exam 1 study questions

according to the law of demand, consumers buy more of a good as

that good's price decreases

all else being equal, if supply decreases

the equilibrium price will rise and the equilibrium quantity will fall

if both supply and demand increase simultaneously, we will be certain that

the equilibrium quantity will increase

If we observe that gasoline prices rise after the government lowers the highway speed limit, then we can conclude that these two ___ are ___, but we cannot conclude that ___ exists between them

variables negatively related causation

suppose that a given year the rate of inflation is 3 percent and the nominal interest rate is 2 percent. The real interest rate is:

-1 percent real interest is nominal minus inflation

which of the following leads to a rightward shift of the demand curve? an increase in the good's own price a decrease in the number of consumers an expectation of an increase in the good's price in the future A decrease in the price of a substitute

an expectation of an increase in the good's price in the future

when solving for opportunity cost: lets say we have apples and strawberries, when looking for the opportunity cost of picking apples we ____. When looking for the opportunity cost of picking strawberries we ___.

divide strawberries / apples divide apples / strawberries

gains from trade occurs as a result of

economic interaction

In what way do economic models differ from models in the physical science

economic models attempt to explain human behavior

What is the relationship? Variable X increases but variable Y remains unchanged? Variable X decreases when variable Y decreases Variable X decreases when variable Y increases

No relationship positive relationship negative relationship

which of the following causes a rightward shift to the supply curve? a gov tax on production an increase in the price of the good being sold a decrease in the number of producers a decrease in the cost of production

a decrease in the cost of production

quantity response is higher with a ___ slope, not a ___ slope

flatter steep

the key elements of a market economy include all of the following except: free exchanges of goods and services freely determined prices government support of market supply property rights

government support of market supply

slope shows

growth rate

if a firm adopts a technology that can increase production without increasing labor or other resource inputs, then

it will reach a point that is previously unattainable

demand is ___ supply is ___

negative positive

ceteris paribus means

other things being equal

surplus occurs when

the quantity supplied exceeds the quantity demanded at the current price level