into two main parts long dash microeconomics and macroeconomics.)

People specialize and trade for all of the following reasons except _______. A. they can obtain an absolute advantage B. they can buy some goods for less than their opportunity cost of producing them C. they can consume at a point outside their PPF D. they can sell some goods for greater than their opportunity cost of producing them

A. they can obtain an absolute advantage

Zach is a math student who is considering taking an extra course in Spanish. An incentive that might encourage him to take the Spanish course is _______. A. tougher grading in math B. an increase in Spanish teachers' wages C. an increase in the price of room and board D. a decrease in Spanish teachers' wages

A. tougher grading in math

If Air Canada imposes the $10 surcharge, the price of an economy ticket ______ rise by $10 because the demand for airline tickets is ______.

A. would not; not perfectly inelastic

Question Facts In an hour, Jim can catch 5 pounds of trout or pick 10 pounds of cherries. In an hour, John can catch 3 pounds of trout or pick 12 pounds of cherries. The opportunity cost of catching a pound of trout is ______ for Jim than for John, and the opportunity cost of picking a pound of cherries is ______ for Jim than for John. A. lower; higher B. higher; lower C. lower; lower D. higher; higher So ______ has a comparative advantage in producing ______. A. Jim; trout B. John; trout C. Jim; cherries D. John; both trout and cherries

A. lower; higher & A. Jim; trout

Over what range of prices does a surplus occur? What happens to the price when there is a surplus? The graph shows the demand curve and the supply curve in the market for newpapers. A. Draw a horizontal line at a price at which there is a surplus of newpapers. Label it Surplus B.When surplus arise price ———- to equilibrium Which ————-

A. Answer below graph B. Fall, increase the quantity demanded and increase the quantity supplied

The demand for plums is unit elastic if

A. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

What is the law of supply and how do we illustrate it? The law of supply states that other things remaining the same, the the price of a good, the A supply curve that illustrates the law of supply

A. higher; greater is the quantity supplied B. shows that the quantity supplied decreases as the price falls

All of the following are consequences of scarcity faced by people in the United States except deciding _______. A. whether a tomato is a fruit or a vegetable B. how to study for both an economics exam and a chemistry exam that take place on the same day C. whether to sleep after attending an all dash night party or to attend your Economics lecture D. whether to play the piano or to study for the next hour

A. whether a tomato is a fruit or a vegetable

The price of oil rises if the demand for oil ______ and the supply of oil ______. A. Increases; decreases B. Decreases; increases C. Decreases; decreases D. Increases; increases A shortage in the market for oil implies that ______. A. More people are traveling B. The market for oil is a competitive market C. The market for oil needs government action D. The price of oil is being prevented from influencing buying and selling plans

A;D

The demand for a necessity is income ______ and the demand for a luxury is income ______. A. Inelastic; elastic B. Inelastic; inelastic C. Elastic; elastic D. Elastic; inelastic In countries with low incomes, such as Tanzania and India, the income elasticity of food is ______ than in countries with high incomes, such as Canada and the United States.

A;Higher

supply curve

Acurve tat shows the relationship between the quantity supplied of a good and its price when all other influence planned remain the same.

rise; an increase

An increase in the demand for ski trips brings a ______ in the price of a ski trip and ______ in the quantity of ski trips supplied.

decrease; increase

An increase in the price of soap, a complement in production of palm oil, will ______ the equilibrium price of palm oil and ______ the equilibrium quantity of palm oil.

Surplus; Fall

An increase in the supply of rice brings a ______ of rice at the original price and a ______ in its price.

Increases

Ann currently produces at point A in the figure. If Ann moves from point A to point C, her opportunity cost of a magazine _______.

At a price of $1 bottle, we plan to sell 2,000 bottles per day.

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled water market?

normative; cannot

Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should not be increased. nothing 2. Hydrogen is a cleaner fuel than gasoline. nothing Statement 1 is a ______ statement because it ______ be tested.

Which of the following statements describes cross price elasticity of demand?

As a result of a rise in the price of spinach with all else remaining constant, Ralph buys more broccoli, a substitute for spinach.

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?

At a price of $1 per pack, I plan to buy 2 packs of peanuts per week.

A demand curve passes through the point (0,550) and has slope equal to -5. The equation of the demand curve is _______. A. QD = 550 - 5P B. P = 550 - 5QD C.P = 3 - 550QD D. P = 550 + 5QD

A minimum wage is a _______ applied to labor markets. A. Quantity ceiling B. Price floor C. Price ceiling D. Quantity floor

Along a curve showing a linear relationship, for each increase in x of one unit, y _______. A. Changes by increasing amounts B. Changes by the same amount C. Changes by decreasing amounts D. Remains constant

Choose the correct statement. A. Competitive equilibrium occurs when demand equals supply B. The competitive market pushes the quantity produced to its efficient level C. When the efficient quantity is produced in a competitive market, producer surplus is maximized D. When the efficient quantity is produced in a competitive market, consumer surplus is maximized

Choose the correct statement. A. The value of one more unit of a good or service is its marginal benefit, and we measure marginal benefit by the area under the demand curve B. The value of one more unit of a good or service is its marginal benefit, and we measure marginal benefit by the maximum price that is willingly paid for another unit of the good or service C. The price of one more unit of a good or service is its marginal benefit D. The value of one more unit of a good or service is equal to the price of one more unit of a good or service

Choose the statement that is incorrect A. Economics can't help with the normative part of a policy goal B. Governments can make better decisions by using the tools of economics, but businesses require the tools of business administration, not economics C. For a given goal, economics compares the marginal benefit from achieving the goal with its marginal cost to find the best use of the available resources D. All the policy questions involve a blend of positive and normative questions

Consumer surplus is _______. A. Equal to the amount that we pay for a good or service B. Measured as the marginal benefit (or value) of a good minus the price paid for it, summed over the quantity bought C. The value that we receive by purchasing a good or service D. Greater on the 100th unit of a good that we buy than on the 1st unit of a good that we buy

Dan sells newspapers. Dan says that a 8 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 10 percent. According to Dan, the demand for newspapers is _______. A. Perfectly elastic B. Elastic C. Unit elastic D. Inelastic

Every day, we make many choices. We can't avoid having to make choices because ________. A. There are too many TV channels B. Our wants exceed the resources available to satisfy them C. We keep changing our minds D. There is too much available E. There is too much variety

Human capital _______. A. Is the human resource that organizes labor and land B. Determines the quality of labor C. Is measured by the amount of income a person earns D. Is a gift of nature

If the demand curve is a downward sloping straight line, the price elasticity of demand always A. Increases as the demand curve shifts rightward B. Increases with movements upward along the demand curve C. Decreases with movements upward along the demand curve D. Increases as the demand curve shifts leftward

If the price of a sundae rises, a ______ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs. A. Rightward shift of; movement down along B. Movement up along; shift of C. Leftward shift of; movement up along D. Movement down along; shift of

Jessica has five job offers to choose from. Working for a consulting firm would pay her $100 per hour. Working as an economist would pay her $80 per hour. Working as a teacher would pay her $40 per hour. Working as a nanny would pay her $20 per hour. Working at a fast food restaurant would pay her $10 per hour. What is Jessica's opportunity cost of working as an economist? A. $40 B. $100 C. $20 D. None of the above are correct E. $80

Leigh has two sandwiches for lunch. The marginal benefit that Leigh receives from the second sandwich is _______. A. The opportunity cost of producing two sandwiches B. The maximum amount that she is willing to pay for the second sandwich C. The opportunity cost of producing the second sandwich D. The maximum amount that she is willing to pay for two sandwiches

Microsoft's marginal cost of the 100th copy of Microsoft Windows 8 is _______. A. The maximum amount that someone is willing to pay Microsoft to obtain the coding that supports Windows 8 B. The opportunity cost of producing the 100th copy of Windows 8 C. The opportunity cost of producing 100 copies of Windows 8 D. The maximum amount that someone is willing to pay for the 100th copy of Windows 8

Producer surplus is _______. A. The value that we receive by purchasing a good or service B. Calculated as the price received for a good minus its minimum supply-price, summed over the quantity sold C. Equal to the amount paid for a good or service D. More on the 100th unit of a good that is produced than on the 1st unit of a good that is produced

The equilibrium quantity _______. A. Is the quantity demanded at the equilibrium price, but not necessarily the quantity sold B. And equilibrium price are determined at the intersection of the supply curve and the demand curve C. Is the quantity supplied at the equilibrium price, but not necessarily the quantity demanded D. Is any quantity at which the quantity supplied is greater than or equal to the quantity demanded

The income earned by the people who sell the services of the factor of production _______ is called _______. A. Land; wages B. Entrepreneurship; profit C. Capital; profit D. Labor; interest

When a minimum wage is set above the equilibrium wage rate, _______. A. Unemployment decreases B. Unemployment increases C. The supply of workers decreases D. Job search activity decreases

When the efficient quantity is produced _______. A. Buyers and sellers acting in their self-interest do not promote the social interest B. Total surplus is maximized C. Consumer surplus is maximized D. Producer surplus is maximized

Which method is used to allocate strategic resources in the military? A. Majority rule B. Command C. Contest D. Market price

Which of the following items is an example of a tradeoff? A. The government spends more on homeland security and more on Medicare B. The government spends more on homeland security and less on Medicare C. The government spends the same amount on homeland security and Medicare D. The government spends less on homeland security and less on Medicare

which of the following statements describes the big tradeoff Sharing the pie more equally _____ . A. makes it bigger. B. makes it smaller. Your answer is correct.C. is the right thing to do regardless of the size of the pie. D. has no influence on its size.

In one hour, Sue can produce 40 caps or 4 jackets and Tessa can produce 80 caps or 4 jackets. Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets. A. 10.0; 20.0 B. 0.1; 0.05 C. 20.0; 10.0 D. 0.05; 0.1 ______ has a comparative advantage in producing caps. If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 15 caps, ______. A. Tessa; Sue loses but Tessa gains B. Tessa; both Sue and Tessa gain C. Sue; both Sue and Tessa gain D. Sue; Tessa gains but Sue loses

B. 0.1; 0.05 & B. Tessa; both Sue and Tessa gain

Which of the following is an example of an incentive? A. China is facing increasing labor costs. B. All conference volunteers would be offered free lunch on all three days. C. The U.S. has a current unemployment rate of 7.5 percent. D. The Reserve Bank of India has raised interest rates.

B. All conference volunteers would be offered free lunch on all three days.

Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds Upper H Salt's opportunity cost of preparing lobster, then all the following are true except ______. A. H Salt has a comparative advantage in lobster B. Big Lobster has a comparative advantage in lobster C. H Salt does not have a comparative advantage in preparing fish D. they will both gain if Big Lobster sells fish and Upper H Salt sells lobster If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______. A. the elimination of comparative advantage B. the elimination of absolute advantage C. divergent opportunity cost D. equal opportunity cost

B. Big Lobster has a comparative advantage in lobster & C. divergent opportunity cost

Which of the following is an example of comparative advantage? A. Michael Jordan is an American basketball player. B. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes. C. Angela makes better pastries than Sherrie. D. The United States produces less textile products and more electronic products.

B. Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

Which of the following examples describes macroeconomics? A. Walmart has lowered the price of iPhones before the launch of the new iPhone 5S. B. The U.S. unemployment rate has increased by 0.4 percent. C. Alice Munro won the Nobel Prize in Literature in 2013. D. Thanksgiving is celebrated on the third Thursday of November every year.

B. The U.S. unemployment rate has increased by 0.4 percent.

Which of the following is an example of absolute advantage? A. Charlie enjoys skiing while Ryan enjoys hiking. B. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task. C. Amy is smart and performs well in exams. D. Nick has an advantage over others in the industry because he knows many software programs.

B. Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

Operators of private dog parks in your city decide to eliminate their fees and allow dog owners to exercise their dogs in the parks at no charge. This statement means that the incentive to exercise dogs at the dog park ______. The operators' decision is a _______ decision. A. remains the same; macroeconomic B. changes; microeconomic C. remains the same; microeconomic D. changes; macroeconomic

B. changes; microeconomic

(static) Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand? I People are buying less chicken because the price of beef has fallen. IL People are buying less chicken because the price of chicken has increased III People are buying more chicken because the price of chicken has fallen. IV The cost of chicken feed has increased

B. I is a change in demand and Il and III are changes in the quantity demanded.

When Erika's income increases by 6 percent, her demand for tickets to professional baseball games increases by 3 percent. Erika's demand for tickets is income For Erika, baseball tickets are good.

B. inelastic; a normal

Factors of production are grouped into four categories, which are is an example of

B. land, labour, capital, and entrepreneurship C. A hospital administrator; labour

Read the news story, then answer the following questions. With which of the big economic questions does it deal and what tradeoffs does it discuss or imply? The news story deals with the questions. The news story implies a tradeoff between

B. what and how B. using traditional check-out methods and using cashier-less technology

All of the following are consequences of scarcity faced by people in Canada except deciding

B. whether a tomato is a fruit or a vegetable

Are either or both of these newspaper headlines positive or normative? 1. The minimum wage should not be increased. nothing 2. An increase in the minimum wage will bring more teenage unemployment. nothing Statement 1 is a ______ statement because it ______ be tested. A. positive; cannot B. normative; cannot C. positive; can D. normative; can Statement 2 is a ______ statement because it ______ be tested. A. positive; can B. positive; cannot C. normative; can D. normative; cannot

B; A

Which of the following statements illustrates a rent ceiling?

Bluestone Properties is permitted to charge a rent of $2,350 for 2-bedroom apartments that would rent for $2,500 in an unregulated market.

at the equilibrium price

Buyers pay the highest price they are willing to pay for the last unit bought, and sellers receive the lowest price at which they are willing to supply the last unit sold

A decrease in the demand for hot dogs brings a ______ of hot dogs at the original price and the market price will ______ . A. Surplus; rise B. Shortage; rise C. Surplus; fall D. Shortage; fall

A market is an arrangement that brings _____ together and enables them to get information and do business with each other. A. sellers and entrepreneurs B. governments and producers C. buyers and sellers D. central banks and commercial banks

A shortage occurs at a given price when ______. The price _____ to reach equilibrium. A. Demand is greater than supply; rises B. The quantity supplied is greater than the quantity demanded; falls C. The quantity demanded is greater than the quantity supplied; rises D. Supply is greater than demand; falls

Aaron, an engineering student, buys two cups of coffee a day, which costs him $5.00. He decides to buy one more cup each day and his expenditure on coffee increases to $7.50. The marginal cost to Aaron of a cup of coffee is _______. A. $5.00 B. $7.50 C. $2.50 D. Greater than $5.00 and less than $7.50

Assume that your state government has placed a price ceiling of $.20 per kilowatt hour on electricity. The equilibrium price per kilowatt hour for electricity is $.25. The government's action will result in A. An increase in producer surplus B. Surplus of electricity in the electricity market C. A deadweight loss D. An increase in the price of electricity to $.25 per kilowatt hour

At the competitive equilibrium, _______. A. Marginal social benefit exceeds marginal social cost B. Marginal social cost exceeds marginal social benefit C. Marginal social cost equals marginal social benefit D. Marginal social benefit is either equal to or greater than marginal social cost

Choose the correct statement. A. The price of one more unit of a good or service is its marginal cost B. The cost of producing one more unit of a good or service is equal to the market price C. The cost of producing one more unit of a good or service is its marginal cost, which is the minimum price that producers must receive to induce them to offer to sell another unit of the good or service D. The cost of producing one more unit of a good or service is the producer's marginal cost, and we measure marginal cost as the area above the supply curve and below the market price

Choose the statement about monopoly that is incorrect. A. A monopoly sets its price to achieve its self-interest B. Local water supplier is a monopoly C. A monopoly produces more than the efficient quantity and charges too high a price D. A monopoly is a firm that is the sole provider of a good or service

Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to Dan, the demand for newspapers is ________. A. Inelastic B. Perfectly elastic C. Elastic D. Unit elastic

Deadweight loss _______. A. Is the decrease in producer surplus that results from a decrease in price when demand decreases B. Occurs in markets that produce at the competitive equilibrium and in markets that produce more than the quantity at the competitive equilibrium C. Is the decrease in total surplus that results from an inefficient level of production D. Occurs only when production is greater than the efficient quantity

Economics explains the choices that end up determining ______ goods and services get produced. A. Why, where, and how B. What, how, and when C. What, how, and for whom D. Where, when, and how

Firms are institutions that organize _____ of goods and services. A. the consumption B. imports C. the production D. exports

French fries and baked potatoes are _______. A. Complements but not complements in production B. Complements or complements in production C. Substitutes or substitutes in production D. Substitutes but not substitutes in production

If demand for good is very inelastic and supply for the good is very elastic a sales tax imposed on sellers will cause the price received by sellers A. Would rise by more than the amount of the tax B. Would fall by an amount of the tax C. Would not change very much D. Would fall by more than the amount of the tax

If the price of a video rental is below its equilibrium price, there will be a ________ of video rentals and the price will ________. A. Surplus; rise B. Surplus; fall C. Shortage; rise D. Shortage; fall

If, as the price of a DVD player decreases, the quantity of DVDs that people buy increases, then DVD players and DVDs are _______. A. Substitutes B. Inferior goods C. Complements D. Normal goods

Producers of MP 3 players expect the price of a factor of production used to produce an MP 3 player to rise and the number of firms producing and selling MP 3 players to decrease. You predict that the price of an MP 3 player will ______ and the quantity of MP 3 players bought will ______. A. Either rise, fall, or remain the same; decrease B. Fall; increase, decrease. or remain the same C. Rise; decrease D. Either rise, fall, or remain the same; increase

Sally and Eric are the only people in an economy. Sally buys 3 bottles of water when the price is $2 a bottle, 4 bottles of water when the price is $1, and 5 bottles when the price is $0.50. Eric buys 10 bottles of water when the price is $0.50 and 5 bottles of water when the price is $1, and no battles when the price is $2 a bottle. In the market for water, the quantity demanded _______. A. Is 8 bottles at a price of $2 a bottle B. Increases as the price rises C. Increases as the price falls D. Is 4 bottles at a price of $1 a bottle

The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded. A. Even when other factors change; lower B. Other things remaining the same; lower C. Other things remaining the same; higher D. Even when other factors change; higher

The market supply curve is the ______ sum of the individual supply curves. It is formed by adding the ______. A. Vertical; marginal cost of all producers at each quantity B. Vertical; quantities supplied by all the producers at each price C. Horizontal; quantities supplied by all the producers at each price D. Horizontal; marginal cost of all producers at each quantity

The quantity of CDs that firms plan to sell this month depends on all of the following except the A. Wage rate of workers who produce CDs B. Number of producers of CDs C. Quantity of CDs that people plan to buy D. Price of a CD

The supply curve passes through the point (0, 350) and has slope equal to 7. The equation of the supply curve is _______. A. P = 7 + 350QS B. QS = 350 + 7P C. P = 350 + 7QS D. P = 350 - 7QS

The supply of apples in the short run will be ______ than the supply in the long run and ______ than the supply today. A. More elastic; more elastic B. More elastic; less elastic C. Less elastic; more elastic D. Less elastic; less elastic

Utilitarianism is a principle whose goal is _______. A. Equal happiness for all workers B. Equal pay for equal work C. The greatest happiness for the greatest number D. The greatest pay for the greatest number

When firms use new and better ways of producing all goods and services, _______. A. The opportunity cost of most goods falls to zero B. The opportunity cost of producing every good decreases C. Economic growth occurs, but it is not free D. The production possibilities frontier shifts inward nothing

Which of the following shifts the demand curve for hot dogs leftward? A. A decrease in the price of a hot dog bun B. An increase in the price of a hamburger C. An increase in the price of a hot dog bun D. An increase in the price of a hot dog

Which of the following topics is studied in macroeconomics A. Big businesses B. The choices that individuals make C. The national economy and the global economy D. All aspects of scarcity

Which of the following illustrates scarcity? A. Ron will travel to New York City for Thanksgiving. B. Mary loves watching movies. C. Megan wants to buy a CD that costs $25 but has only $10 to spend. D. I got a new dress from my mother.

C. Megan wants to buy a CD that costs $25 but has only $10 to spend.

Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them. A. social science that studies; settle disagreements B. set of personal opinions about; cope with scarcity C. social science that studies; cope with scarcity D. set of personal opinions about; settle disagreements

C. social science that studies; cope with scarcity

Becky, an economics student, buys three cups of coffee a day, which costs her $9.00. She decides to buy one more cup each day and her expenditure on coffee increases to $12.00. The marginal cost to Becky of a cup of coffee is

C. $3.00

Which of the following statements describes an elastic demand?

C. Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent.

Which of the following news headlines does not deal with scarcity? A. Time comma Inc. to slash 300 jobs B. Is going green worth the cost question mark C. Stocks turn higher D. Companies open workplace clinics to save on medical expenses

C. Stocks turn higher

Complete the following sentence. If, as Stephen's income increases, his demand for Perrier water increases, then for Stephen, Perrier water is

C. a normal good

Human capital that people obtain from education, on-the-job training, and work experience. that have been produced in the past and that businesses now use to produce goods and services is capital.

C. is the knowledge and skill; Tools, instruments, machines, buildings, and other items

Complete the sentence. The factors that influence the elasticity of supply are

C. resource substitution possibilities and the time frame for the supply decision

Which of the following statements are positive? 1. China is Canada's largest trading partner 2. Greece is the best place to vacation 3. People who wear glasses look intelligent 4. The greatest number of accidents are caused by drunk drivers

C. statements 1 and 4 are positive

(static) Which of the following goods are likely substitutes and which are likely complements? Coal and oil are A skateboard and roller blades are Pasta and pizza are A video game and a laptop are A smartphone and a text message are A text message and an email are Pizza and sausage are Wheat and com are

C. substitutes; substitutes D. substitutes; complements complements, substitutes D. substitutes substitutes

(static) Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither? I With incomes falling in the recession, people are buying more chicken. IL People are buying more beef now that incomes have increased. III People are buying more chicken because the price of chicken has fallen. IV With higher incomes people are switching from chicken to beef.

CA. Iis inferior, Il is normal, II is neither, and IV is both

A competitive market is a market that has so can influence the price.

CA. many buyers and sellers; no single buyer or seller

positive statement

Can be supported by facts

Labor earns?

Capital

Does not eliminate scarcity because we still must give up production of one good to increase production of a second good and remain on the production possibilities frontier

What kind of economic system relies on private ownership of resources, direct incentives and decisions made via markets and the price mechanism?

Capitalism

The graph illustrates a rental apartment market in which there is a rent ceiling of $500 a month. The rent ceiling is strictly enforced. Draw a point that shows the quantity of apartments rented and the rental price. Draw shapes that represent the following: 1) the consumer surplus. Label it CS. 2) the producer surplus. Label it PS. 3) the deadweight loss. Label it DWL. 4) the maximum potential loss from housing search. Label it Loss. Ch 6+7 Quiz question 2

Ch 6+7 Quiz question 2 Photo on phone

an inferior good

Complete the following sentence. If, as Stephen's income increases, his demand for hamburgers decreases, then for Stephen, hamburgers are _______.

A change in the expected future price of laptops changes the supply of laptops.

Consider the influences on selling plans, and whether the influence changes supply.

What is consumer surplus? Consumer surplus is the ______ of a good in excess of ______, summed over the quantity bought.

Consumer surplus is the excess of the benefit received from a good over the amount paid for it. On a graph consumer surplus equals the area under the demand curve above the price paid for it, summed over the quantity bought. marginal benefit; the price paid for it

Before the Civil War, the South traded with the North and with England. The South sold cotton and bought manufactured goods and food. During the war, one of President Lincoln's first actions was to blockade the ports and prevent this trade. The South had to increase its production of munitions and food. The South had a comparative advantage in producing _______.

Cotton

Cuba is a centrally planned economy. We would expect Cuba's production possibilities (per person) to be smaller than those of Canada because Cuba _______. A. specializes in capital goods and imports all of its consumption goods B. produces a greater proportion of consumption goods than capital goods, so its PPF does not shift outward as quickly as the PPF in Canada C. is a smaller country than Canada D. does not have a comparative advantage in any goods compared to Canada

Cuba devotes a large percentage of its resources to producing consumption goods because it does not actively trade and obtain these consumption goods from countries that have a comparative advantage in their production. So Cuba cannot produce many capital goods. Canada trades for goods in which it does not have a comparative advantage, and does not have to produce goods in which it does not have a comparative advantage. Canada can produce many capital goods. The more of its resources that a country devotes to producing consumption goods and the fewer resources to producing capital and developing technologies, the smaller its production possibilities

A relative price is _______. A. The price that you pay for two goods that you use simultaneously, like coffee and cream B. What you get paid for babysitting your cousin C. Always greater than a money price D. An opportunity cost

All of the following are incentives for you to take a class in summer school except ______. A. your failure in the winter does not allow you to continue your education until you earn a credit for this course B. the course fits more easily into your summer schedule than your fall schedule C. the smaller class size in the summer, which makes it easier to get help from the professor D. you prefer summer outdoor activities to winter outdoor activities

All of the following items are sources of inefficiency except _______. A. Price and quantity regulations B. Public goods and common resources C. High transactions costs D. An increase in supply

An effective production quota _______. A. Makes marginal benefit equal to marginal cost B. Makes marginal benefit less than marginal cost C. Is efficient D. Lowers the marginal cost of production

An external benefit is a benefit that _______. A. Is greatest at the equilibrium point B. Experiences increasing marginal returns C. Always equals external cost D. Affects someone other than the buyer of a good

Bottled water and health club memberships are _______. A. Substitutes B. Complements in production C. Substitutes in production D. Complements

Choose the correct statement. A. The big tradeoff is the tradeoff between income tax and redistribution B. Taxing people's income from employment makes them work more so that their take-home income will increase C. Through income tax and redistribution, a dollar taken from a rich person ends up as a dollar in the hands of a poorer person D. The greater the amount of income redistribution through income taxes, the greater is the inefficiency

Choose the correct statement. A. What we do in pursuit of our self interest is independent of the social interest B. You make choices based on what you think is best for society as a whole C. Social interest and self interest do not conflict D. Choices that are the best for society as a whole are said to be in the social interest

Choose the statement about incentives that is incorrect. A.With low computer prices, school boards have an incentive to connect more classrooms to the Internet B. An incentive can be a reward that encourages an action C. If the price of soda falls, a child has an incentive to buy more soda D. Incentives create scarcity

Choose the statement that is incorrect. A. Only the wants of the person making a choice are relevant to determine its rationality B. Economists view the choices that people make as rational C. A rational choice is one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice D. A rational choice will turn out to have been the best choice after the event

For the past year, Andre has played tennis once a month. He now decides to play tennis twice a month. You infer that for Andre, _______. A. The marginal benefit from a game of tennis must have increased B. The marginal cost of a game of tennis must have decreased C. Either the marginal cost of a game of tennis has increased or the marginal benefit has decreased D. Either the marginal benefit from a game of tennis has increased or the marginal cost has decreased

Harry produces 9 balloon rides and 5 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier. A. Moving along B. Producing outside C. Producing on D. Producing inside

If as the price of nylon decreases, the quantity of lawn fertilizer that firms plan to sell decreases, then nylon and lawn fertilizer are _______. A. Substitutes in production B. Inferior goods C. Normal goods D. Complements in production

In the market for books, the supply of books will decrease if any of the following occur except ______. A. An increase in the price of paper B. A decrease in the number of book publishers C. An increase in the future expected price of a book D. A decrease in the price of a book

Marvin loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, Marvin continues to buy a dozen candy bars every week. Marvin's demand for candy bars is _______. A. Elastic B. Unit elastic C. Illustrated by a horizontal demand curve D. Perfectly inelastic

Money is ______. A. A social arrangement that governs the ownership, use, and disposal of anything that people value B. An economic unit that hires factors of production and organizes those factors to produce and sell goods and services C. Any arrangement that enables buyers and sellers to get information and to do business with each other D. Any commodity or token that is generally acceptable as a means of payment

On most days the price of a rose is $1 and 80 roses are purchased. On Valentine's Day the demand increases so that the price of a rose rises to $2 and 320 roses are purchased. Therefore, the price elasticity of A. supply of roses is about 0.55 B. demand for roses is about 1.8 C. demand for roses is about 0.55 D. supply of roses is about 1.8

Price elasticity of demand is equal to the ______ divided by the ______. A. Price; quantity demanded B. Percentage change in price; percentage change in quantity demanded C. Quantity demanded; price D. Percentage change in quantity demanded; percentage change in price

Resource use is efficient when _______. A. Workers receive an income equal to that made by their employers B. New resources are constantly being discovered and no resource depletion occurs C. Wealth is spread equally throughout society D. It is not possible to make someone better off without making someone else worse off

The demand curve for bus rides is a downward-sloping straight line. The price elasticity of demand for bus rides _______. A. Is constant as the price of a bus ride falls or rises B. Increases as the price of a bus ride falls C. Decreases as the price of a bus ride rises D. Decreases as the price of a bus ride falls

The demand for plums is unit elastic if _____. A. my demand for plums increases when the price of apples falls B. any increase in the price of plums results in a 1 percent decrease in the quantity of plums demanded C. the price of plums does not change after a drought D. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

The factors that influence the elasticity of supply are _______. A. The cross elasticity of demand and the price elasticity of demand B. The proportion of income spent on the good and resource substitution possibilities C. The proportion of income spent on the good and the time frame for the supply decision D. Resource substitution possibilities and the time frame for the supply decision

The minimum wage delivers _______ result and imposes _______ rule. A. An unfair; a fair B. A fair; a fair C. A fair; an unfair D. An unfair; an unfair

The price of oil hit a record high above $135 a barrel in May 2008 more than twice what it cost the year before. ... OPEC has so far blamed price rises on speculators and says there is no shortage of oil. If OPEC is correct, the price change could have occurred as a result of demand changing because of ______ in the expected price of oil and supply changing because of ______ in the expected price of oil. A. An increase; a decrease B. A decrease; a decrease C. A decrease; an increase D. An increase; an increase

Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes. The price elasticity of demand for Webster Dictionaries _______. A. Is 1 B. Is almost zero C. Depends on the complements for dictionaries D. Is almost infinity

When calculating the price elasticity of demand, we calculate the change in the quantity demanded as the percentage of the average price and the change in the quantity as a percentage change of the average quantity because this method _______. A. Gives a units-free measure B. Is the only one that will calculate a value of zero when demand is perfectly inelastic C. Allows us to calculate the price elasticity of demand as a positive number D. Gives the same value for the elasticity regardless of whether the price falls or rises

Which method is used to allocate rooms in Florida during spring break? A. Command B. Contest C. Majority rule D. Market price

Which method is used to allocate the Academy Awards? A. Lottery B. Personal characteristics C. Command D. Contest

Which of the following statements is a normative macroeconomic statement? A. A decrease in cigarette taxes will encourage more people to smoke. B. More generous unemployment benefits will increase the unemployment rate. C. State governments should lower taxes on cigarettes. D. The U.S. government should increase unemployment benefits.

Which of the following statements is a positive microeconomic statement? A. Lower taxes might increase employment. B. Apple should lower the price of its iPad to discourage competitors from entering the market. C. Interest rates will rise as the economy expands. D. The price of an iPad will fall over the next year.

You want to play the piano You think hard about how to allocate the next hour between playing the piano and reading and decide to play the piano for the first 5 minutes and then spend 55 minutes reading. Your decision is an example of _______. A. Marginal tradeoffs B. Misallocating your time C. Marginal incentives D. Making a choice at the margin

If, as Adrienne's income decreases, her demand for magazines decreases, then for Adrienne, magazines are _______. A. A substitute B. A complement C. An inferior good D. A normal good

_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent. _______ choose the quantities of factors of production to hire. A. Households and firms; Households and firms B. Firms; Firms C. Households; Markets D. Households; Firms

From May 2010 to February 2011, the price of corn increased by 100 percent and some barley growers on the Prairies stopped planting barley and started to grow corn. Choose the statement that explains this price increase. Does the event illustrate the law of demand or the law of supply? A barley farmer would grow corn because

D As the demand for corn increases, the demand curve for corn shifts rightward and the quantity of corn supplied increases. This fact illustrates the law of supply B. corn is a substitute in production for barley, and when the price of corn rises barley farmers plant more corn

If the price of a printer rises, with all other influences on buying plans remaining the same, in the market for printers, _____. A. the demand for printers increases B. the demand for printers decreases C. the quantity of printers demanded increases D. the quantity of printers demanded decreases

D) The quantity of printers demanded decreases

Which of the following is an example of an incentive?

D. All conference volunteers would be offered free Ilunch on all three days.

Read the news clip, then answer the following question. When Kanye West gave away tickets, what was free and what was scarce? Kanye students.

D. The seats available for the concert are scarce because there are only a certain number available.

What is the law of demand and how do we illustrate it? The law of demand states that other things remaining the same, the —-the price of a good, the — A demand curve that illustrates the law of demand when the price

D. higher; smaller is the quantity demanded C. shows that the quantity demanded decreases as the price rises

William loves candy bars. As the price of a candy bar increases from $1.00 to $1.25 to $1.50, William continues to buy a dozen candy bars every week. William's demand for candy bars is

D. perfectly inelastic

The opportunity cost of the Rio Olympics is

D. the goods and services that would have been purchased with R$7.0 billion if the facilities were not built unless Rio hosted the Olympics

Estimates of the long-run response to past movements in [gasoline] prices imply that a 10 percent price rise causes 5 to 10 percent less consumption, other things being equal. ... The nationwide average price of gasoline surged 53 percent from 1998 to 2004, after adjusting for inflation. Yet consumption was up 10 percent in this period. Of course, many other things changed in this period. Perhaps most important, [incomes] grew by 19 percent. ... This would ordinarily be expected to push gasoline sales up about 20 percent. The price elasticity of demand for gasoline in the long run ______. A. Depends on the change in income B. Is zero. The quantity of gasoline demanded does not respond to a change in the price of gasoline. C. Ranges between 1 and 2 D. Ranges between 0.5 and 1 The income elasticity of demand implied by the information given in the news clip is ______ If other things remain the same except for the increase in income and the rise in price, the data for 1998 to 2004 implies that the price elasticity of demand for gasoline is approximately equal to ______

D; 1.05; .19

Suppose there is a strictly enforced $1,200 rent ceiling in this market. With the rent ceiling, the market is _____ because _____. A. Inefficient; the marginal social cost of the last apartment rented is greater than its marginal social benefit B. Efficient; a rent ceiling gives poorer people greater access to housing C. Efficient; the marginal social cost of the last apartment rented is greater than its marginal social benefit D. Inefficient; the marginal social benefit from the last apartment rented is greater than its marginal social cost With the rent ceiling, the housing market is fair by both the fair results and fair rules views. A. True B. False

D;B

Ezra and Betsy grow turnips and potatoes. Ezra has a comparative advantage in producing turnips if _______ A. Ezra can produce for himself all the vegetables he wants B. Ezra can grow more turnips than Betsy can grow C. Betsy's opportunity cost of producing turnips is less than her opportunity cost of producing potatoes D. Betsy's opportunity cost of producing turnips is greater than Ezra's opportunity cost of producing turnips If Ezra also has an absolute advantage in growing turnips and potatoes, he will _______. A. Be unable to trade with Betsy B. Perform all activities at the lowest opportunity cost C. Have a comparative advantage in one activity but not both D. Have an equal opportunity cost in performing all activities

D;C

If a price cut increases total revenue, demand is ______. If a price cut decreases total revenue, demand is ______. A. Inelastic; elastic B. Unit elastic; inelastic C. Elastic; unit elastic D. Elastic; inelastic If a price cut leaves total revenue unchanged, demand is ______

D;Unit Elastic

Which of the following is an example of comparative advantage

Dave makes 4 pizzas giving up 6 jars of milk shakes while Rob makes 2 pizzas giving up 4 jars of milk shakes.

The graph shows the supply curve of no-name soda. The government has imposed a sales tax of $2 per case on no-name soda. The sellers of no-name soda end up paying the entire tax. Draw and label the demand curve for no-name soda. The more ______ the demand, ______. a. elastic; the more equally is the tax split between buyers and sellers b. inelastic; the more equally is the tax split between buyers and sellers c. elastic; the larger is the amount of the tax paid by sellers d. elastic; the larger is the amount of the tax paid by sellers

Demand horizontal, stays the same. c. elastic; the larger is the amount of the tax paid by sellers

Marginal revenue is: A. The revenue a person gives up to do their current job B. Revenue associated with secondary effects of production C. The amount by which the revenue of a good exceeds its cost D. None of the above are correct E. The additional revenue a person gets from performing one more unit of work

The table gives the demand and supply of teenage labour. If a minimum wage for teenagers is set at $4 an hour, how many hours do they work and how many hours of teenage labour are unemployed? If a minimum wage of $4 an hour is set for teenagers, the teenagers work 1500 hours a month and 0 hours a month are unemployed.

EQILIBRIUM PRice

social science that studies; cope with scarcity

Economics is the _____ the choices that individuals, businesses, governments, and entire societies make as they _____, and the influences on those choices, and the arrangements that coordinate them.

Rain spoils the strawberry crop, the price of strawberries rises from $6 to $8 a box, and the quantity demanded decreases from 600 to 200 boxes a week. Over this price rang, the demand for strawberries is (inelastic, elastic, or unit elastic)

Elastic

Inelastic

Elasticity < 1

Unit elastic

Elasticity =1

Elastic

Elasticity > 1

we don't have enough time to do all the things we'd like to do

Every day, we make many choices. We can't avoid having to make choices because ______

The production

Firms are institutions that organise _____ of goods and services.

Which of the following is true?

For an interior good, when income increases, the demand curve shifts leftward

During Valentine's week, more people buy chocolates and chocolatiers offer their chocolates in special boxes which cost more to produce than the everyday box. The graph shows the market for chocolates during an average week. Draw a curve to show the effect when more people buy chocolates during Valentine's week. Label it 1. Draw a curve to show the effect of chocolatiers offering their chocolates in special red boxes. Label it 2. Draw a point to show the new equilibrium price and new equilibrium quantity.

Graph answer

Tim Hortons has exploded to become a dominant player among quick-serve restaurants. In 2001, it took the risk by switching to centralized production of baked goods, which lowered its labour costs and increased its sales volume. Draw a graph to show the effect of lower labour costs on the price of Tims' baked goods and the quantity sold.

Graph answer

Big Lobster sells lobster and fish, and so too does H Salt. If Big Lobster's opportunity cost of preparing lobster exceeds Upper H Salt's opportunity cost of preparing lobster, then ______ If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.

H Salt has a comparative advantage in preparing lobster divergent opportunity cost

Olivia and Helen can produce gains from trade if

Helen sells shirts to Olivia in exchange for some of the ties that Olivia produces

How

How do we use the factors of production to produce theses goods?

Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. II Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and III are changes in the quantity supplied.

Which of the following statements describes a change in the quantity supplied and which describes a change in supply? I Farms are selling less chicken because the price of turkey has increased. IL Farms are selling less chicken because the price of chicken has fallen. III Farms are selling more chicken because the price of chicken has risen. IV Farms are selling more chicken because the cost of chicken feed has fallen.

I and IV are changes in supply and II and IIII are changes in the quantity supplied.

Which of the following statements is an example of transaction costs?

I paid a commission to the real estate broker when I bought my house.

Which of the following statements is an example of transaction costs?

I paid a commission to the real estate broker when i bought my house

The graph (on the other side) shows the market for bottled water. Draw a point at the market equilibrium. Label it 1. Draw a demand curve that shows what happens if the price of a gym membership falls. Label the curve D1. Draw a supply curve that shows the effect of a technological advance that cuts the cost of producing bottled water. Label it S1. Draw a point at the new market equilibrium. Label it 2.

If demand and supply change in the same direction, we CAN PREDICT the direction of change of the equilibrium quantity and we CANNOT PREDICT the direction of change of the equilibrium price.

Financial Capital is Not Capital

In everyday language, we talk about money, stocks, and bonds as being capital. These items are financial capital, and they are not productive resources. They enable people to provide businesses with financial resources, but they are not used to produce goods and services. They are not capital.

Scarcity - be it in time, talent, or money - forces all of us to make choices. But according to economists, those choices can be influenced. What do choices respond to?

Incentives

What does the income elasticity of demand measure? The income elasticity of demand is a measure of the responsiveness of the demand for a good or service to a change in ______, other things remaining the same.

Income

(Figure 1) If the price of a denim jacket falls from $80 to $40, all other influences are unchanged, the quantity of denim jackets demanded

Increases

positive; positive

Indicate whether each of the following news items is a positive or a normative statement. 1. The PlayStation has a larger range of games than the XBox. 2. Higher income taxes will lead to a decrease in work hours. 3. An increase in the gas tax will decrease urban air pollution. 4. Music downloads have decreased CD sales. Statement 1 is a ______ statement, and statement 2 is a ______ statement.

If the quantity of dental services demanded increases by 5 percent when the price of dental services falls by 10 percent, is the demand for dental services inelastic, elastic, or unit elastic?

Inelastic

The smaller the proportion of income spent on a good, the more _____ is the demand for it

Inelastic

Capital earns?

Interest

farmers planned to decrease the quantity of corn supplied in 2017. This fact illustrates the law of supply.

In 2016, the price of corn fell and some corn farmers will switch from growing corn in 2017 to growing soybeans. Does this fact illustrate the law of demand or the law of supply? As the price of corn fell in 2016, _________.

Higher than; can, Jack has absolute advantage.

Jack is producing at point J on PPFJ and Stephen is producing at point S on PPFS. Jack's opportunity cost of producing a ton of apples is ______ than Stephen's, so Stephen ______ gain from specialization and trade with Jack. Who has absolute advantage?

Martha can produce 50 quilts or 200 batches of chocolate chip cookies in a month. Jane can produce 10 quilts or 55 batches of chocolate chip cookies in a month. Martha has an absolute advantage in both goods ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

Jane;Martha

Who is Chairman of the Board of Governors of the Federal Reserve?

Janet Yellen

Which of the following is an example of money price?

Joe paid $15 to buy a pizza from McDonald's.

10, 2, Liam, Kim, 20/200, 50/100

Kim can produce 40 pies per hour or 400 cakes per hour. Liam can produce 100 pies per hour or 200 cakes per hour.Kim's opportunity cost of producing a pie is _____ cakes. Liam's opportunity cost of producing a pie is ______ cakes. ______ has the comparative advantage in producing pies. ______ has the comparative advantage in producing cakes. Kim spends 30 minutes producing pies and 30 minutes producing cakes, Kim produces ______ pies and _______ cakes. If Liam spends 30 minutes producing pies and 30 minutes producing cakes, Liam produces ______ pies and _______ cakes

Kim can produce 40 pies per hour or 400 cakes per hour. Liam can produce 100 pies per hour or 200 cakes per hour.

Kim's opportunity cost of producing a pie is 10 cakes. Liam's opportunity cost of producing a pie is 2 cakes. Liam has a comparative advantage in producing pies while Kim has a comparative advantage in producing cakes Kim spends 30 minutes producing pies and 30 minutes producing cakes, Kim produces 20 pies and 200 cakes. If Liam spends 30 minutes producing pies and 30 minutes producing cakes, Liam produces 50 pies and 100 cakes.

4. In the US, which factor of production earned the largest share of income in 2011 and what percentage did it earn?

Labor is the factor of production that earns the largest share of income. In 2011, labor in the US earned 69% of total income.

Labor is the productive resource that _____.

Labor is the productive resource that *gets highest fraction of income.*

Factors of production

Land, labor, capital and entrepreneurship

3. The productive resources that are used to produce goods and service _____ are factors of production.

Land, labor, capital, and entrepreneurship

Factors of production are grouped into four categories:

Land, labor, capital, and entrepreneurship

(Figure 1) The change in the price of a denim jacket illustrates what law in action

Law of Demand

No, it cannot produce these quantities, and no it is not efficient.

Leisure Island has 50 hours of labor a day that it can use to produce entertainment and good food. The table shows the maximum quantity of each good that Leisure Island can produce with different quantities of labor. A. Can Leisure Island produce 4 shows and 14 meals a week? B. If Leisure Island produces 4 shows and 9 meals a week, is production efficient?

Which of the following is a normative statement? a. Low rents will restrict the supply of housing. b. Low rents are good because they make apartments more affordable. c. Housing costs are rising. d. Owners of apartment buildings are free to charge whatever rent they want.

Low rents are good because they make apartments more affordable.

A competitive market is a market that has ___, so ___ can influence the price.

Many buyers and sellers; no single buyer or seller

pasta and pretzels are inferior goods

Maria graduates from college and her income increases by $40 comma 000 a year. Nothing else changes. Maria decreases the quantity of pasta and pretzels that she buys and increases the quantity of tickets to orchestra concerts that she buys. For Maria, _______.

Martha can produce 70 quilts or 140 batches of chocolate chip cookies in a month. Jane can produce 8 quilts or 24 batches of chocolate chip cookies in a month. _______has an absolute advantage in both goods. ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

Martha (she is more productive for both goods) Jane (opp. cost =.33 quilts) Martha (opp. cost = 2 cookies)

Martha can produce 60 quilts or 180 batches of chocolate chip cookies in a month. Jane can produce 9 quilts or 18 batches of chocolate chip cookies in a month. Distinguish between comparative advantage and absolute advantage ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

Martha_______ has an absolute advantage in both goods. jane;Martha

Which of the following statements describe an inelastic demand?

Megan did not buy too many hockey tickets even though their price dropped by 10 percent.

Kelly is an architect, and she is trying to decide whether to hire Mike, a draftsman, to assist with her work. Kelly could hire Mike at $20 per hour, but it would take him three times as long to complete a task as it takes Kelly. Kelly is able to earn $90 per hour and has more architectural jobs than she is able to handle. Which of the following is true?

Mike should be hired at the $20 per hour wage rate.

Which of the following is money? A. Paulo's stash of Bitcoin. B. Jen's credit card. C. Ron's debit card. D. Charlie's chequing account deposit at the Bank of Montreal.

Money is any commodity or token that is generally accepted as a means of payment. "Charlie's chequing account deposit at the Bank of Montreal," implies a commodity deposited in the bank that is accepted as a means of payment. So it is an example of money. Next Question

If a price of a sundae falls, a ____ the demand curve occurs. If any factor that influences buying plans other than the price changes, then a ___ the demand curve occurs.

Movement down along; shift of

The money price of a textbook is $90 and the money price of the Wii game Super Mario Galaxy is $45. What is the opportunity cost of a textbook in terms of the Wii game? What is the relative price of the Wii game in terms of textbooks?

O A. the number of Wii games you must give up to get the textbook

changes; microeconomic

Which of the following examples describes microeconomics?

People prefer buying iPhones over Nokia phones.

When a _____ is applied to a labour market, it is called a minimum wage.

Price Floor

percentage change in quantity demanded; percentage change in price

Price elasticity of demand is equal to the ______ divided by the ______.

Cannot; less

Production efficiency is a situation in which the economy is getting all that it can from its resources and _____ produce more of one good or service without producing _____ of something else.

Entrepreneurs earn?

Profit

opportunity cost

Quantity given up / Quantity gained

Lower; higher

Question Facts In an hour, JamesJames can catch 10 pounds of bass or pick 10 pounds of peaches. In an hour, FredFred can catch 10 pounds of bass or pick 20 pounds of peaches. A. The opportunity cost of catching a pound of bass is ______ for James than for Fred, and the opportunity cost of picking a pound of peaches is ______ for James than for Fred.

James; bass

Question Facts In an hour, JamesJames can catch 10 pounds of bass or pick 10 pounds of peaches. In an hour, FredFred can catch 10 pounds of bass or pick 20 pounds of peaches. B. So ______ has a comparative advantage in producing ______.

Land earns?

Rent

People earn their income by...

Rent, wages, interest, and profit

When a shortage arises, the price ______ to its equilibrium, which _______.

Rises; decreases the quantity demanded and increases the quantity supplied

1. Which of the following is an example of consumption goods and services?

Ron bought a Nissan Altima last summer

Will and Ruth grow turnips and potatoes. Will had a comparative advantage in growing turnips if

Ruth's opportunity cost of producing turnips is greater than Will's opportunity cost of producing turnips

7. Which of the following is an example of entrepreneurship?

Sam Walton created the multinational retail corporation brand Walmart in 1962.

Which of the following statements is an example of perfectly elastic demand?

Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a kilogram compared to other sellers in the farmers' market.

Which of the following statements describes a perfectly inelastic demand?

Shoppers does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.

Social institutions such as firms, markets, property rights, and money _______. A. are required for society to enjoy the benefits of specialization and tradeare required for society to enjoy the benefits of specialization and trade B. are not required for societyare not required for society to enjoy the benefits of specialization and tradeto enjoy the benefits of specialization and trade C. give comparative advantage in all goods and services to advanced economiesgive comparative advantage in all goods and services to advanced economies D. were collectively unknown until the 20 th centurywere collectively unknown until the 20th century

Social institutions such as firms, markets, property rights, and money are necessary to make decentralized coordination work and are required for society to enjoy the benefits of specialization and trade.

Choose the correct statements about competitive markets. 1. A single seller in a competitive market cannot influence the price. 2. Competitive markets exist for goods, services, money, factors of production, and inputs. 3. A competitive market is a market for services but not for goods. 4. In a competitive market, prices are eventually driven down to zero.

Statements 1 and 2 are correct

Choose the correct statements. 1. To describe preferences comma economists use the concept of marginal benefit.To describe preferences, economists use the concept of marginal benefit. nothing 2. Marginal benefit of a good is the opportunity cost of producing one more unitMarginal benefit of a good is the opportunity cost of producing one more unit of it.of it. 3. We measure the marginal benefit from a good or service by the least that people are willing to pay for all theWe measure the marginal benefit from a good or service by the least that people are willing to pay for all the units they consume.units they consume. 4. We measure the marginal benefit from a good or service by the most that people are willing to pay for anWe measure the marginal benefit from a good or service by the most that people are willing to pay for an additional unit of it.

Statements 1 and 4 are correct

Choose the correct statements. a. The opportunity cost of an action is the highest dash valued alternative forgone. nothing nothing b. Opportunity cost is a ratio. nothing nothing c. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF . nothing d. There is no relationship between the opportunity cost of producing an additional good measured on the x dash axis and the opportunity cost of producing an additional good measured on the y dash axis.

Statements a and b are correct

Choose the correct statements. a. Opportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantityOpportunity cost of a good is the increase in the quantity produced of one good divided by the decrease in the quantity produced of another good as we move along the PPF .produced of another good as we move along the PPF. nothing b. The opportunity cost of producing more x comma illustrated as a movement between two points on the PPF is equal toThe opportunity cost of producing more x, illustrated as a movement between two points on the PPF is equal to the inverse of the opportunity cost of producing more y comma illustrated as a movement between the same two points in thethe inverse of the opportunity cost of producing more y, illustrated as a movement between the same two points in the nbsp opposite direction. opposite direction. c. Opportunity cost is a ratio.Opportunity cost is a ratio. nothing nothing d. Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods.Opportunity cost of a good cannot be accurately measured along a PPF because the PPF shows only two goods. nothing nothing

Statements b and c correct.

supply is

Supply is the relationship between the quantity supplied and the price of a good when all other influences on selling plans remain the sam

the demand for smartphones increases

Taking a smartphone to the gym when you work out becomes more popular. What is the result of this event?

We observe that the equilibrium price of digital cameras has fallen and the equilibrium quantity of digital cameras has increased. Which of the following events could be responsible for this? a. The price of film cameras rose. b. Consumers' preferences changed in favor of digital cameras. c. Technological advances in digital camera production. d. Workers who make digital cameras received a pay rise.

Technological advances in digital camera production.

What does the supply curve tell us about the producer's minimum supply price? A supply curve _______.

Tells us the lowest price at which someone is willing to sell.

Eye of the Past: Changes in What We Produce

The United States has changed in the way we produce. A lot of what used to be done by hand is now done by computers.

the movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit

The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if ______.

When an event occurs that changes the demand for coffee makers, ___ if demand increases and ____ if demand decreases

The demand curve shifts rightward; the demand curve shifts leftward

B. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

The demand for plums is unit elastic if _____. A. the price of plums does not change after a drought B. a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded C. my demand for plums increases when the price of apples falls D. any increase in the price of plums results in a 1 percent decrease in the quantity of plums demanded

Which of the following is most likely to increase the price of personal computers in the short-run?

The development of personal computer software that makes it easier to use personal computers.

The table sets out the supply schedule of jeans. Calculate the elasticity of supply when the price rises from $125 to $135 a pair. Calculate the elasticity of supply when the average price is $125 a pair.

The elasticity of supply when the price rises from $125 to $135 a pair is 3.25. The elasticity of supply when the average price is $125 a pair is 3.57. The supply of jeans is elastic .

The demand for laptops is P= 1,400 - 50QD The supply of laptops is P= 750+100QS. What is the equilibrium price of a laptop and what is the equilibrium quantity of laptops per day?

The equilibrium price is $ 1183 per laptop, and the equilibrium quantity is 4.33 laptops per day. >>> Answer to the nearest whole number.

The table (on the other side) gives the demand and supply schedules for DVD rentals. What is the equilibrium price of a DVD rental?

The equilibrium price is $5 a DVD rental

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

The table (on the other side) gives the demand and supply schedules for DVD rentals. What is the equilibrium quantity of DVD rentals per day?

The equilibrium quantity of DVD rentals is 500 a day

negatively sloped.

The existence of the tradeoff along the PPF means that the PPF is

2. Name the four factors of production and the incomes they earn.

The factors of production are land, labor, capital, and entrepreneurship. Land earns rent; labor earns wages capital earns interest; and entrepreneurship earns profit or incurs a loss.

2 bags

The figure shows Jessica's PPF. Jessica currently produces 10 bags of fudge and no candies. If JessicaJessica decides to produce 1 bag of candies, her opportunity cost of the bag of candies is _______ of fudge.

Attainable; unattainable, and does; because the firm can attain the points outside the frontier but not inside the frontier

The figure shows the production possibilities frontier for a firm that produces pet food. Point A is ______ and point B is ______. This PPF ______ illustrate scarcity because ______.

3. Distinguish between the functional distribution of income and the personal distribution of income.

The functional distribution of income shows the percentage of total income received by each factor of production. the personal distribution of income shows how total income is shared among households.

Which of the following is an example of a price floor?

The government guarantees that potato farmers will receive at least $50 a tonne.

2. Which of the following is an example of capital goods?

The government will open another public school in the area.

We are giving up the minimum amount of y possible to increase the production of x

The graph shows a production possibilities frontier. Production efficiency is achieved at points A, B, and C because to increase the production of x as we move from A to B to C, _______ .

6 cookies, and the principle of decreasing marginal benefit

The graph shows the marginal benefit curve for cups of coffee. What is the maximum amount that people are willing to pay for the 4 millionth cup of coffee per day? and The marginal benefit curve illustrates _______.

4 batches of cookies an hour are produced

The graph shows the marginal cost of producing cookies and the marginal benefit from cookies in Oakdale. Oakdale achieves allocative efficiency if _______.

The table gives the demand schedules for train travel for Ann, Beth, and Cy. What is each traveller's consumer surplus when the price is $4 a kilometre? What is the market consumer surplus when the price is $4 a kilometre? When the price is $4 a kilometre, Ann's consumer surplus is $

The graph shows Ann's demand curve and the market price line. Consumer surplus equals the area under the demand curve and above the market price. Ann's consumer surplus equals 1/2 times ($9minus$4) times 25, which is $62.50. When the price is $4 a kilometre, Ann's consumer surplus is $ 62.5. When the price is $4 a kilometre, Beth's consumer surplus is $ 40. When the price is $4 a kilometre, Cy's consumer surplus is $ 22.5. When the price is $4 a kilometre, the market consumer surplus is $ 125.

An increasing; bowed-out shape

The graph shows Brazil's PPF for ethanol and food crops. Brazil faces ______ opportunity cost of a barrel of ethanol, which is shown by the _____________ of the PPF.

The inverse of the opportunity cost of producing an additional barrel of ethanol

The graph shows Brazil's PPF for ethanol and food crops. If Brazil increases production of food crops from 2 tons per day to 3 tons per day, the opportunity cost of the additional ton of food crops is 14 barrels of ethanol. If Brazil increases production of ethanol from 40 barrels per day to 54 barrels per day, the opportunity cost of the additional 14 barrels of ethanol is 1 ton of food crops. The opportunity cost of producing an additional ton of food crops is equal to ______

A constant; a constant

The graph shows Yucatan's PPF for food and sunscreen. Yucatan faces ______ opportunity cost of food and ______ opportunity of sunscreen, which can be seen by the shape of the PPF.

We observed a fall in the price of running shoes and in increase in the quantity of running shoes that producers sell. The most likely explanation is that _____.

The law of supply applies to running shoes, but some other influence on selling plans has increased the supply of running shoes

When most economists wake up in the morning, their first decision is whether or not to hit the snooze alarm. What statement best represents their thought process as a rational decision maker? (How does an economist approach analyzing a situation like this?)

The marginal benefit of sleeping 10 more minutes is greater than the marginal benefit of 10 more minutes of work.

Every week,Hassan skates for one hour, and his grade on each math test is 85 percent. Last week, after skating for one hour, Hassan considered skating for another hour. He decided to skate for another hour and cut his study time by one hour. But last week, his math grade fell to 75 percent. Given that Hassan spent a second hour skating, what can you conclude about the marginal benefit and marginal cost of the first hour of skating?

The marginal benefit of the first hour of skating exceeded its marginal cost.

What is the relationship between the marginal cost, minimum supply-price, and supply?

The marginal cost is the cost of producing an additional unit of a good. The marginal cost is the minimum supply-price, so the supply curve is the same as the marginal cost curve.

opportunity cost of producing one more unit of it

The marginal cost of a good or service is the _____.

market demand.

The market demand curve is the horizontal sum of the individual demand curves and is formed by adding the quantities demanded by all the individuals at each price.

The creation of a successful movie illustrates choices made in self-interest that also achieve the social interest if ______.

The movie is produced at the lowest possible cost, and the movie gives the greatest possible benefit.

Gains from trade

The net benefits that countries experience as a result of lowering import tariffs and otherwise liberalizing trade.

The table (on the other side) gives the demand and supply schedules for movie downloads. Suppose that demand increases by 50 downloads a day and supply decreases by 100 downloads a day. What is the new equilibrium price of a movie download and what is the new equilibrium quantity of movie downloads?

The new equilibrium price is $6.00 per download The new equilibrium quantity is 650 downloads per day

Brazil produces ethanol from sugar at a cost of $0.83 per gallon. The United States produces ethanol from corn at a cost of $1.14 per gallon. Sugar grown on one acre of land produces twice the quantity of ethanol as the corn grown on an acre. The United States imports 5 percent of its ethanol consumption and produces the rest itself. Since 2003, U.S. ethanol production has more than doubled and U.S. corn production has increased by 45 percent.

The opportunity cost of producing ethanol has increased since 2003.

Your price elasticity of demand for bananas is 4. If the price of bananas rises by 5 percent, what is the percentage change in the quantity of bananas you buy? What is the change in your expenditure on bananas?

The percentage change in the quantity of bananas demanded is a decrease of 20 percent. The percentage change in your expenditure on bananas decreases by approximately 15 percent.

A fall in the price of chocolate sauce of 2 percent increases the quantity of chocolate sauce demanded by 10 percent and increases the quantity of ice cream demanded by 12 percent.

The price elasticity of demand for chocolate sauce is 5 The cross elasticity of demand for ice cream with respect to the price of chocolate sauce is -6

A 12 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 22 percent and increases the quantity of apple juice demanded by 14 percent. Calculate the price elasticity of demand for orange juice and the cross elasticity of demand for apple juice with respect to the price of orange juice.

The price elasticity of demand for orange juice is 1.83. The cross elasticity of demand for apple juice with respect to the price of orange juice is 1.16.

A rise in the price of sushi of from 98cents to $1.02 a piece decreases the quantity of soy sauce demanded form 101 units to 99 units an hour and decreases the quantity of sushi demanded by 1 percent an hour. Calculate the price elasticity of demand for sushi and the cross elasticity of demand for soy sauce with respect to the price of sushi.

The price elasticity of demand for sushi is . 25. The cross elasticity of demand for soy sauce with respect to the price of sushi is negative . 5.

US. coal production in 2016 is 17 percent down on that of 2015. Almost all coal use in the United States is for electricity generation and the price of coal for power plants foll from $2.27 per million Btu in 2015 to $2.17 per million Btu in 2016 Source Hellenic Shipping News, January 10, 2017 Calculate the price elasticity of supply of coal assuming no change in the supply of coal Is the supply of coal elastic or inelastic?

The price elasticity of supply of coal is 3.78 >>> Answer to 2 decimal The supply of coal is elastic

The demand for gym memberships does not change when a change in ___ occurs. a. the price of a gym membership b. the average income c. the price of bottled water (complement of a gym membership) d. the expected future price of a gym membership

The price of a gym membership

All grapefruit juice producers have decided to blend tangerine juice with the grapefruit juice. This blend results in a higher cost of production, but studies show that consumers prefer the taste of the blend to straight grapefruit juice. What will happen to the equilibrium price and quantity of the new "blended" grapefruit juice now that it costs more to produce but consumers like it better?

The price rises, but the effect on the quantity is uncertain

Can be produced and the combinations that cannot be produced

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

can be produced and the combinations that cannot be produced

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

The price elasticity of demand is a units-free measure of the responsiveness of ________

The quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

Sarah, Kirk, and Jean are the only producers of panini sandwiches in an isolated village. The table shows their weekly supply of paninis. When the price of a panini is $7.50, what is the quantity of paninis supplied by the market in a week?

The quantity supplied by the market is 7 paninis a week.

Which of the following is a microeconomic topic? a. The reasons for a decline in average prices. b. The reasons why total employment decreases. c. The effect of the government budget deficit on inflation. d. The reasons why Kathy buys less orange juice.

The reasons why Kathy buys less orange juice.

Demand is ____, when all other influences on buying plans remain the same.

The relationship between the quantity demanded of a good and the price of the good.

Long-Run Supply

The response of the quantity supplied to a price change after all the technologically possible ways of adjusting supply have been exploited is determined by long-run supply. For most goods and services, long-run supply is elastic and perhaps perfectly elastic.

Short-Run Supply

The response of the quantity supplied to a price change when only some of the possible adjustments to production can be made is determined by short-run supply. Most goods have an inelastic short-run supply.

When Kanye West gave away tickets, what was free and what was scarce? Kanye West Offers Free Concert Tickets Kanye West has teamed with Los Angeles inner-city schools to offer free passes for students.

The seats available for the concert are scarce because there are only a certain number available.

All shredded wheat producers have decided to add a new ingredient to shredded wheat, the "crunch enhancer." Crunch enhancer keeps cereals crisper longer in milk and, as a result, consumers decide they like shredded wheat more than before. What happens to the supply and demand curve for shredded wheat now that it costs more to produce and consumers like it better?

The supple curve shifts leftward and the demand curve shifts rightward

The graph (on the other side) illustrates the market for cell phones. Suppose the current price of a cell phone is $60 and 4 million cell phones a year are bought. What do you predict will happen to the price of a cell phone?

The surplus of cell phones forces the price down

There is a technological advance in the production of a good and simultaneously also an increase in the expected future price. Which of the following will happen?

The technological improvement shifts the supply curve rightward while the increase in the expected future price shifts the supply curve leftward. The net effect is unknown

Which of the following is the opportunity cost of attending a ball game

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time

What is the relationship between the marginal benefit, value, and demand? Choose the correct statement.

The value of one more unit of a good is its marginal benefit. The demand curve is the same as the marginal benefit curve.

marginal benefit

The value of one more unit of a good or service is its marginal benefit. We measure marginal benefit by the maximum price that is willingly paid for another unit of the good or service. But willingness to pay determines demand. A demand curve is a marginal benefit curve.

As gas and food prices increased and home prices slumped, people had less extra income to spend on home improvements. And the improvements that they made were on small inexpensive types of repairs and not major big-ticket items. Source: CNN, May 20, 2008 What does this news clip imply about the income elasticity of demand for big-ticket home-improvement items? Would the income elasticity of demand be greater or less than 1?

This news clip implies that big-ticket home-improvement items are income ______ and the income elasticity of demand for these items is ______ than 1. elastic; greater

Which of the following statements best describes search activity?

Tim spends time looking for jobs and sending applications to firms.

Which of the following is an example of absolute advantage

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

Patty has a comparative advantage in producing snowboards, but not skis. Patty specializes in snowboards producing 20, and Tony specializes in Skis producing 50.

Tony and Patty produce skis and snowboards. The tables show their production possibilities per week. Each week, Tony produces 5 snowboards and 40 skis and Patty produces 10 snowboards and 5 skis.

Consumer Surplus

Top Graph triangle

1. What are the types of goods and services produced? Give an example of each and distinguish between them.

Two types: consumption goods and services and capital goods. A hamburger is a consumption good and a haircut if a consumption service. An oil rig an auto assembly line are capital goods. A consumption good or service is an item that is brought by individuals or the government and is used up in the current period. A capital good is brought by businesses or the government and ti is used over and over again to produce other goods and services.

If the money price of a cup of coffee is $1 and the money price of gum is 50 cents per pack, then the relative price of a cup of coffee in terms of a pack of gum is

VB. 2

Which of the following statements describes a perfectly inelastic demand?

Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.

What

What goods and services do we produce?

Harry's marginal cost of tennis when he plays for 5 hours a week is 2.5 percentage points in economics, and 5 points for 7 hours.

What is Harry's marginal cost of tennis if he plays for 5 hours a week? What is Harry's marginal cost of tennis if he plays for 7 hours a week?

a how; a what

When Starbucks decides to produce coffee by using more labour and less capital, it is answering ______ question. When Gap decides to produce athletic wear rather than business suits, it is answering ______ question.

A. increases the supply of logs B. Decreases the supply of plywood

When a timber mill makes logs from trees it also produces sawdust, which is used to make plywood. a. Explain how a rise in the price of sawdust influences the supply of logs. b. Explain how a rise in the price of sawdust influences the supply of plywood.

The table provides information on the supply schedules of hot air balloon rides by Xavier, Yasmin, and Zack, who are the only sellers in the market. When the price is $70 a ride, what is each seller's producer surplus? What is the market producer surplus when the price is $70 a ride?

When the price is $70 a ride, Xavier's producer surplus is $ 225. When the price is $70 a ride, Yasmin's producer surplus is $ 100. When the price is $70 a ride, Zack's producer surplus is $ 25. When the price is $70 a ride, the market producer surplus is $ 350.

Momentary Supply

When the price of a good changes, the immediate response of the quantity supplied is determined by the momentary supply of that good.

Which of the following is an example of price elasticity of demand?

When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.

C. decreases from $45 to $40; elastic

When the price of tomatoes rises from $3 per pound to $4 per pound, the quantity of tomatoes sold decreases from 15 pounds to 10 pounds. Total revenue _____, and using the total revenue test, we can determine that the demand for tomatoes is _____ . A. initially is $45; unit elastic B. equals quantity sold divided by price; elastic C. decreases from $45 to $40; elastic D. decreases by $5; inelastic

The table gives the demand schedules for train travel for Ann, Beth, and Cy. What is the marginal social benefit when the total distance travelled is 45 kilometres? When the total distance traveled is 45 kilometres, how many kilometres does each travel and what is their marginal private benefit? When the total distance travelled is 45 kilometres, each person receives a marginal benefit of _____.

When the total distance travelled is 45 kilometres, the marginal social benefit is $ 5. When the total distance travelled is 45 kilometres, Ann travels 20 kilometres, Beth travels 15 kilometres, and Cy travels 10 kilometres. B. $5

a for whom

Whether Gap gets a larger profit or its workers get higher wages is _______ question.

I will study for my exam instead of going to the movie tonight.

Which of the following illustrates a tradeoff?

D. Dan says that a 10 percent rise in the price of movie tickets increases the quantity of movie tickets supplied by the same proportion.

Which of the following illustrates a unit elastic supply? A. Webster Dictionaries and Oxford Dictionaries are almost perfect substitutes and therefore have a constant elasticity of substitution. B. A 5 percent increase in wage rates has increased the cost of production in China by 5 percent. C. The supply of lettuce will be more elastic in the long run than the supply today. D. Dan says that a 10 percent rise in the price of movie tickets increases the quantity of movie tickets supplied by the same proportion.

C. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.

Which of the following is an example of price elasticity of demand? A. Banana farmers enjoyed higher prices when the demand for bananas increased. B. Richer people buy fewer bananas than poorer people. C. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. D. When the price of bananas increased by 5 percent and incomes slumped, banana sales decreased by 5 percent.

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

Which of the following is the opportunity cost of attending a ball game?

C. Megan did not buy too many hockey tickets even though their price dropped by 10 percent.

Which of the following statements describe an inelastic demand? A. A rise in the tax rate has decreased imports of auto parts from China. B. People are buying HDTVs before the Super Bowl game begins. C. Megan did not buy too many hockey tickets even though their price dropped by 10 percent. D. Housing prices in London rose by 10 percent due to rock bottom interest rates.

B. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price

Which of the following statements describes a perfectly inelastic demand? A. The government is promoting generic drugs that are much cheaper. B. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price. C. A large number of youngsters buy roses from Colombian rose-growers before Valentine's Day. D. I prefer taking the subway to work rather than driving because of high fuel prices.

A. Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent.

Which of the following statements describes an elastic demand? A. Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent. B. A fall in Ralph's income by 5 percent changes his demand for chocolates by 1 percent. C. I can't afford as many books because my income has fallen. D. Tom's demand for apples does not change when the price of bananas rises.

D. A rise in the price of tomatoes by 10 percent increases the quantity supplied by more than that.

Which of the following statements describes an elastic supply? A. Ron grows both corn and soybean in his field and supplies them to the market. B. A fall in Tom's profits by 5 percent changes his supply of chocolates by 1 percent. C. Federal officials say that food supply is safe even though a fourth case of mad cow disease has been detected in California. D. A rise in the price of tomatoes by 10 percent increases the quantity supplied by more than that.

D. As a result of a rise in the price of spinach with all else remaining constant, Ralph buys more broccoli, a substitute for spinach.

Which of the following statements describes cross price elasticity of demand? A. A 10 percent rise in the price of ink cartridges decreases the quantity demanded of ink cartridges by 6 percent. B. A quota imposed on the production of potatoes has increased supply of onions. C. A weaker rupee against the dollar has increased India's export competitiveness. D. As a result of a rise in the price of spinach with all else remaining constant, Ralph buys more broccoli, a substitute for spinach.

B. The demand for pears increases by 800 percent, but Kroger continues to sell them at an unchanged price.

Which of the following statements describes perfectly elastic supply? A. Walgreens reports a 70 percent increase in the sales of Ibuprofen. B. The demand for pears increases by 800 percent, but Kroger continues to sell them at an unchanged price. C. The total revenue from the sale of notebooks is constant regardless of the price of a notebook. D. The price of ice cream falls by $1 a carton and Baskin Robbins continues to sell the same quantity of ice cream.

A. Farmers have not been able to respond to a rise in the price of peas

Which of the following statements illustrates an inelastic supply? A. Farmers have not been able to respond to a rise in the price of peas. B. IBM sold its personal computing division to Lenovo. C. Sales of Apple's new iPhone 5S have broken all previous records. D. Foxconn technologies, a large manufacturing company that supplies electronics, is facing a strike.

C. A salary cut and no other changes has resulted in Mary buying less fast food.

Which of the following statements illustrates income elasticity of demand? A. A rise in Annie's income by 5 percent decreases supply of canned fruits by 6 percent. B. Poor economic conditions are resulting in higher unemployment and lower aggregate demand. C. A salary cut and no other changes has resulted in Mary buying less fast food. D. A 2 percent fall in the price of peanuts increases Ralph's demand for almonds by 5 percent.

C. Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a pound compared to other sellers in the farmers' market.

Which of the following statements is an example of perfectly elastic demand? A. A high incidence of diabetes has resulted in a large increase in demand for insulin. B. A 10 percent rise in Rita's income decreases supply of canned fish by 5 percent. C. Sherry is overwhelmed with buyers of her peaches when she lowers their price by a penny a pound compared to other sellers in the farmers' market. D. The price elasticity of demand for bottled water in Ohio is 1.5 while in Illinois it is 0.96.

C. When the price of insulin falls by 10 percent, Rite Aid pharmacy continues to supply the same quantity.

Which of the following statements is an example of perfectly inelastic supply? A. Twitter plans to raise $1 billion in an IPO. B. In India, poor supply chain management is one of the reasons for high inflation. C. When the price of insulin falls by 10 percent, Rite Aid pharmacy continues to supply the same quantity. D. A 5 percent rise in the price decreases quantity supplied by zero percent.

B. A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent.

Which of the following statements is an example of price elasticity of supply? A. The quality of fruits sold by Safeway is getting better. B. A 10 percent fall in the price of turkey with no other change decreases quantity supplied by 12 percent. C. A 20 percent discount at all Old Navy stores is drawing large crowds. D. Farmers increase their supply of potatoes when the price of onions rises.

Whom

Who consumes the goods and services that are produced?

Soybeans and corn can be grown with the same resources, so they are substitutes in production.

Why would a corn farmer grow soybeans?

Since everything has an alternative use, does everything have an alternative cost?

Yes, if there is an alternative use there's an opportunity cost

You plan to travel in Europe this summer. If you do, you won't be able to take your usual summer job that pays $5,000 for the summer, and you won't be able to live at home for free. The cost of transportation is $1,000, visas cost $100, and living expenses are $1,400. What is the opportunity cost of your plan to travel in Europe?

Your opportunity cost is $7,500.

You plan to go to school this summer. If you do, you won't be able to take your usual summer job that pays a $11,000 for the summer. The cost of tuition is $3,000 and textbooks cost $200. You live with your family, which covers your living expenses of 2,000. What is your opportunity cost of going to school this summer?

Your opportunity cost of going to summer school is $ 14,200.

Production, allocative,

_______ efficiency occurs when we produce goods and services at the lowest possible cost. ________ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

The demand for plums is unit elastic if _____.

a 5 percent rise in the price of plums results in a 5 percent decrease in the quantity of plums demanded

change inn demaned

a change in buyers plans that occurs when some influence on those plans others then the price of the good changes it is illustrated by a shift f the demand curve

change in the quantity supplied

a change in sellers plan that occurs when the price of a good changes but all other influences on sellers plans remain unchanged.

Barron Davis has ______ advantage in playing basketball and ______ advantage in movie directing, which is the reason for his success in both activities.

a comparative; a comparative

Which of the following shifts the supply curve for gasoline rightward?

a decrease in the price of a resource used to produce gasoline, such as crude oil

The price of cereal rises. As a result, people have cereal for breakfast on fewer days and eat eggs instead. This behavior is an example of

a decrease in the quantity demanded of cereal because of the substitution effect

______ earns ______.

a delivery truck; wages

normal good

a good for which demand increases as income increases

Specialization and the gains from trade make the economy PPF outward bowed because _______.

a good is initially produced by producers with lower opportunity costs and eventually produced by producers with higher opportunity costs

substitute

a good that can be used in place of another good

Complement

a good that is used in conjunction with another good

Inferior good

a good which demand decreases as income increases

What is a rent ceiling and what are its effects if it is set above the equilibrium rent? A rent ceiling is _______.

a government regulation that makes it illegal to charge a rent higher than a specified level

The relationship between two variables that are unrelated can be shown by

a horizontal line

In the graph, when the minimum wage is $10.25 an hour _____ occurs. When the minimum wage is $6.75 an hour _____ occurs.

a labour surplus; neither a labour shortage nor a labour surplus

How are scarce housing resources allocated when a rent ceiling is in place? With an effective rent ceiling, housing is allocated by ______. Search activity ______.

a method other than by price; increases and black markets can arise

Explain how scarce jobs are allocated when a minimum wage is in place. When a minimum wage is in place, scarce jobs are allocated by _______.

a method other than market price, such as personal characteristics, first-come first-served, or discrimination

change in the quantity demanded

a movement along the demand curve

according to marginal utility theory, when the price of a good rises,

a movement up along the demand curve occurs, and the higher the price of a good, the greater is the quantity bought of substitutes for the good

If, as Johnny's income increases, his demand for Perrier water increases, then for Johnny, Perrier water is ____

a normal good

A good with an income elasticity greater than one is ______. A good with an income elasticity that is positive and less than 1 is ______.

a normal good that is income elastic; a normal good that is income inelastic

What does the sign (positive/negative) of the income elasticity tell us about a good? A good with an income elasticity greater than one is ______. A good with an income elasticity that is positive and less than 1 is ______.

a normal good that is income elastic; a normal good that is income inelastic

What is a minimum wage and what are its effects if it is set above the equilibrium wage? A minimum wage is _______.

a price floor in the labour market

An incorrect statement

a rational choice will turn out to have been the best choice after the event

Which of the following would result in a movement along, but no shift in, the supply curve of grapefruit juice?

a report by the U.S. Surgeon General that increased citrus consumption increases the likelihood of lower cholesterol levels, which decreases the risk of heart attacks

An incentive is

a reward that encourages an action or a penalty that discourages an action

Which of the following leads to a movement along, but no shift in, the demand curve for spinach

a rise in the price

Economics

a social science that studies choices

a. The Table shows Westland's production possibilities. The marginal cost of a pound of tea when the quantity produced is 150 pounds of tea per month is______ b. The marginal cost curve in Westland is ___________

a. 0.50 pairs of hiking boots b. a horizontal line

As the prices of homes rose across the United States in 2014, the number of homes offered for sale started to increase. a. Choose the statement that explains this price increase. b. Home owners would hold off trying to sell because _______.

a. As the demand for homes increases, the demand curve for homes shifts rightward and the quantity of homes supplied increases. This fact illustrates the law of supply. b. they expect the price of homes will rise in the future

Which of the following illustrates scarcity? a. megan wants to buy a CD that costs $25 but has only $10 to spend b. mary loves watching movies c. I got a new dress from my mother. d. Ron will travel to New York City for Thanksgiving.

a. Megan wants to buy a CD that costs $25 but has only $10 to spend

______ is an example of ______. a. bus driver; labor b. an interstate highway; land c. an airport security guard; entrepreneurship d. a salmon river; capital

a. bus driver; labor

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology. a. can be produced and the combination that cannot be produced b. can be produced and the prices paid for those c. we want to produce but cannot consume d. we want to produce and what we want to consume

a. can be produced and the combination that cannot be produced

Think about the demand for the three popular game consoles: XBox One, PlayStation 4, and Wii U. What is the effect of the following events in the market for XBox One games, other things remaining the same? A. Programmers who write code for Xbox One games become more costly to hire B. The price of an Xbox One falls C. The prices of a PS4 and a Wii U fall D. A new game console comes onto the market, which is a close substitute for Xbox One a. Event A ______ the ______ XBox One games. b. Event B ______ the ______ XBox One games. c. Event C ______ the ______ XBox One games. d. Event D ______ the ______ XBox One games.

a. decreases; quantity demanded of b. increases; demand for c. decreases; demand for d. decreases; demand for

Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts. a. factors of production b. land c. capital d. environmental factors

a. factors of production

Marginal benefit ______. a. from a good or service is the benefit received from consuming one more unit of it b. is equal to the slope of the PPF c. is the benefit received from consuming a good or service d. does not change as more of a good is consumed

a. from a good or service is the benefit received from consuming one more unit of it

The demand for a necessity is income ______, and the demand for a luxury is income ______. a. inelastic; elastic b. elastic; inelastic c. inelastic; inelastic d. elastic; elastic The level of income _______ a big effect on income elasticities of demand because _______. a. has; what is a necessity and what is a luxury depends on the level of income b. does not have; a necessity is a necessity regardless of income and a luxury is a luxury regardless of income

a. inelastic; elastic a. has; what is a necessity and what is a luxury depends on the level of income

a. When Apple Inc. pays the designers of the iPad, the flows are a __________ from firms to households and a ______________ from households to firms b. When you buy an iPad from the Apple Store, the flows are a _________ from households to firms and a _________ from firms to households

a. money flow; real flow b. money flow; real flow

Which of the following examples describes microeconomics? a. people prefer buying iPhones over Nokia phones b. the federal reserve is increasing interest rates c. germany is a country in western Europe d. The Yukon territory of canada has extreme cold weather

a. people prefer buying iphones over nokia phones

Which of the following is an example of entrepreneurship? a. sam walton created the multinational retail corporation brand Walmart in 1962 b. facebook is a social networking site c. honda civic and toyota corolla are the best-selling compact cars in north america d. industrial output in china is increasing

a. sam walton created the multinational retail corporation brand Walmart in 1962

a. An Act of the United States Congress increased U.S. production of corn by mandating a ______. As the production of corn increases, the opportunity cost of corn ______. b. In the rest of the world, a movement along the PPF occurred due to ______ in the quantity of land devoted to producing corn. The PPF also shifted ______ due to drought, which increased the cost of producing corn. c. The United States achieves allocative efficiency in corn production if its marginal benefit ______ marginal cost.

a. steady increase in the production of ethanol; increases because resources are not equally productive in all activities b. an increase; inward c. equals

Shoppers bought strawberries in March for $1.25 a pound rather than the $3.49 a pound they paid last year. With the price so low, some growers plowed over their strawberry plants to make way for spring melons; others froze their harvests and sold them to juice and jam makers. a. If growers did not plow in their plants and instead offered locals "you pick for free", all of the following occurs except_______. b. Given the lower price of strawberries, the ______ and the price of strawberry jam ______.

a. the equilibrium quantity of strawberries sold in grocery stores increases b. supply of strawberry jam increases; falls

a. The price of gasoline has increased during the past year. The law of demand applies to gasoline because when the price of gasoline rises, ______. b. The income effect influences gasoline purchases because when the price of gasoline rises, other things remaining the same, ______. Consumers ______. c. The substitution effect influences gasoline purchases because when the price of a gallon of gasoline rises, other things remaining the same, _______. Consumers _______.

a. the quantity demanded decreases b. the price of gasoline rises relative to income; cannot afford to buy all the things they previously bought, so they buy less gasoline c. its relative price rises; look for alternate means of transportation

When a minimum wage is set above the equilibrium wage rate, _______. a. unemployment increases b. the supply of workers decreases c. job search activity decreases d. unemployment decreases

a. unemployment increases

Why do we need a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price? Because elasticity is a units-free measure of the responsiveness of the quantity demanded of a good or service to a change in its price, _______. a. we can compare the responsiveness of the same good when quantity is measured in different units, or we can compare across different goods b. elasticity is equal to the negative of the slope of the demand curve c. elasticity is equal to the slope of the demand curve d. elasticity is dependent on the units in which the variable is measured

a. we can compare the responsiveness of the same good when quantity is measured in different units, or we can compare across different goods

All of the following are consequences of scarcity faced by people in the United States except deciding _______. a. whether or not Pluto should be classified as a planet b. how to study for both an economics exam and a chemistry exam that take plane on the same day c. whether to sleep after attending an all-night party or to attend your Economics lecture d. whether to play the piano or to study for the next hour

a. whether or not Pluto should be classified as a planet

Preferences are _____. a. people's likes and dislikes and the intensity of those feelings b. only the things you would alternatively have done with your time c. firms' likes and dislikes for producing a good or service d. politicians' likes and dislikes about a policy

a. people's likes and dislikes and the intensity of those feelings

This year Americans are taking fewer exotic holidays by air and instead are visiting local scenic places by car. The global financial crisis has encouraged many Americans to cut their holiday budgets. Given the prices of the two holidays, the income elasticity of demand for exotic holidays is ______ and the income elasticity of demand for local holidays is ______.

a. positive; negative b. Exotic holidays are a normal good and local holidays are an inferior good

absolute advantage

ability of a party (an individual, or firm, or country) to produce more of a good or service than competitors, using the same amount of resources

comparative advantage

ability of a person or a country to produce a particular good or service at a lower marginal and opportunity cost over another.

How does economic growth change the patterns of production? In a low-income country, _________. As a country invests in capital and uses more advanced technologies _______.

agriculture accounts for a large percentage of total production; manufacturing becomes a greater percentage of total production and agriculture shrinks

What kind of efficiency are we achieving when we are producing at a point of the PPF that we prefer above all other points:

allocative

Tradeoff

an exchange-giving up one thing to get something else

A good with an income elasticity that is negative is _______.

an inferior good

a good with an income elasticity that is negative is

an inferior good

A firm is

and economic unit that hires factors of production and organizes those factors to produce and sell goods and services

When Delta Airlines encourages flyers to book their trips online versus making phone reservations, it is a. answering the what question. b. facing natural resource depletion. c. making a choice in the social interest only. d. answering the how question.

answering the how question.

market

any arrangement that enables buyers and sellers to get information and to do business with each other

Spam Sales Rise as Food Costs Soar Sales of Spam are rising as consumers realize that Spam and other lower-cost foods can be substituted for costlier cuts of meat as a way of controlling their already stretched food budgets. AOL Money & Finance, May 28, 2008 Is Spam a normal good or an inferior good? Explain. Would the income elasticity of demand for Spam be negative or positive? Explain.

an inferior; as the income available to buy meat decreases, consumers buy more spam The income elasticity of demand for Spam is _______ because as income falls, the quantity of Spam demanded _______. negative; increases

Factors of production:

are the productive resources used to produce good and services

The study of economics

arises from the fact that our wants exceed available resources

At West, a restaurant in Vancouver, reservations are essential. At Cibo, a restaurant in downtown Vancouver, reservations are recommended. At Vij's, a restaurant near the University of British Columbia, reservations are not accepted. Each restaurant might be using an efficient allocation system because _______.

at West, phone reservations increase demand and the price the restaurant can charge, so it is worth the cost of managing the reservation system. Vij's has no reservations, which saves the cost of managing reservation system and keeps the price lower

The graph shows Yucatan's PPF for food and sunscreen. Yucatan faces ______ opportunity cost of food and ______ opportunity of sunscreen, which can be seen by the shape of the PPF.

a constant; a constant

An example of an income elastic good is ______ and an example of an income inelastic good is ______.

a haircut; food

If the money price of a cup of coffee is $1 and the money price of gum is 50 cents per pack, then the relative price of a cup of coffee in terms of a pack of gum is _____. A. 1 B. 2 C. 50 D. 1/2

b. 2

Which of the following statements by Aqua Springs demonstrates that the firm's selling plans obey the law of supply? a. We've been hit by a rise in the price of plastic bottles and will lower production. b. If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers c. We can easily decrease the production of plain water and increase the production of sparking water. d. At a price of $1 bottle, we plan to sell 2,000 bottles per day.

b. If the price of bottled water falls and all the other influences on our selling plans remain the same, we will cut back on production and lay off some workers

Which of the following statements describes a perfectly inelastic demand? a. A large number of youngsters buy roses from Colombian rose-growers before Valentine's Day. b. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price. c. I prefer taking the subway to work rather than driving because of high fuel prices. d. The government is promoting generic drugs that are much cheaper.

b. Walgreens does not find any change in the number of people buying chlorthalidone after a 7 percent rise in its price.

Which of the following is an example of price elasticity of demand? a. When the price of bananas increased by 5 percent and incomes slumped, banana sales decreased by 5 percent. b. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent. c. Richer people buy fewer bananas than poorer people. d. Banana farmers enjoyed higher prices when the demand for bananas increased.

b. When the price of bananas increased by 5 percent and nothing else changed, the quantity of bananas demanded decreased by 2 percent.

Which of the following is an example of an incentive? a. the US has a current unemployment rate of 7.5 percent b. all conference volunteers would be offered free lunch on all three days c. the reserve bank of india has raised interest rates d. china is facing increasing labor costs

b. all conference volunteers would be offered free lunch on all three days

What makes the demand for some goods elastic and the demand for other goods inelastic? The fewer the substitutes for a good or service, the more ______ is the demand for it. The smaller the proportion of income spent on a good, the more ______ is the demand for it. a. elastic; elastic b. inelastic; inelastic c. inelastic; elastic The shorter the time that has elapsed since a price change, the more _______. a. inelastic is demand b. non-linear is the demand curve c. elastic is demand d. linear is the demand curve

b. inelastic; inelastic a. inelastic is demand

Factors of production are grouped into four categories, which are _______. a. capital, human capital, financial capital, and labor b. land, labor, capital, and entrepreneurship c. land, capital, human capital, and entrepreneurship d. land, labor, capital, and human capital

b. land, labor, capital, and entrepreneurship

What are the main influences on the elasticity of supply that make the supply of some goods elastic and the supply of other goods inelastic? Goods and services that use rare resources in their production have a ______ elasticity of supply. The greater the amount of time available after a price change, the ______ is the elasticity of supply. a. high; greater b. low; greater c. high; smaller d. low; smaller

b. low; greater

A competitive market is a market that has _____, so _____ can influence the price. a. many buyers and one seller; no buyer b. many buyers and sellers; no single buyer or seller c. one buyer and many sellers; no seller d. many buyers and sellers; both buyers and sellers

b. many buyers and sellers; no single buyer or seller

Martha can produce 80 quilts or 320 batches of cookies in a month. Jan can produce 7 quilts or 14 batches of cookies in a month. Distinguish between comparative advantage and absolute advantage. _______ has an absolute advantage in both goods. a. Jane b. Martha ______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies. a. jane; jane b. jane; martha c. martha; jane d. martha; martha

b. martha b. jane; martha

A substitute in production is a good that is _____ another good, and a complement in production is a good that is _____ another good. a. produced together with; produced in place of b. produced in place of; produced together with c. produced in place of; consumed with d. consumed in place of; produced together with

b. produced in place of; produced together with

The table gives the demand schedule for hotel rooms. What happens to total revenue when the price falls from $400 to $250 a room per night and from $250 to $200 a room per night? Is the demand for hotel rooms elastic, inelastic, or unit elastic? If the price falls from $400 to $250 a night, total revenue _____. If the price falls from $250 to $200 a night, total revenue _____. a. rises; rises b. remains the same; remains the same c. rises; falls d. falls; falls The demand for hotel rooms is _____ because _____. a. decreasing as the price falls; the demand curve for hotel rooms is straight-line demand curve b. inelastic; if the price is set low enough, total revenue will decrease c. unit elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum d. elastic; if the price is set high enough, total revenue will decrease

b. remains the same; remains the same c. unit elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum

Tariff is a _____ imposed on a good when it is _____. a. subsidy; imported b. tax; imported c. subsidy; exported d. tax; exported

b. tax; imported

The opportunity cost of a good is equal to _______. a. the price of the good b. the price of the good plus the value of the search time spent finding the good c. the price ceiling d. the value of the search time spent finding the good

b. the price of the good plus the value of the search time spent finding the good

Faced with high gas prices, Americans are substituting smaller cars for SUVs. In April 2008, Toyota Yaris sales increased 46 percent and Ford Focus sales increased 32 percent from a year earlier. Sales of SUVs decreased by more than 25 percent in 2008 and Chevrolet Tahoe sales fell 35 percent. Full-size pickup sales decreased more than 15 percent in 2008 and Ford F-Series pickup sales decreased by 27 percent in April 2008. The effect of a downsized vehicle fleet on fuel consumption is unknown. In California, gasoline consumption decreased by 4 percent in January 2008 from a year earlier. The price of gasoline in January 2008 increased by about 30 percent from a year earlier. Source: The New York Times, May 2, 2009 Calculate the price elasticity of demand for gasoline in California.

proce elasticity of demand 0.13 The cross elasticity of demand for the Toyota Yaris with respect to the price of gasoline is 1.53. The cross elasticity of demand for the Ford Focus with respect to the price of gasoline is 1.06. The cross elasticity of demand for a Chevrolet Tahoe with respect to the price of gasoline is negative 1.16. The cross elasticity of demand for a full-size pickup with respect to the price of gasoline is negative 0.5.

We achieve production efficiency if we

produce goods and services at the lowest possible cost

Law of Supply

producers offer more of a good as its price increases and less as its price falls

Harry produces 10 balloon rides and 7 boat rides an hour. Harry could produce more balloon rides without producing fewer boat rides. Harry is ______ his production possibilities frontier.

producing inside

What kind of efficiency do we achieve when we produce goods and services at the lowest possible cost?

production

Jobs alone are not the measure of economic well-being. If this were the case, then we could increase the well-being of an economy by giving highway workers spoons rather than backhoes and garment workers needles and thread instead of computerized sewing machines. What does provide the source of high living standards?

production of goods and services people value

When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

production;allocative

_______ efficiency occurs when we produce goods and services at the lowest possible cost. _______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit

production;allocative

A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.

quantity supplied of good , and its price

demand

relationship between the price of a good and the quantity demanded

Demand

reltionship between the price of the good and the quanitity deamnded of it when all other influnce on buyers plans remain the same. it is iiurrstef by a demaned and described by a demand schedule

remains the same; remains the same The demand for hotel rooms is _____ because _____.

The amount paid each month by an oil company for the right to drill on a farmer's land is called

rent

complement

rise in the price of a good used with another good (complement)- decreases demand and shifts the demand curve leftward

substitute

rise in the price of a related good (substitute)- increases demand and shifts the demand curve reightward

In increase in the demand for pizza brings a _____ in the price of pizza and _____ in the quantity of pizza supplied

rise; an increase

A rent ceiling ________.

set below the equilibrium rent constrains the market forces

change in demand

shift of the demand curve

If the price of a good A is below its equilibrium price, there will be a .......... of that good and the price will .......... . a. surplus/rise b. shortage/fall c. shortage/rise d. surplus/fall

shortage/rise

A demand curve that illustrates the law of demand ______.

shows that the quantity demanded decreases as the price rises

demand curve

shows the relationship between the quantity demanded of a good quantity and its price, everything else remaining the same

demand curve

shw the relationship between the Q demaned for a good and its price when all other influence on consumer planned purchase remain the same

property rights

social arrangements that govern the ownership use and disposal of anything that people value

What are the four goals of any economic system? (Order does not matter but spelling does! Separate them with a comma.)

stability,equity, efficiency, growth

A relationship with a maximum

starts out sloping upward, and then slopes downward

normative statement

subjective or opinion based

If, as the price of Coke decreases, the quantity of Pepsi that people buy decreases, then Coke and Pepsi are____.

substitute

If the cross elasticity of demand for ramen noodles with respect to the price of rice is positive, then ramen noodles and rice are ______.

substitutes

What does the sign (positive/negative) of the cross elasticity of demand tell us about the relationship between two goods? If the cross elasticity of demand for a hot dog with respect to the price of a burger is positive, then hot dogs and burgers are ______.

substitutes

Pasta and pizza are ______. A video game and a laptop are ______.

substitutes; complements

demand = benefit

supply = cost

A decrease in the demand for ramen noodles together with an increase in the supply of ramen noodles brings a ______ of ramen noodles at the original price and a ______ in their price.

surplus; fall

Economic growth is defined as the _____ .

sustained expansion of production possibilities

The obstacles to achieving an efficient allocation of resources in the market economy include ____

taxes and subsidies, externalities, monopoly, and public goods

What are the obstacles to achieving an efficient allocation of resources in the market economy? The obstacles to achieving an efficient allocation of resources in the market economy include _______.

taxes and subsidies, externalities, monopoly, and public goods

In a high-income country like the United States _______.

technological advances release labor from industrial production and move the labor into service production

Economics is the social science that studies the choices

that individuals, businesses, governments, and entire societies make as they cope with scarcity

Quanitity demanded

the amount of a good or service that consumers plan to buy during a given time at a particular price

quantity supplied

the amount of a good or service that producers plan to sell during a giving time period at a particular price

utility

the benefit or satisfaction that a person gets from the consumption of goods and services

Beth has three sandwiches for lunch. The marginal benefit that Beth receives from the third sandwich is _______.

the benefit she receives from eating the third sandwich

Exotic holidays and local holidays are substitutes if ______.

the cross elasticity of demand is positive

What is the opportunity cost of creating the technology for trips around the moon? The opportunity cost of creating the technology for trips around the moon is _______.

the decrease in the current production of other goods and services

When income rises

the demand curve for a normal good shifts rightward, so that at the new quantity consumed marginal utility per dollar is equal for all goods

Technological change is _____ new goods and of _____ of producing goods and services.

the development of; of better ways

personal distribution of income

the distribution of income among households

functional distribution of income

the distribution of income among the factors of production

supply

the entire relationship between the price of a good and the quantity supplied of it when at other influences on producers planned sales remain the same,. it is describe by a supply schedule and illustrated by a supply curve

marginal utility

the gain (or loss) from an increase (or decrease) in the consumption of that good or service.

Opportunity cost

the highest-valued alternative that must be given up to get it

The opportunity cost of any action is

the highest−valued alternative given up.

Which of the following is correct? Factors of production are

the inputs used to produce goods and services.

The deadweight loss created equals _______.

the loss of total surplus

marginal cost

the lowest price at which someone is willling to sell, shown in a supply curve

What are the minimum prices that Xavier, Yasmin, and Zack are willing to accept to provide 15 rides? Why? The minimum prices that Xavier, Yasmin, and Zack are willing to accept equal _______.

the marginal cost of producing the rides When the total number of rides is 75, the marginal social cost is $ 100. When the total number of rides is 75, Xavier provides 30rides, Yasmin provides 25 rides, and Zack provides 20 rides. The marginal cost for each firm is $ 100.

A tax is inefficient because _______.

the marginal social benefit from the last unit sold exceeds the marginal social cost of the last unit produced and a deadweight loss is created

If the price of a good falls, then in the new consumer equilibrium

the marginal utility from consuming the good will be lower than before

if the price of a good rises,

the marginal utility from the last unit of the good consumed increases

The money price of a textbook is $90 and the money price of the Wii game Super Mario Galaxy is $45.

the number of Wii games you must give up to get the textbook

Money price

the number of dollars that must be given up in exchange for a good or service

Goods and services are

the objects that people value and produce to satisfy human wants

Marginal cost of a good is _______.

the opportunity cost of producing one more unit of it

What is macroeconomics?

the part of economics concerned with large-scale or general economic factors, such as interest rates and national productivity.

The elasticity of supply is calculated by dividing ______ by ______.

the percentage change in the quantity supplied; the percentage change in the price

The elasticity of supply is calculated by diving ___ by ___.

the percentage change in the quantity supplied; the percentage change in the price

Equilibrium price

the price at which the quantity demanded equals the quantity supplied

If the price of a calculator is $10, 24 million calculators a year are supplied. Draw a point at this combination of price and quantity. If the price of a calculator falls to $2, 6 million calculators are supplied. Draw a point at this combination of price and quantity. Draw a supply curve for calculators that is consistent with this information. Label the curve. Along the supply curve, _____.

the price changes but all other influences on producers' planned sales remain the same

the price of a good

Elasticity of supply measures the responsiveness of the quantity supplied to a change in ______, when all other influences on selling plans remain the same.

the price of a good

The demand for gym memberships does not change when a change in _______ occurs.

the price of a gym membership

The marginal benefit curve illustrates

the principle of decreasing marginal benefit

Equilibrium quantity

the quantity bought and sold at the equilibrium price

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

the quantity demanded equals the quantity supplied; the quantity bought and sold at the equilibrium price

Define the price elasticity of demand and show how it is calculated. The price elasticity of demand is a units-free measure of the responsiveness of ______.

the quantity demanded of a good to a change in its price when all other influences on buying plans remain the same

Diminishing marginal utility is the decrease in marginal utility as

the quantity of consumed increases

according to marginal utility theory, when the price of a good falls,

the quantity of the good demanded increases and the lower the price of a good the smaller is the quantity bought of substitutes for the good

relative pricec

the ratio of one money price to another

relative price

the ratio of the price of one good or service to the price of another good or service. Relative price is an opportunity cost (price/price)

Which of the following is a macroeconomic topic? a. the reasons for a rise in the price of orange juice b. the reasons for the rise in average prices c. why plumbers earn more than janitors d. whether the army should buy more tanks or more rockets

the reasons for the rise in average prices

Demand is _____, when all other influences on buying plans remain the same.

the relationship between the quantity demanded of a good and the price of the good,

An effective rent ceiling creates an unfair outcome because _______.

the rent ceiling does not necessarily allocate housing to the less well off

All ideas about fairness can be divided into two broad groups: It's not fair if ______, and it's not fair if ______.

the result isnt fair; the rules arent fair

What is microeconomics?

the study of how households and firms make decisions and how they interact in markets

Which of the following is NOT a factor of production? a. the water used to cool a nuclear power plant b. the efforts of farmers raising cattle c. the wages paid to workers d. the management skill of a small business owner

the wages paid to workers

The "law of demand" refers to the fact that, all other things remaining the same, when the price of a good rises a. the demand curve shifts rightward. b. the demand curve shifts leftward. c. there is a movement down along the demand curve to a larger quantity demanded. d. there is a movement up along the demand curve to a smaller quantity demanded.

there is a movement up along the demand curve to a smaller quantity demanded.

In 1966, the production possibilities per person in the United States were more than ______ times those in Hong Kong.

three

Deadweight loss is the decrease in ____ that results from an inefficient ____ or _____

total surplus; underproduction; overproduction

Deadweight loss is the decrease in _____ that results from an inefficient _____ or _____.

total surplus; underproduction; overproduction

Taxes lead to ___ and subsidies lead to

underproduction; overproduction

Price regulations that put a cap on the rent a landlord is permitted to charge lead to ____ A monopoly leads to ____

underproduction; underproduction

if a price cut leaves total revenue unchanged, demand is

unit elastic

Allocative efficiency is a situation in which the quantities of goods and services produced are those that people _____ - it is not possible to produce more of a good or service _____ some of another good that people _____.

value most highly; without giving up; value more highl

All economic questions arise because we

want more than we can get.

Allocative efficiency occurs when ______.

we are producing at a point on the PPF that we prefer above all other points

we can compare the responsiveness of the same good when quantity is measured in different units, or we can compare across different goods

Why do we need a units-free measure of the responsiveness of the quantity supplied of a good or service to a change in its price? Because elasticity of supply is a units-free measure of the responsiveness of the quantity supplied of a good or service to a change in its price, _______.

we can compare the responsiveness of the same good when quantity is measured in different units, or we can compare across different goods

Utilitarianism

we should strive to achieve the greatest happiness for the greatest number

Amazon Delays Opening of Cashier-Less Store to Work Out Kinks Amazon.com Inc. is delaying the public opening of its first cashier-less convenience store because of technical complications. Amazon Go was due to launch to the public by the end of the month, ... It is unclear when it will now open, as it works out kinks in the technology to automatically charge customers when they leave, instead of needing to have cash registers, checkouts and lines. The store in Amazon's hometown of Seattle uses cameras, sensors and algorithms to watch customers and track what they pick up, ... But Amazon has run into problems tracking more than about 20 people in the store at one time, ... The store will continue to need employees to help ensure the technology is accurately tracking purchases for the near future. ... The news clip deals with the ______ questions The news clip implies a tradeoff between _____

what and how using traditional check-out methods and using cashier-less technology

The what, how, and for whom questions in economics are questions about ______.

what goods and services do we produce, how do we use the factors of production to produce these goods, and who consumes the goods and services that are produced

Marginal benefit

what people are willing to give up in order to obtain one more unit of a good

A correct statement

what we do in pursuit of our self-interest can further the social interest

Consumer equilibrium

when allocating all your income such that your marginal utility per dollar is equal for all goods

A printer is a normal good if the population increases, you predict that the demand for printers _____.

will increase

5. The _____ that people devote to produce goods and services is labor.

work time and work effort

Slope

y=a+bx

When you make economic choices to purchase goods and services,

you are making choices that are in your self-interest and the people who produce and deliver the goods and services that you decide to buy are also making choices in their self-interest

the equilibrium price is given by the formula

(ad + bc)/(b + d)

When Alex's income increased from $3,000 to $5,000, he increased his consumption of bagels from 5 to 9 a month and decreased his consumption of donuts from 16 to 10 a month.

Alex's income elasticity of demand for bagels is 1.14 Alex's income elasticity of demand for donuts is -.92

1. If there is no tax on concert tickets, what is the price of a ticket and how many tickets are bought? If there is no tax on concert tickets, the price of a ticket is $ 7 a ticket and the quantity of tickets bought are 400 per concert. If a sales tax of $2 a ticket is imposed on sellers of concert tickets: 2. What is the price a concert-goer pays for a ticket and how many tickets are bought? With $2 a ticket, a concert-goer pays $ 8 a ticket and buy 300 tickets. If a sales tax of $2 a ticket is imposed on sellers of concert tickets: 3. Who pays the tax and what is the government's tax revenue? _____ pay $ 1 of the tax and _____ pay the other $ 1 of the tax and the government's tax revenue is $ 600.

Concert-goers; Concert organizers;

Which of the following best defines capital as a factor of production?

Instruments, machines, and buildings used in production.

Suppose that the price of a cashmere sweater is $100 and Jean's marginal benefit from a cashmere sweater is $300. If Jean buys 1 cashmere sweater, what is her consumer surplus?

Jean's consumer surplus is $ 200.

Which of the following statements describes an elastic demand?

Mary's quantity demanded of milk decreased by 8 percent when the price of milk rose by 5 percent.

______ pay more of the junk-food tax because the ______ junk-food is elastic.

Sellers; demand for

In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets. Suppose that Tessa buys a new machine for making jackets that enables her to make 35 jackets per hour. (She can still make only 70 caps per hour.) Now ______ has a comparative advantage in producing jackets. ______ from trade. Sue and Tessa are _______ to trade 1 jacket for 7 caps because _______.

Tessa; both Sue and Tessa gain no longer willing; Sue can produce jackets at an opportunity cost of 1 jacket for 5.0 caps

The price of oil hit a record high above $135 a barrel in May 2008 --- more than twice what it cost the year before. OPEC has so far blamed price rises on speculators and says there is no shortage of oil. The price of oil rises if the demand for oil ______ and the supply of oil ______. a. decreases; increases b. increases; decreases c. increases; increases d. decreases; decreases A shortage in the market for oil implies that ______. a. the market for oil is a competitive market b. the market for oil needs government action' c. more people are traveling d. the price of oil is being prevented from influencing buying and selling plans

b. increases; decreases d. the price of oil is being prevented from influencing buying and selling plans

hat are the two principles of fairness that are applied to tax system? The ______ principle is the proposition that people should pay taxes equal to the benefits they receive from the services provided by government. The ______ principle is the proposition that people should pay taxes according to how easily they can bear the burden of the tax.

benefits; ability-to-pay

A smartphone and a text message are ______. A text message and an email are ______.

complements; substitutes

If Air Canada imposes the $10 surcharge, consumer surplus would ______ because consumers would ______.

decrease; buy fewer airline tickets and pay a higher price

If the new minimum wage of $10.25 an hour is effective, then the higher minimum wage ______ workers' surplus and ______ firms' surplus.

decreases; decreases

With a price ceiling on fertilizer set below the equilibrium price, total surplus _______ and deadweight loss _______.

decreases; increases

Prospects for the fertilizer sector are exceptional this year. Grain prices have sky rocketed, stimulating greater plantings of grain and greater demand for fertilizer. The price of fertilizer has soared from US$350 to more than US$600 per tonne during the past year. Source: National Post, June 21, 2011 Suppose that the government tries to halt the fertilizer price rise and sets a price ceiling below the equilibrium price. How would the price ceiling influence the quantity of fertilizer supplied and the quantity demanded? If initially the market is in equilibrium, then the price ceiling ______ the quantity of fertilizer supplied and ______ the quantity of fertilizer demanded.

decreases; increases If a price ceiling is set below the equilibrium price in the market for fertilizer, the quantity of fertilizer sold is ______ than the equilibrium quantity and the price ceiling creates a ______. less; shortage The price ceiling _______ the maximum price that someone is willing to pay for the last tonne of fertilizer available on a black market. Increases

General Motors cut its fourth-quarter production schedule by 10 percent because Ford Motor, Chrysler, and Toyota sales declined in August. This news clip illustrates a decrease in ______ and ______ in the market for cars.

demand; a decrease in the quantity supplied

This PPF ______ illustrate scarcity because ______.

does; the firm cannot produce points outside the frontier and as the firm moves along the PPF, it cannot produce more dog biscuits without producing less cat food

With no tax, the market for concert tickets is _____. With the tax, the market for concert tickets is _____ because _____.

efficient; inefficient; the ticket price rises and the quantity bought decreases Your answer is correct.C.

Swelling Textbook Costs Have College Students Saying 'Pass' Textbook prices have doubled and risen faster than average prices for the past two decades. Sixty percent of students do not buy textbooks. Some students hunt for used copies and sell them back at the end of the semester; some buy online, which is often cheaper than the campus store; some use the library copy and wait till it's free; some share the book with a class mate. Source: The Washington Post, January 23, 2006 Explain what the news clip implies about the price elasticity of demand for textbooks. This news clip implies that the demand for college textbooks is price ______ because ______.

elastic; college textbooks have many substitutes Explain what the news clip implies about the income elasticity of demand for textbooks. This news clip ______. does not give us any information about the income elasticity of demand for college textbooks Explain what the news clip implies about the cross elasticity of demand for college textbooks from the campus bookstore with respect to the online price of a textbook. The cross elasticity of demand for college textbooks from the campus bookstore with respect to the online price of a textbook is ______. Textbooks from the campus bookstore and textbooks purchased online are ______. positive; substitutes

Why is the demand for a luxury generally more elastic (or less inelastic) than the demand for a necessity? Demand for a luxury is more ______ than demand for a necessity, because a luxury has ______ substitutes.

elastic; more

The greater the elasticity of demand, the ______ is the amount of the tax paid by sellers and the ______ is the decrease in the equilibrium quantity.

greater; greater

The level of income a _______ big effect on income elasticities of demand because _______.

has; what is a necessity and what is a luxury depends on the level of income

What is the relationship between individual supply and market supply? The market supply curve is the ______ sum of the individual supply curves. It is formed by adding ______.

horizontal; the quantities supplied by all the producers at each price

Failure to specialize and reap the games from trade is _______ because _______.

inefficient; production is at a point inside the economy's PPF

With a sales tax of $2 a ticket, is the market for concert tickets efficient? Explain why or why not: With the $2 tax, the market for concert tickets is _____ because _____.

inefficient; the quantity bought and sold is less than the efficient quantity and a deadweight loss arises

ith a sales tax of $2 a ticket, is the market for concert tickets efficient? Explain why or why not: With the $2 tax, the market for concert tickets is _____ because _____.

inefficient; the quantity bought and sold is less than the efficient quantity and a deadweight loss arises

You are told that a 10 percent increase in the price of a good has led to a 1 percent increase in the quantity supplied of the good after one month and a 25 percent increase in the quantity supplied after one year. Is the supply of this good elastic, inelastic, or unit elastic? What is the price elasticity of supply of this good? After one month, the supply of this good is ______. The elasticity of supply is ______.

inelastic; 0.1 This good is likely to be produced using factors of production that are easily obtained. False After one year, the elasticity of supply is 2.5. Has the good become more elastic or less elastic? Why? The good has become ______ elastic because ______. A. more; enough time has elapsed to make adjustments to production

The demand for a necessity is income ______, and the demand for a luxury is income ______.

inelastic; elastic

A tax is efficient when supply is perfectly _______ or demand is perfectly _______.

inelastic; inelastic

The fewer the substitutes for a good or service, the more ______ is the demand for it. The smaller the proportion of income spent on a good, the more ______ is the demand for it.

inelastic; inelastic

During the recession, Wal-Mart moved its pet food and supplies to the front with its other fast-growing business, baby products. Retail experts point out that kids and pets tend to be fairly recession-resistant businesses long dash—even in a recession, dogs will be fed and kids will get their toys. The news clip implies that the demand for pet food and baby products is income ______. The income elasticity of demand for pet food and baby products is ______ than 1.

inelastic; less

The total surplus is $ 2250. The efficient quantity of smartphones is 100. The market for smartphones _______ efficient because _______.

is; the equilibrium quantity is the efficient quantity

At the market equilibrium, calculate consumer surplus. Consumer surplus is $ 500. At the market equilibrium, calculate producer surplus. Producer surplus is $ 250. 2. Is the market for sunscreen efficient? Why? The market for sunscreen _____ efficient because _____.

is; total surplus is maximum

low; greater

Preferences are _____.

people's likes and dislikes and the intensity of those feelings

As the price rises from $200 a chip to $300 a chip, total revenue ______. So at a price of $250 a chip, demand is ______.

rises; inelastic

The greater the elasticity of demand, the _______ the tax revenue and the _______ is the deadweight loss.

smaller; greater

The greater the elasticity of supply, the ______ is the amount of the tax paid by sellers and the ______ the decrease in the quantity bought.

smaller; greater

The greater the elasticity of supply, the _______ the tax revenue and the _______ is the deadweight loss.

smaller; greater

Coal and oil are ______. A skateboard and roller blades are ______.

substitutes; substitutes

The graph shows a labour market with a minimum wage of $5 an hour. In the graph, when the minimum wage is set above the equilibrium wage at $5 an hour, it creates a labour ______ of ______ million hours a year.

surplus; 2 The figure shows a labour market with a minimum wage set above the equilibrium wage rate. When the minimum wage is set above the equilibrium wage rate, the quantity employed is equal to the quantity of labour demanded at the minimum wage. In the graph, the minimum wage is $5 an hour. The quantity of labour demanded is 20 million hours a year and the quantity of labour supplied is 22 million hours a year. The minimum wage creates a surplus of labour of 2 million hours a year.

Provide examples of goods or services whose elasticities of supply are (a) zero, (b) greater than zero but less than infinity, and (c) infinity. The momentary supply of wheat has an elasticity of supply equal to _______. The short-run supply of wheat has an elasticity of supply equal to _______.

zero; more than zero but less than infinity

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