Micro test 1

a society that is able to produce goods and services at the lowest cost possible is experiencing

production efficiency

economic models must

rely on the ceteris paribus assumption

when an economy is operating efficiently, the production of one more unit of a good will result in the production of less of another good because?

resources are limited and efficiency implies that all resources are already in use

a price ceiling usually results in a

shortage and a misallocation of resources

the supply curve

shows a positive relationship between price and quantity supplied

which of the following is NOT one of the three basic economic questions that each society must answer

who decides what goods and services are in demand

Reasons to study economics include all of the following, EXCEPT that you:

will learn exactly how to invest your cash short-term for the highest return on investments

which of the following would change demand from D0 to D1

increase in the price of substitute goods

if the demand curve shifts rightward the...

price in the market will increase

on a demand curve:

price is on the vertical axis and quantity demanded is on the horizontal axis

Suppose that a customer's willingness to pay for a product is $79, and the seller's willingness to sell is $64. If the negotiated price is $68, how much is consumer surplus?

79-68= $11

Paolo can walk 3 dogs and mow 2 lawns in 2 hours. Ashanti can walk 6 dogs or mow 3 lawns in 2 hours. One can conclude that

Ashanti has absolute advantage in dog walking and Paolo has comparative advantage in lawn mowing

which of the following would cause a decrease in the demand for coffee

a decrease in the price of tea (a substitute for coffee)

bread and butter: b represents

a point where all of society rescuers are fully employed

implementing a price floor can cause

a surplus

in the table, at a price of $12

a surplus of 20 units occurs

which of the following events would shift the supply curve for gasoline to the right

a technological innovation in the oil-drilling industry that dramatically lowers the cost of exploration

which of the following is NOT correct regarding combination X

because it is on the line, combination X has no opportunity cost

Butter is a substitute for margarine. If the price of margarine drops, we would expect to see:

both the price of butter and quantity of butter traded fall

entrepreneurs

combine and manage inputs of land labor and capital

the theory which suggested that countries would mutually benefit from trade by specializing in export goods they could produce at a lower opportunity cost than another country is called

comparative advantage

An increase in the price of ice cream causes the demand for the sprinkles to decrease . in the this case ice cream and sprinkles are:

complementary goods

in a market, consumers get extra benefits called ______, while businesses receive extra benefits known as ______

consumer surplus, producer surplus

which of the following is NOT true of economic model building

economic models always reach verifiable results

a decrease in demand causes the equilibrium price to ______ and the equilibrium quantity to ______

fall and fall

the law of supply states that if prices:

fall, producers will offer fewer products to the market

supply and demand analysis is used

in both micro and macro

paying a salesperson more for increased sales is an example of

incentive

opportunity costs

influence all economic decisions

Capital, which includes all manufactured products that are used to produce other goods and services, earns:

interest

scarcity

is faced by all individuals and societies

Natural resources in the production process are called ______ and their payment is called ______

land and rent

suppose that summer in a resort town is very rainy. We can expect demand to shift _____ and equilibrium price for hotels to _____.

left, fall

the field of economics that is concerned about the broader issues in economy such as inflation unemployment and national output of goods and services is called

macroeconomics

When economist use the word additional, they generally mean:

marginal

a change from an inefficient mix to an efficient mix of output would best be represented with a production possibilities frontier as a

movement from inside the PPF onto the PPF

If the demand for iPhones rises as incomes increase, then the iPhone is a(n):

normal good

Increasing opportunity costs occur along the PPF because?

not all resources are equally well suited to produce all goods

a market exists when

people exchange money for goods and services

an increase in the cost of coffee beans, which is used to make coffee, will cause the ______ for coffee to shift______

supply, left

the best definition of externalities is

the economic effects of individual actions on third parties

the opportunity costs of attending college do NOT include

the expenditures for food

demand refers to

the goods and services buyers are willing and able to purchase at various prices in a given period of time

graph represents

the law of supply

the law of demand states that

the lower a products price the more of that product consumers will purchase duding a given period

In a market based economy, scarce resources are allocated by:

the price system

Economists like to use graphs and equations primarily because

these tools efficiently express economic concept

a point to the right of the production possibilities frontier is

unattainable

scarcity is best defined as when

unlimited wants exceed limited resources

a surplus exists

when the quantity supplied exceeds the quantity demanded