Micro Econ Ch 1-7 Review
is a price floor in the labor market
A minimum wage
Invisible Hand
Adam Smith argued that each person in the competitive market is led to promote the efficient use of society's resources, even though it id no person's intention to make the society better off. His theory uses the phrase:
increase the price of a computer
An increase in the demand for computers and a decrease in the number of sellers of computers will _____ regardless of the magnitude of the shifts
decreases when the income increases
An inferior good is a good for which demand
made up of a loss of both consumer surplus and producer surplus
Assuming both supply and demand are not perfectly elastic or inelastic, deadweight loss
there is no deadweight loss
At the efficient level of production
both overproduction and underproduction.
Deadweight loss can be the result of
are an inferior good and sushi is a normal good.
During strong economic times, when consumer income increases, the demand for tacos decreases and the demand for sushi increases. This implies that tacos
supply curve shifted rightward
During the last decade, the price of a computer fell every year and the quantity sold increased every year. This experience suggests that the
A society learns to produce more using existing resources and acquires new resources.
Economic growth may occur when
Make Choices to cope with Scarcity
Economics is best defined as the study of how people, businesses, governments and societies
is equal to the sum of consumer surplus and producer surplus
Economics surplus
A shift to the left in the supply curve for college education and a shift to the right of the demand curve for college education
From 1970 to 1993, the real price of college education increased, and total enrollment increased. Which of the following could have caused this increase in price and enrollment?
Price and quantity both increase.
If the U.S. Surgeon General announced that increased grapefruit juice consumption could help prevent heart attacks, what would happen to the equilibrium price and quantity of grapefruit juice?
move away from the ppt towards the origin
If the unemployment rate increases, the economy will
Effective Price Ceilings, Taxes and Underproduction
In competitive markets, deadweight losses can be caused by
the choices made by individual households, firms, and governments.
Microeconomics is best described as the study of
rise; smaller
Poor temperatures in California have produced a depressed crop and caused the supply if strawberries in the U.S. to shift to the left. You predict that the price of strawberries will ______, and the more elastic the demand for strawberries, the _______ will be the effect on the price.
as prices fall, quantity demanded increases.
The "law of demand" implies that
if closer substitutes are available.
The demand for a good is more price elastic
consumer surplus
The difference between what a consumer is willing to pay for a unit of a good and what must be paid when actually buying it is called
Can consume at a point outside their production possibilities frontier, can gain from trading, and shoulder specialize in the production of goods.
The idea of comparative advantage implies that people or countries
depicts the boundary between those combinations of goods and services that can be produced and those that cannot given resources and the current state of technology
The production possibility frontier
Increasing opportunity costs
The shape of a traditional, curved production possibility frontier shows
Increase in producer surplus
What effect on the market can be used to support an increase in the minimum wage?
Not equal to, larger, or smaller than
When a market is in equilibrum, the total amount of consumer surplus must be ___________ the total amount of producer surplus
opportunity cost
When an action is chosen, the highest-valued alternative NOT chosen is called the
increases
When the price of wood (which is an input in the production of furniture) falls, the consumer surplus associated with the consumption of furniture
What factors determine the price of carrots?
Which of the following is a microeconomics question?
cola and lemon lime soda
Which of the following pairs of goods are most likely substitutes?
When supply increases (shift right), the equilibrium quantity increases and the equilibrium price falls.
Which of the following statements is correct?
A change in the price of Compact Discs
Which of the following will NOT cause a shift in the demand curve for compact discs?
An increase in the number of students attending college.
Which of the following would shift the demand curve for the new textbooks to the right?
Deadweight loss
refers ti the reduction in the economic surplus resulting from not being at the efficient, competitive equilibrium
