Micro

If the consumers can easily switch to a close substitute when the price of a good increases, demand for that good is likely to be:

elastic.

The range of topics or issues that fit within the definition of economics is:

extremely wide, requiring only the ideas of choice and scarcity.

When a person decides to pursue an activity as long as the extra benefits are at least equal to the extra costs, that person is:

following the cost-benefit principle.

Application of the Principle of Comparative Advantage leads to

greater specialization of labor and other factors of production.

Refer to the figure above. What is the price elasticity of supply when P = 6?

greater than 1

The demand for a good is elastic with respect to price if the price elasticity of demand is:

greater than one.

The No Cash on the Table Principle asserts that

in equilibrium, all opportunities have been exploited.

As consumers' incomes increase, the demand for ground beef decreases. Ground beef is called a(n):

inferior good.

Suppose two demand curves have a point in common. With respect to price at that point, demand shown by the steeper curve will be _______ the less steep curve.

less elastic than

The buyer's reservation price of a particular good or service is the:

maximum amount the buyer would be willing to pay for it.

. If the demand for salad dressing increased when the price of lettuce decreased, cross price elasticity D would be ________, and we would say these two goods are _______.

negative; complements

Amy is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30. The opportunity cost of seeing the movie is:

$37.

$20

. The marginal cost of the 3rd unit of this activity is:

Refer to the figure above. Of the labeled points, ______________ (select all points) that are attainable.

. only w, x, y, z, v, and t

If a market is in equilibrium and demand increases while supply decreases, the change in the equilibrium price is ________ and the change in the equilibrium quantity is _________.

. positive; indeterminate

A demand curve that is drawn as a vertical line illustrates price elasticity equal to:

0.

If the total benefits of watching 1, 2, and 3 baseball games on TV are 100, 120, and 125 respectively, then the marginal benefits of watching 1, 2 and 3 baseball games on TV are:

100, 20, and 5 respectively.

. If the price of cheese falls by one percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese has a value of:

3.

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday (assume that you would have been willing to pay $40 for this concert). You end up hating the concert from the start. What would the cost-benefit principle suggest you to do?

Leave the concert.

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

Leslie has an absolute advantage.

Lou and Alex live together and share household chores. They like to cook some meals ahead of time and eat leftovers. Suppose that in one hour Lou and Alex can do the following:

Lou does all of the cleaning, while Alex does all of the cooking.

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore:

Maryann should specialize in the activity for which she has a comparative advantage.

excess demand of 45 units.

Refer to the figure above. Assume that column A and column B are the initial demand and supply curves. At a price of $30, the market would experience:

greater than $4.

Refer to the figure above. If the price is $4 today, and if there are no other changes in this market, one would expect the price in the future to be:

shift from Current Supply to Supply A.

Refer to the figure above. If the price of the plastic used to make action figures rises, supply will:

increase in the price of a complement.

Refer to the figure above. Moving from demand curve D2 to demand curve D1 could be caused by a(n):

They would feel pressure to lower their prices because at $45 there would be excess supply.

Refer to the figure above. Suppose all the sellers in this market started out charging a price of $45 per unit. What is the most likely result?

5/2

Refer to the figure above. The price elasticity of demand at point A is:

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his surplus by attending:

State College, because the difference between the benefit and cost is greatest there.

This graph describes the production possibilities on the island of Genovia:

The opportunity cost of producing one car in Genovia is:

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

an economic problem because Chris has only one hour during which he can study or work out.

If income elasticity for a particular good has a negative sign:

as income increases, consumers will tend to purchase less of the good.

Suppose you notice that more and more people are driving gas-guzzling cars. Since you drive an economy car, their increased demand for gas:

causes the price you pay for gas to increase.

If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawed because:

the costs will be understated.

Suppose the price of gasoline increases and that sport utility vehicles get poor gas mileage compared to other available cars. One would expect:

the demand for sport utility vehicles to decrease.

In a two-person, two-good economy, the benefits of labor specialization will be larger when:

there are large differences in the respective opportunity costs of the two individuals for both goods.

Supply curves are generally _______ sloping because _______________

upward; of the principle of increasing opportunity costs.

Last summer, real estate prices in your town soared. You started noticing more "For Sale" signs in your neighbors' yards. You conclude that:

when housing prices rose, they started to exceed some of your neighbors' reservation prices.

If your linear, two-good production possibilities graph has a slope steeper than -1:

you would have to give up less than one unit of the good measured on the horizontal axis to gain an additional unit of the good measured on the vertical axis.

You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve Refer to the figure above. As soon as you see the other island's PPC, you realize:

your island will have to specialize in coconuts if it wants to gain from trade.