Macro Exam 1

A decrease in demand is represented by a

eftward shift of a demand curve.

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

equality refers to uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources.

At the equilibrium price, the quantity of the good that buyers are willing and able to buy

exactly equals the quantity that sellers are willing and able to sell.

The law of demand states that, other things equal, when the price of a good

falls, the quantity demanded of the good rises

Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are

normal goods.

The overriding reason why households and societies face many decisions is that

resources are scarce

Which of the following is a correct statement about production possibilities frontiers?

An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier.

Belarus has a comparative advantage in the production of linen, but Russia has an absolute advantage in the production of linen. If these two countries decide to trade,

Belarus should export linen to Russia.

Suppose the incomes of buyers in a market for a particular normal good decrease and there is also a reduction in input prices. What would we expect to occur in this market?

Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market?

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous.

Kelly and David are both capable of repairing cars and cooking meals. Which of the following scenarios is not possible?

Kelly has a comparative advantage in repairing cars and in cooking meals.

What you give up to obtain an item is called your

Opportunity cost

If Shawn can produce donuts at a lower opportunity cost than Sue, then

Shawn has a comparative advantage in the production of donuts.

Which of the following events would cause a movement upward and to the left along the demand curve for olives?

The price of olives rises.

Which of the following would shift the demand curve for gasoline to the right?

an increase in consumer income, assuming gasoline is a normal good

Which of the following would not shift the supply curve for mp3 players?

an increase in the price of mp3 players

If the demand for a product increases, then we would expect equilibrium price

and equilibrium quantity both to increase.

In economics, capital refers to

buildings and machines used in the production process.

Any point on a country's production possibilities frontier represents a combination of two goods that an economy

can produce using all available resources and technology.

Economists speaking like scientists make

claims about how the world is.

In the markets for goods and services in the circular-flow diagram,

households are buyers and firms are sellers.

Economics is the study of

how society manages its scarce resources

Two goods are complements when a decrease in the price of one good

increases the demand for the other good.

Factors of production are

inputs into the production process.

An economy's production of two goods is efficient if

it is impossible to produce more of one good without producing less of the other.

A group of buyers and sellers of a particular good or service is called a(n)

market.

Which markets are represented in the simple circular-flow diagram?

markets for goods and services and markets for factors of production

Unemployment would cause an economy to

produce inside its production possibilities frontier.

Production possibilities frontiers are usually bowed outward. This is because

resources are specialized; that is, some are better at producing particular goods rather than other goods.

An increase in quantity demanded

results in a movement downward and to the right along a demand curve.

When each person specializes in producing the good in which he or she has a comparative advantage, total production in the economy

rises

The law of supply states that, other things equal, when the price of a good

rises, the quantity supplied of the good rises.

The quantity supplied of a good is the amount that

sellers are willing and able to sell.

You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for

shorts will decrease.

Wheat is the main input in the production of flour. If the price of wheat decreases, then we would expect the

supply of flour to increase.

A rational decision maker takes action if and only if

the marginal benefit of the action exceeds the marginal cost of the action.

If the supply of a product decreases, then we would expect equilibrium price

to increase and equilibrium quantity to decrease.

In economics, the cost of something is

what you give up to get it

The quantity demanded of a good is the amount that buyers are

willing and able to purchase.

A normative economic statement such as "The minimum wage should be abolished"

would require values and data in order to be evaluated.