microeconomics

Which one of the following expressions best states the idea of opportunity cost?

"There is no such thing as a free lunch."

the least-cost production technique depends on

- the available technology -the cost of the needed resources

68. Suppose you have a money income of $10, all of which you spend on Coke and popcorn. In the above diagram, the prices of Coke and popcorn respectively are: A. $.50 and $1.00. B. $1.00 and $.50. C. $1.00 and $2.00. D. $.40 and $.50.

A. $.50 and $1.00.

Efficiency

An economic concept that focuses on how well resources are used and allocated.

161. Refer to the above diagram. The slope of curve ZZ at point A is approximately: A. +2. B. +2 1/2. C. -2 1/2. D. +4.

B. +2 1/2.

162. Refer to the above diagram. The slope of curve ZZ at point B is: A. infinity. B. zero. C. +1. D. -1.

B. zero.

What is a business cycle?

Fluctuations in economic activity.

A production possibilities curve illustrates:

Scarcity

What is market power?

The ability of an individual or group to substantially influence market prices.

What are property rights?

The ability of an individual to own and exercise control over scarce resources.

What is productivity?

The amount of goods and services produced from each unit of labor input.

positive analysis

analysis concerned with what is

Supply and demand analysis is used:

in both microeconomics and macroeconomics.

trade

the act of buying or selling

Ceteris paribus ("all else equal")

the requirement that when analyzing the relationship between two variables - such as price and quantity demanded - other variables must be held constant

the scientific method, on which economics rely, consists of several elements, including:

- accepting, rejecting, and adjusting a hypothesis -continuing to test the hypothesis against facts -observing real-world behavior and outcomes and formulation a hypothesis based on said observations

A nation's production possibilities curve (PPC) can shift outward:

- as a result of specialization and trade -with an increase in the quality and quantity of resources -through the use of improved production techniques

consider the relationship between the price of gas and the quantity of gas consumed by drivers. If we are to consider the price of gas as the only factor affecting the quantity of gas consumed, while holding other factors such as drivers' incomes and tastes and preferences irrelevant, then we are invoking:

- ceteris paribus -the other-things-equal assumption

In which of the following ways do capital goods differ from consumer goods?

- consumer goods satisfy wants directly - capital goods satisfy consumer wants indirectly through the production of consumer goods

which of the following describe the virtues of incentives?

- greater work skills and effort mean greater production and higher incomes leading to higher standards of living - hard work, skill acquisition, and innovation -assumption of risk by entrepreneurs to innovate and improve the general standard of living

the importance of the production possibilities curve is that it shows the different combinations of goods and services that a society can produce:

- in a fully employed economy -efficiently -given a fixed state of technology -given a fixed amount of resources

Economic growth is achieved through

- increased supplies of the factors of production - advances in technology

which of the following describes a technological advancement?

- new and improved methods that reduce production and/or distribution costs -the ability to produce better products and processes to replace inferior ones -the ability of a firm or entrepreneur to gain revenue and economic profit at the expense of rivals by introducing a popular new product

which of the following are true of the partnership form of business organization?

- partners share profits and losses -partners pool financial resources and business skills

The combinations of goods that lie on the production possibilities curve of a country:

- represent an efficient utilization of resources -utilize all of an economy's available resources -are attainable

Which of the following statements or questions exemplify normative economics

- the government SHOULD increase the minimum wage -the government OUGHT to bail out distressed banks - what SHOULD the Federal minimum wage be?

which of the following best describe the virtue of efficiency?

- the market encourages the development and adoption of new and more efficient production techniques -the market system promotes the efficient use of resources by guiding them into the production of the goods and services most wanted by society

What does each point on the production possibilities curve represent?

- the maximum output of two products -efficiency in production

which of the following factors are the determinants of a person's income?

- the prices commanded by the skills of the person in the resource market -the quantities of the property and human resources supplied

Which of the following define ceteris paribus?

-Factors other than those being considered in a particular analysis do not change - other-things-equal assumption

which of the following does competition require?

-Freedom of sellers and buyers to enter or leave markets. -Two or more buyers and two or more sellers acting independently in a particular market.

Countries benefit from trade and specialization:

-Get a better price abroad for goods they produce -Buy other goods more cheaply from abroad than could be produced at home.

Economists study:

-How people decide what to buy, how much to work, save, and spend -How firms decide how much to produce, how many workers to hire -How society decides how to divide its resources between national defense, consumer goods, protecting the environment, and other needs

which of the following are issues most explored in microeconomics?

-Measuring the price of specific goods -The expenditures of a government entity -A firms decision to hire more workers -Measuring total revenues of a firm or household

"Organize economic activity" means determining:

-What goods and services to produce -How much of each to produce -Who produced and consumed these

which of the following describe the concept of laissez-faire?

-a market system in which firms are free to pursue maximum profits -a market system in which the role of government is limited to protecting private property

Consumers derive personal satisfaction from goods and services by

-acting in a self-interested manner -allocating their time and energy to maximize satisfaction

which of the following best describe how goods and services can be produced?

-by utilizing the right mix of labor and capital -by locating production facilities optimally to hold down production and transportation expenses

Which of the following combinations are attainable given a consumer's budget line?

-combination involving the entire consumption of one good and zero consumption of the other good -combinations that fall ON the budget line -combinations that fall INSIDE the budget line -combinations on the MIDPOINT of the budget line

the command economies of the former soviet union and of eastern europe failed due to:

-coordination problems -incentive problems

intellectual property is an extension of property rights through:

-copyrights -trademarks -patents

The net result of increased quantities of the factors of production should be:

-economic growth -expanded potential output

A statement about economic behavior or the economy that enables prediction of the probable effects of certain actions is known as a(n):

-economic principle -economic law

the most important consequence of property rights is that they ________.

-encourage cooperation by ensuring that only mutually agreeable economic transactions take place

competition among economic units:

-implies that producers can enter or leave an industry -diffuses economic power within the businesses and households that makeup the economy

identify the 3 virtues of the market system

-incentives -efficiency -freedom

Economic growth is the result of:

-increases in supplies of resources -improvements in resource quality -technological advances

which of the following functions can a corporation do on its own behalf?

-incur debts -acquire resources -own assets -can sue

Which of the following describes the concept of rational self-interest?

-individuals look for and pursue opportunities to increase their utility -individuals allocate their resources to maximize their satisfaction -individuals weigh the costs and benefits of their decisions

Property rights also extend to:

-intellectual property

which of the following are resources which businesses purchase from households?

-labor -land -capital -entrepreneurial ability

in the circular flow model, in which of the following markets do households obtain the income needed to buy the goods and services?

-labor market -resource market

Factors of production include _____________.

-land -labor -capital -entrepreneurship

Combinations of output that fall inside the production possibilities curve represent:

-less total output in an economy -inefficient use of resources -goods that are attainable

describe the role of a central planning board appointed by a command system government

-makes all decisions concerning the use of resources -makes decisions on the composition and distribution of output -organizes production

which of the following are characteristics of the market system?

-markets and prices -freedom of choice -self-interest -private property -freedom of enterprise -competition

An individuals' income rise, they will still be confronted with which of the following?

-opportunity cost -trade-offs -choices

which of the following describe the role of government in the united states' form of capitalism?

-provides the rules for economic activity -modifies the distribution of income -provides certain goods and services that would otherwise be under-produced or not produced at all -promotes economic stability and growth

The combinations of goods that lie on the production possibilities curve of a country:

-represent an efficient utilization of resources -utilize all of an economy's available resources -are attainable

which of the following are markets in a simple circular flow model?

-resource market -product market

Society's Economizing Problem involves:

-scarce resources -opportunity cost -making choices in the face of scarcity

the 3 main categories into which businesses fall are:

-sole proprietorship -corporation -partnership

human specialization or division of labor contributes to a society's output in which of the following ways?

-specialization makes use of DIFFERENCES in ability -specialization saves TIME -specialization fosters learning by DOING

When incomes fall and the quantities of steak purchased change, economist make the ceteris paribus assumption because:

-the assumption helps isolate the effects of a change in income on the quantity of steak purchased -economist would otherwise be confused by the effects of changes of other variables on the quantity of steak purchased

which of the following are economic themes considered in macroeconomics?

-the level of prices in the economy -the unemployment rate -national income

The concept or term that refers to the notion that all variables except those under immediate consideration are held constant for a particular analysis is known as:

-the other-things-equal assumption -ceteris paribus

private individuals and businesses are able to utilize property as they wish as a result of:

-the right of private property -the ability to negotiate legally binding contracts

which of the following helps sustain the institution of private property?

-the right of property owners to designate who will receive their property when they die -the freedom of enterprise

which of the following statements describe who will get the goods and services produced in a market economy?

-those who have sufficient income and want to spend money on a particular good -those who are willing and able to pay

which of the following are examples of capital goods?

-tools -machinery -large-scale factories

identify the 5 fundamental questions that all economies, whether market or command, must address

-what goods and services will be produced? -how will the goods and services be produced? -who will get the goods and services? -how will the system accommodate change? -how will the system promote progress?

Which of the following statements or questions exemplify positive economics?

-when the government increases the minimum wage, the unemployment rate will rise -the unemployment rate in Mexico is higher than in the United States -as the flight ticket prices fall, airlines experience a sharp increase in the revenue

Suppose a rise in the price of peaches from​ $5.50 to​ $6.50 per bushel decreases the quantity demanded from​ 12,500 to​ 11,500 bushels. The price elasticity of demand is

. 0.5.

An increase in​ Abigail's income decreases her demand for used cars. For​ her, used cars are.

. an inferior good.

Demand is elastic when a price​ ________ results in total revenue​ ________.

. ​rise, decreasing

People respond to...

...incentives.

A rational decision maker takes an action only if...

...the marginal benefit is greater than the marginal cost.

Rational people...

...think at the margin.

People face...

...trade-offs.

The cost of something is...

...what you give up to get it.

The elasticity of supply equals​ ________ if the supply curve is vertical.

0

Suppose the quantity of gasoline is measured in gallons and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline was now measured in cents rather than​ dollars, the price elasticity of demand would now be

0.67

If a 6 percent decrease in the price leads to a 5 percent increase in the quantity​ demanded, the price elasticity of demand is

0.83.

The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from​ $0.30 to​ $0.50 is​ ________.

1

which of the following does competition imply:

1. It provides the economy with the flexibility needed to remain efficient over time. 2. No insurmountable barriers prevent an industry from expanding or contracting. 3. It enables the economy to adjust to changes in consumer tastes, technology, and resource availability.

How people make decisions:

1. People face trade-offs 2. The cost of something is what you give up to get it. 3. Rational people think at the margin. 4. People respond to incentives.

How can the government sometimes improve market outcomes?

1. The government protects property rights (incentive to work). 2. Can sometimes intervene to improve efficiency or equality. 3. Intervenes in monopolies. 4. Income taxes + welfare.

How people interact:

1. Trade can make everyone better off 2. Markets are usually a good way to organize economic activity 3. Governments can sometimes improve market outcomes

when the price of a movie ticket increases from $5 to $7, the quantity of tickets demanded decreases from 600 to 400 a day. What is the price elasticity of demand for movie tickets

1.20

A fall in the price of cabbage from​ $10.50 to​ $9.50 per bushel increases the quantity demanded from​ 18,800 to​ 21,200 bushels. The price elasticity of demand is

1.20.

Taco​ Bell's economists determine that the price elasticity of demand for their tacos is 2.0.​ So, if Taco Bell raises the price of its tacos by 6.0​ percent, the quantity demanded will decrease by​ ________ percent.

12.0

in order to have competition in a market economy, there must be at least ______ or more sellers acting independently in a particular market

2

The figure shows the demand for and supply of rental housing in Smallton. If a rent ceiling is set at​ $400, how many apartment units are​ rented?

2,000

In the U.S., income has grown about 2% per year so how many years does it take to double?

35 years

The figure shows the demand for and supply of labor of students in Smallville. If the minimum wage is set at​ $4 per​ hour, how many hours do students​ work?

9,000 hours

Rational Self-Interestest

A concept that individuals tend to make decisions that are in their own best interest.

Marginal Analysis.

A frame work for decision-making based on a comparison of additional costs and benefits.

Normal good

A good for which the demand increases as income rises and decreases as income falls.

Market

A group of buyers and sellers

Price ceiling

A legally determined maximum price that sellers may charge

Perfectly competitive market

A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market.

What is market failure?

A situation in which the market fails to allocate resources efficiently.

Demand schedule

A table showing the relationship between the price of a product and the quantity of the product demanded

supply schedule

A table that shows the relationship between the price of a product and the quantity of the product supplied

A price ceiling is a price

A. above which a seller cannot legally sell.

160. In the above diagram the vertical intercept and slope are: A. 4 and -1 1/3 respectively. B. 3 and -1 1/3 respectively. C. 3 and + 3/4 respectively. D. 4 and + 3/4 respectively.

A. 4 and -1 1/3 respectively.

62. Refer to the budget line shown in the diagram above. If the consumer's money income is $20, which of the following combination of goods is unattainable? A. 4 units of C, and 6 units of D. B. 5 units of C, and no units of D. C. 1 unit of C, and 8 units of D. D. 2 units of C, and 6 units of D.

A. 4 units of C, and 6 units of D.

139. Refer to the above diagram. Which of the following positions relative to PP1 would be the most likely to result in a future production possibilities curve of PP3, rather than PP2? A. A. B. B. C. C. D. D.

A. A.

Which of the following statements is true? A. Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole. B. Macroeconomics focuses on specific decision-making units of the economy; microeconomics examines the economy as a whole. C. Every topic in economics is either a microeconomic or a macroeconomic issue; a topic cannot be both. D. Topics in microeconomics have public policy implications; topics in macroeconomics do not.

A. Microeconomics focuses on specific decision-making units of the economy; macroeconomics examines the economy as a whole.

Which of the following is a macroeconomic statement? A. The gross profits of all U.S. businesses were $182 billion last year. B. The price of beef declined by 3 percent last year. C. General Motors' profits increased last year. D. The productivity of steelworkers increased by 1 percent last year.

A. The gross profits of all U.S. businesses were $182 billion last year.

153. Refer to the above diagram. The equation that shows the relationship between Y and X is: A. Y = 50 + 1/4 X. B. X = 1/4Y. C. Y = .4X. D. Y = 1/4 X - 50.

A. Y = 50 + 1/4 X.

Which of the following is a labor resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

A. a computer programmer

95. Refer to the above table. For this economy to produce a total output of 3 units of capital goods and 13 units of consumer goods it must: A. achieve economic growth. B. use its resources more efficiently than the data in the table now indicate. C. allocate its available resources most efficiently among alternative uses. D. achieve the full employment of available resources.

A. achieve economic growth.

Which of the following is not a main function of the entrepreneur? A. make routine pricing decisions. B. innovate. C. assume the risk of economic losses. D. makes strategic business decisions.

A. make routine pricing decisions.

140. Refer to the above diagram. An improvement in technology will: A. shift the production possibilities curve from PP1 to PP2. B. shift the production possibilities curve from PP2 to PP1. C. move the economy from A to C along PP1. D. move the economy from A, B, or C on PP1 to D.

A. shift the production possibilities curve from PP1 to PP2.

131. Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then: A. society should produce fewer shoes to achieve the optimal allocation of resources. B. society should produce more shoes to achieve the optimal allocation of resources. C. resources are being allocated efficiently to the production of shoes. D. shoes are more valuable to society than alternative products

A. society should produce fewer shoes to achieve the optimal allocation of resources.

129. Refer to the above diagram for athletic shoes. If the current output of shoes is Q1, then: A. society would consider additional units of shoes to be more valuable than alternative uses of those resources. B. society would consider additional units of shoes to be less valuable than alternative uses of those resources. C. society would experience a net loss by producing more shoes. D. resources are being allocated efficiently to the production of shoes.

A. society would consider additional units of shoes to be more valuable than alternative uses of those resources.

93. Refer to the above table. As compared to production alternative D, the choice of alternative C would: A. tend to generate a more rapid growth rate. B. be unattainable. C. entail unemployment. D. tend to generate a slower growth rate.

A. tend to generate a more rapid growth rate.

If the equation y = -10 + 2.5x was plotted: A. the vertical intercept would be -10. B. the slope would be -7.5. C. it would graph as a downsloping line. D. the slope would be -10.

A. the vertical intercept would be -10.

117. Refer to the above diagram. If society is currently producing 9 units of bicycles and 4 units of computers and it now decides to increase computer output to 6, the cost: A. will be 4 units of bicycles. B. will be 2 units of bicycles. C. will be zero because unemployed resources are available. D. of doing so cannot be determined from the information given.

A. will be 4 units of bicycles.

165. The slope of a line parallel to the horizontal axis is: A. zero. B. one. C. infinite. D. one-half.

A. zero.

Economic growth

According to this image (http://www.harpercollege.edu/mhealy/ecogif/ppc/ppceg.gif): What does this graph represent?

A rent ceiling results in a shortage. As a​ result, which of the following do you​ expect?

All of the above would be expected.

Rational behavior requires "thinking at the margin." Which of the following is an example of this type of thinking?

All of these are examples of "thinking at the margin."

What is a market economy?

An economic system where interaction of households and firms in markets determines the allocation of resources.

What is inflation?

An increase in the overall level of prices.

Real Capital

Anything man-made that can be used to produce something else

Which of the following best describes the relationship between trade-offs and opportunity cost?

As you give up consumption or production of one good over another (the trade-off), an opportunity cost is incurred

110. Refer to the above diagram. Starting at point A, the opportunity cost of producing each successive unit of tractors is: A. a constant 2 units of bread. B. 2, 4, 6, and 8 units of bread. C. 8, 6, 4, and 2 units of bread. D. the reciprocal of the output of tractors.

B. 2, 4, 6, and 8 units of bread.

128. Refer to the above diagram for athletic shoes. The optimal output of shoes is: A. Q1. B. Q2. C. Q3. D. greater than Q3.

B. Q2.

Which of the following statements is correct? A. The value of the independent variable is determined by the value of the dependent variable. B. The value of the dependent variable is determined by the value of the independent variable. C. The dependent variable designates the "cause" and the independent variable the "effect." D. Dependent variables graph as upsloping lines; independent variables graph as downsloping lines.

B. The value of the dependent variable is determined by the value of the independent variable.

Which of the following is real capital? A. a pair of stockings B. a construction crane C. a savings account D. a share of IBM stock

B. a construction crane

Which of the following would be most likely to shift the production possibilities curve to the right? A. a sudden and substantial expansion of consumer wants B. an improvement in the literacy level and general level of education C. a decline in the size of the population and labor force D. shifting resources from the production of capital goods to the production of consumer goods

B. an improvement in the literacy level and general level of education

115. Refer to the above diagram. Points A, B, C, D, and E show: A. that the opportunity cost of bicycles increases, while that of computers is constant. B. combinations of bicycles and computers that society can produce by using its resources efficiently. C. that the opportunity cost of computers increases, while that of bicycles is constant. D. that society's demand for computers is greater than its demand for bicycles.

B. combinations of bicycles and computers that society can produce by using its resources efficiently.

150. Refer to the above diagram. The variables X and Y are: A. inversely related. B. directly related. C. unrelated. D. negatively related.

B. directly related.

152. Refer to the above diagram. The slope of the line: A. is - 1/4. B. is + 1/4. C. is .40. D. cannot be determined from the information given.

B. is + 1/4.

151. Refer to the above diagram. The vertical intercept: A. is 40. B. is 50. C. is 60. D. cannot be determined from the information given.

B. is 50.

120. Refer to the above diagram. The combination of computers and bicycles shown by point F: A. is unattainable, given currently available resources and technology. B. is attainable, but implies that the economy is not using all its resources. C. is irrelevant because it is inconsistent with consumer preferences. D. suggests that opportunity costs are constant.

B. is attainable, but implies that the economy is not using all its resources.

96. Refer to the above table. For these data the law of increasing opportunity costs is reflected in the fact that: A. the amount of consumer goods that must be sacrificed to get more capital goods diminishes beyond a point. B. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. C. the production possibilities data would graph as a straight downsloping line. D. the economy's resources are presumed to be scarce.

B. larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

158. The movement from line A to line A' represents a change in: A. the slope only. B. the intercept only. C. both the slope and the intercept. D. neither the slope nor the intercept.

B. the intercept only.

(Consider This) An exception to the advice "go to college, stay in college, and earn a degree" occurs when: A. tuition expenses are high and rising. B. the opportunity cost of attending college is extraordinarily high. C. the price of textbooks is high and rising. D. the economy is growing rapidly and jobs are plentiful.

B. the opportunity cost of attending college is extraordinarily high.

Which of the following will not produce an outward shift of the production possibilities curve? A. an upgrading of the quality of a nation's human resources B. the reduction of unemployment C. an increase in the quantity of a society's labor force D. the improvement of a society's technological knowledge

B. the reduction of unemployment

118. Refer to the above diagram. The combination of computers and bicycles shown by point G is: A. attainable, but too costly. B. unattainable, given currently available resources and technology. C. attainable, but involves unemployment. D. irrelevant because it is inconsistent with consumer preferences.

B. unattainable, given currently available resources and technology.

119. Refer to the above diagram. If society is currently producing the combination of bicycles and computers shown by point D, the production of 2 more units of bicycles: A. cannot be achieved because resources are fully employed. B. will cost 1 unit of computers. C. will cost 2 units of computers. D. will cause some resources to become unemployed.

B. will cost 1 unit of computers.

Normative economics is:

Based on value judgments

the product market is a place where _______

Businesses sell goods and services and households buy goods and services

Assume a household would consume $100 worth of goods and services per week if its weekly income were zero and would spend an additional $80 per week for each $100 of additional income. Letting C represent consumption and Y represent income, the equation that summarizes this relationship is:

C = 100 + .8Y.

163. Refer to the above diagram. The slope of curve ZZ at point C is approximately: A. -4. B. -2. C. -2 2/5. D. +3.

C. -2 2/5.

111. Refer to the above diagram. Starting at point E, the production of successive units of bread will cost: A. a constant 8 units of tractors. B. a constant 6 units of tractors. C. 1/8, 1/6, 1/4, and 1/2 units of tractors. D. 1/2, 1/4, 1/6, and 1/8 units of tractors.

C. 1/8, 1/6, 1/4, and 1/2 units of tractors.

Which of the following is a normative statement? A. The temperature is high today. B. The humidity is high today. C. It is too hot to play tennis today. D. It will cool off later this evening.

C. It is too hot to play tennis today.

Which of the following statements pertains to macroeconomics? A. Because the minimum wage was raised, Mrs. Olsen decided to enter the labor force. B. A decline in the price of soybeans caused farmer Wanek to plant more land in wheat. C. National income grew by 2.7 percent last year. D. The Pumpkin Center State Bank increased its interest rate on consumer loans by 1 percentage point.

C. National income grew by 2.7 percent last year.

Which of the following is a microeconomic statement? A. The real domestic output increased by 2.5 percent last year. B. Unemployment was 6.8 percent of the labor force last year. C. The price of personal computers declined last year. D. The general price level increased by 4 percent last year.

C. The price of personal computers declined last year.

Which of the following is a positive statement? A. The humidity is too high today. B. It is too hot to jog today. C. The temperature is 92 degrees today. D. Summer evenings are nice when it cools off.

C. The temperature is 92 degrees today.

Other things equal, which of the following would shift an economy's production possibilities curve to the left? A. the discovery of a low-cost means of generating and storing solar energy B. the entrance of more women into the labor force C. a law requiring mandatory retirement from the labor force at age 55 D. an increase in the proportion of total output that consists of capital or investment goods

C. a law requiring mandatory retirement from the labor force at age 55

116. Refer to the above diagram. This production possibilities curve is: A. convex to the origin because opportunity costs are constant. B. linear because opportunity costs are constant. C. concave to the origin because of increasing opportunity costs. D. convex to the origin because of increasing opportunity costs.

C. concave to the origin because of increasing opportunity costs.

164. The slope of a line parallel to the vertical axis is: A. zero. B. one. C. infinite. D. one-half.

C. infinite.

159. In the above diagram variables x and y are: A. both dependent variables. B. directly related. C. inversely related. D. unrelated.

C. inversely related.

138. Refer to the above diagram. The concept of opportunity cost is best represented by the: A. shift of the production possibilities curve from PP1 to PP2. B. move from B on PP1 to E on PP2. C. move from B on PP1 to C on PP1. D. move from D inside PP1 to B on PP1.

C. move from B on PP1 to C on PP1.

Which of the following is a land resource? A. a computer programmer B. a computer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

C. silicon (sand) used to make computer chips

130. Refer to the above diagram for athletic shoes. If the current output of shoes is Q3, then: A. resources are being allocated efficiently to the production of shoes. B. society would consider additional units of shoes to be more valuable than alternative products. C. society would consider additional units of shoes to be less valuable than alternative products. D. society would experience a net gain by producing more shoes.

C. society would consider additional units of shoes to be less valuable than alternative products.

107. Which of the following is not correct? A typical production possibilities curve: A. indicates how much of two products a society can produce. B. reveals how much each additional unit of one product will cost in terms of the other product. C. specifies how much of each product society should produce. D. indicates that to produce more of one product society must forgo larger and larger amounts of the other product.

C. specifies how much of each product society should produce.

(Consider This) A direct cost of going to college is: A. tuition, while an indirect cost (opportunity cost) is books and other supplies. B. forgone income while in college, while an indirect cost (opportunity cost) is tuition. C. tuition, while an indirect cost (opportunity cost) is forgone income while in college. D. books and supplies, while an indirect cost (opportunity cost) is food and housing.

C. tuition, while an indirect cost (opportunity cost) is forgone income while in college.

94. Refer to the above table. A total output of 3 units of capital goods and 4 units of consumer goods: A. is irrelevant because the economy is capable of producing a larger total output. B. will result in the maximum rate of growth available to this economy. C. would involve an inefficient use of the economy's scarce resources. D. is unobtainable in this economy.

C. would involve an inefficient use of the economy's scarce resources.

________ refers to produced goods that are used in the production of other goods

Capital

Which of the following is NOT an example of market failure?

Competition leads firms to provide products at the lowest possible price.

92. Refer to the above table. If the economy is producing at production alternative C, the opportunity cost of the tenth unit of consumer goods will be: A. 4 units of capital goods. B. 2 units of capital goods. C. 3 units of capital goods. D. 1/3 of a unit of capital goods.

D. 1/3 of a unit of capital goods.

102. Refer to the above diagram. This economy will experience unemployment if it produces at point: A. A. B. B. C. C. D. D.

D. D.

63. Refer to the budget line shown in the diagram above. The absolute value of the slope of the budget line is: A. MUC/MUD. B. one-half. C. PD/PC. D. PC/PD.

D. PC/PD.

Which of the following is a capital resource? A. a computer programmer B. a corporate bond issued by a computer manufacturer C. silicon (sand) used to make computer chips D. a piece of software used by a firm

D. a piece of software used by a firm

Which of the following will shift the production possibilities curve to the right? A. an increase in the unemployment rate from 6 to 8 percent B. a decline in the efficiency with which the present labor force is allocated C. a decrease in the unemployment rate from 8 to 6 percent D. a technological advance that allows farmers to produce more output from given inputs

D. a technological advance that allows farmers to produce more output from given inputs

Which of the following lists includes only capital resources (and therefore no labor or land resources)? A. an ice arena; a professional hockey player; hockey uniforms. B. the owner of a new startup firm; a chemistry lab; a researcher. C. a hydroelectric dam; water behind the dam; power lines. D. autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers to and from the airport.

D. autos owned by a car rental firm; computers at the car rental agency; the vans that shuffle rental customers to and from the airport.

121. Refer to the above diagram. The movement down the production possibilities curve from point A to point E suggests that the production of: A. computers, but not bicycles, is subject to increasing opportunity costs. B. bicycles, but not computers, is subject to increasing opportunity costs. C. both bicycles and computers are subject to constant opportunity costs. D. both bicycles and computers are subject to increasing opportunity costs.

D. both bicycles and computers are subject to increasing opportunity costs.

101. Refer to the above diagram. Other things equal, this economy will achieve the most rapid rate of growth if: A. the ratio of capital to consumer goods is minimized. B. it chooses point C. C. it chooses point B. D. it chooses point A.

D. it chooses point A.

61. Refer to the budget line shown in the diagram above. If the consumer's money income is $20, the: A. prices of C and D cannot be determined. B. price of C is $2 and the price of D is $4. C. consumer can obtain a combination of 5 units of both C and D. D. price of C is $4 and the price of D is $2.

D. price of C is $4 and the price of D is $2.

109. Refer to the above diagram. This production possibilities curve is constructed so that: A. resources are presumed to be perfectly shiftable between bread and tractors. B. the opportunity cost of bread diminishes as more bread is produced. C. the opportunity cost of tractors increases as more bread is produced. D. the opportunity cost of both bread and tractors increases as more of each is produced.

D. the opportunity cost of both bread and tractors increases as more of each is produced.

The figure represents the behavior of total revenue as price falls along a straightminus−line demand curve. What is the price elasticity of demand if total revenue is given by point f​?

Demand is elastic.

Prices

Determined by an interaction of buyers and sellers that reflects the goods value to buyers and the cost of producing that good.

On a graph, an upward sloping curve is indicates a(n) ___________ relationship between the variables.

Direct relationship

_______ is the study of how individuals and societies use their limited resources to try and satisfy their unlimited wants.

Economics

________ is the special skill involved in organizing labor, land, and capital for production.

Enterpreneurship

Who does trade make better off?

Everyone.

T/F: All, but the super wealthy, have a finite or limited amount of income

False

T/F: Constant opportunity costs is best exemplified through a curved production possibilites frontier

False

T/F: Economists assume that human behavior reflects "irrational self-interest"

False

T/F: an economic hypothesis is a statement about economic behavior that is well-tested and widely accepted

False

T/F: the scientific method is unique to economics alone

False

Capital (Accounting)

Financial capital

________ illustrate the relationship between two variables.

Graph

Ben says that "An increase in the tax on beer will raise its price." Holly argues that "Taxes should be increased on beer because college students drink too much." We can conclude that:

Holly's statement is normative, but Ben's is positive.

__________ __________ is developed ability that increases a person's productivity.

Human Capital

What is the guns vs. butter debate?

If a society spends more on national defense (guns), then it will have less to spend on social programs (butter).

What is usually a good way to organize economic activity?

In markets.

A(n) _________ changes the benefit or cost associated with an action

Incentive

Which of the following is a key idea in economic thinking?

Incentives matter.

What are marginal changes?

Incremental adjustments to an existing plan.

The _________ of a curve is the ratio of the vertical change to the horizontal change as the graph is read from left to right.

Inverse relationship

What does a country's standard of living depend on?

Its ability to produce goods and services.

______ refers to the physical and mental efforts that people contribute to production.

Labor

_________ refers to the naturally occuring resources

Land

_________ refers to the naturally occurring resources.

Land

law of increasing opportunity cost

Law that states: we must give up ever-increasing quantities of other goods and services in order to get more of a particular good.

__________ focuses on overall economic behavior.

Macroeconomics

Rational Thinking

Make decisions by evaluating costs and benefits of marginal changes

Which is more efficient: market economies or centrally planned economies?

Market economies.

_________ focuses on components of the economy

Microeconomics

__________ statements propose the way things ought to be.

Normative Statements

Most of the disagreement among economists involves:

Normative statements

__________ cost is the value of the best alternative surrendered when a choice is made

Opportunity Cost

When the government chooses to use resources to build tourist centers, the chosen resources are no longer available to build highways. This BEST illustrates the concept of:

Opportunity cost

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates what?

Opportunity costs

Which of the following statements, if any, is correct for a nation that is producing only consumer and capital goods?

Other things equal, the more capital goods a nation produces, the greater will be its future growth rate.

People benefit from trade:

People can buy a greater variety of goods and services at a lower cost.

__________ statements claim to describe the way things are.

Positive Statements

Invisible hand

Prices guide self interested households and firms to make decisions that maximize societies economic well-being.

What happens when the government prints too much money?

Prices rise.

Equality

Prosperity is distributed uniformly [['/;

which of the following best exemplifies the importance of advanced technology and capital goods?

Rather than producing with his bare hands, a farmer can derive huge benefits from using equipment such as a tractor, plow, and storage bin.

Capital (Economics)

Real capital

________ are the inputs that make production possible.

Resources

_______ is the problem that human wants exceed the production possible with the limited resources available.

Scarcity

Efficiency

Society gets the most from its scarce resources

Incentive

Something that induces a person to act.

What is an incentive?

Something that induces a person to act.

Consumer goods

Something with a one time use like a hamburger or a shirt. Not something that is able to produce something in general.

What is rational?

Systematically and purposefully doing the best you can to achieve your objectives.

Conservatives

Tend to favor Adam Smith's laissez-faire approach

Using dollar price as the rationing device means:

That goods will be rationed to the consumers who are willing and able to pay for most of them.

suppose an economy produces only two goods, consumer goods and capital goods. its current combination of production involving higher level of capital goods than consumer goods. which of the following can be inferred from this current choice on its production possibilities curve?

That its present choice in production may result in higher future prospects for economic growth

Adam Smith's viewpoint

The "invisible hand" determines what gets produced, how, and for whom. He also believed in "laissez faire": price signals and responses of the marketplace were likely to do a better job of allocating resources than any government could

Ceteris Paribus

The assumption that "all other variables are held constant."

What is a monopoly?

The case in which there is only one seller in the market.

Investment (Accounting)

The exchange of one asset for another asset

Sara is an Economics major. She has a total of 16 hours to study for both exams. She speculates that her score on either test will improve by one whole grade for every two hours she spends studying either discipline. After considering her options, she chooses to study ten hours for her economics exam and six hours for her chemistry exam. The fact that Sara would like to study an equal amount for both exams, but cannot, reveals which of the following?

The fact that scarcity restricts options and demands choices

Equity

The fairness of various issues and policies.

Scarcity

The limited nature of society's resources

What is scarcity?

The limited nature of society's resources (and their unlimited wants).

Society faces trade-offs:

The more it spends on national defense the less it can spend on consumer goods to raise the standards of living Pollution regulations: Cleaner environment and improved health at the cost of reducing the incomes of the firms' owners, workers, and customers.

The price elasticity of demand for purses is measured in what​ units?

The price elasticity of demand is a unitless measure

Example of Opportunity Cost: Going to the Movies

The price of the movie ticket PLUS the value of the time you spend in the theater

What is the "invisible hand" principle?

The principle that self-interested market participants may unknowingly maximize the welfare of society as a whole.

What is equality?

The property of distributing economic prosperity uniformly among the members of society.

What is efficiency?

The property of society getting the most from its scarce resources.

Investment (Economics)

The purchase of "real capital."

law of supply

The rule that, holding everything else constant, increases in price causes increases in the quantity supplied, and decreases in price cause decreases in the quantity supplied.

What causes the business cycle?

The short-run trade off between inflation and unemployment. Increased money stimulates spending, which raises prices and production and therefore reduces unemployment. In the short-term, an increase in inflation reduces unemployment.

scarcity

The situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Economics

The study of how society manages its scarce resources.

What is economics?

The study of how society manages its scarce resources.

Which of the following exemplifies that topics and subdivisions of economics can be rooted in both macroeconomics and microeconomics?

The unemployment rate and the decisions of individual firms and workers to encourage or impede hiring, as well as to search for work, respectively.

Which is TRUE about specialization and exchange between two individuals?

They generally benefit the poorer individual as well as the richer individual.

Liberals

Think government intervention is needed to improve market outcomes.

Trade-off: Efficiency v. Equality

To achieve greater equality, could redistribute income from wealthy to poor But this reduces incentive to work and produce, shrinks the size of economic "pie"

People face trade-offs

To get something that we like, we have to give up something else that we also like.

A decrease in income will shift the budget line to the left

True

T/F: A trade-off occurs when some quantity of production or consumption of a good or service is given up in order to produce or consume another good or service

True

What is the opportunity cost of going to college?

Tuition payment, value of time you could have spent working (valued at potential earnings).

Example of Opportunity Cost: Going to College for a Year

Tuition, books, and fees PLUS foregone wages

Macroeconomics is concerned with issues such as:

Unemployment

Use the infinite line tool to draw a curve that illustrates a linear relationship between x and y such that the slope is zero and y always equals 5. Label the curve "Linear curve."

Use the finite line tool and draw a horizontal line in 5 and mark as linear curve

In the​ figure, a minimum wage of​ ________ would result in employment of​ ________.

W1​; L2

Three CORE Economic questions

WHAT to produce, HOW to produce it, FOR WHOM to produce

Inefficiency

What does point B represent? (according to this image: http://edu.uoh.edu.cn/zlgc/sykc/sxy/zyxt/images/xt1_image006.gif)

It is impossible to produce at this point with the available resources and technology.

What does point y represent? (according to this image: http://edu.uoh.edu.cn/zlgc/sykc/sxy/zyxt/images/xt1_image006.gif)

What is opportunity cost?

Whatever is given up to get something else.

Opportunity Cost

Whatever must be given up to obtain some item

What is an externality?

When one person's actions have an impact on a bystander.

If demand is price​ elastic,

a 1 percent decrease in the price leads to an increase in the quantity demanded that exceeds 1 percent.

The demand for movies is unit elastic if

a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded.

The alternative combination of two goods which a consumer can purchase with a given money income is shown by what?

a budget line.

Which of the following best exemplifies the relationship between a capital good and a consumer good or service?

a commercial baking oven and loaves of bread

what does the economic perspective entail?

a comparison of marginal benefits and marginal costs in decision making

production possibilities frontier (ppf)

a curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology

demand curve

a curve that shows the relationship between the price of a product and the quantity of the product demanded.

supply curve

a curve that shows the relationship between the price of a product and the quantity of the product supplied.

66. The shift of the budget line from cd to ab in the above figure is consistent with: A. decreases in the prices of both M and N. B. an increase in the price of M and a decrease in the price of N. C. a decrease in money income. D. an increase in money income.

a decrease in money income.

What is Microeconomics is concerned with?

a detailed examination of specific economic units that make up the economic system.

A point that lies inside the production possibilities curve reflects:

a failure to achieve full employment

To maximize its​ revenue,

a firm facing inelastic demand should always raise its price.

The production possibilities curve is a frontier between what?

a frontier between all combinations of two goods that can be produced and those combinations that cannot be produced.

inferior good

a good for which the demand increases as income falls and decreases as income rises.

production possibilities curve

a graph that illustrates the full range of production choices; each point depicts an alternative mix of output that could be produced

market

a group of buyers and sellers of a good or service and the instition or arrangement by which they come together to trade.

price floor

a legally determined minimum price that sellers may receive

competitive market equilibrium

a market equilibrium with many buyers and many sellers

black market

a market in which buying and selling takes place at prices violate government price regulations.

economic efficiency

a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum.

the operation of ______ creates a curious unity between private interests and social interests

a market system

which of the following is characterized by the private ownership of resources and the use of markets to coordinate and direct economic activity?

a market system

free market

a market with few government restrictions on how a good or service can be produced or sold, or on how a factor of production can be employed.

circular-flow diagram

a model that illustrates how participants in markets are linked

The term "other things equal" means that:

a number of relevant variables are assumed to be constant

technological change

a positive or negative change in the ability of a firm to produce a given level of output with a give quality or inputs.

which of the following illustrates that at any point in time, a fully employed economy must sacrifice some amount of one go to obtain more of another good?

a production possibilities table

According to economists, economic self-interest is what?

a reality that underlies economic behavior

economic model

a simplified version of reality used to analyze real-world economic situations

market equilibrium

a situation in which quantity demanded equals quantity supplied

surplus

a situation in which quantity supplied is greater than the quantity demanded

shortage

a situation in which the quantity demanded is greater than the quantity supplied

allocative efficiency

a state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides marginal benefit to society equal to the marginal cost of producing it

in the type of capitalism practiced in the united states and most other countries, the government plays _________ role in the economy

a substantial

entrepreneurs trying to maximize profits and minimize losses, property owners trying to get the highest price for the sale or rental of their resources, and workers trying to maximize their satisfaction by finding jobs that offer the best combination of wages, hours, benefits, and working conditions are all examples of:

acting in one's self-interest

In macroeconomics, a(n) ______ is a collection of specific economic units treated as if they were one unit

aggregate

Suppose an economist says that "Other things equal, the lower the price of bananas, the greater the amount of bananas purchased." This statement indicates that:

all factors other than the price of bananas (for example, consumer tastes and incomes) are assumed to be constant.

land

all natural resources (land, crude oil, water, air, and minerals)

What does a budget line show?

all possible combinations of two goods that can be purchased, given money income and the prices of the goods.

The assertion that "There is no free lunch" means what?

all production involves the use of scarce resources and thus the sacrifice of alternative goods.

What is the basic purpose of the other-things-equal assumption?

allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

Points ______ the production possibilities curve are produced efficiently so long as an economy uses all of its available resources

along

A budget line shows the:

alternative combinations of two goods that a consumer can purchase with a given money income.

mixed economy

an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources

market economy

an economy in which the decisions of households and firms interacting in markets allocate economic resources

centrally planned economy

an economy in which the government decides how economic resources will be allocated

mixed economy

an economy that uses both market signals and government directives to allocate goods and resources.

What is associated with macroeconomics?

an empirical investigation of the general price level and unemployment rates since 1990

market failure

an imperfection in the market mechanism that prevents optimal outcomes. The invisible hand has failed to achieve the best possible outcomes.

Paying a salesperson more for increased sales is an example of:

an incentive.

"guns vs. butter" dilemma

an increase in national defenses implies more sacrifices of civilian goods and services (the factors of production devoted to producing military hardware aren't available for producing civilian goods)

If we say that two variables are inversely related, this means that:

an increase in one variable is associated with a decrease in the other.

If we say that two variables are directly related, this means that:

an increase in one variable is associated with an increase in the other variable.

economic growth

an increase in output; an expansion of production possibilities

normative analysis

analysis concerned with what ought be

Marginal analysis

analysis that involves comparing marginal benefits and marginal costs.

What are Economic theories?

are generalizations based on a careful observation of facts.

combinations of goods lying outside the budget line, not the PPF:

are unattainable, given a consumer's income

the two major benefits that arise from the market system's restriction of business risk to owners and investors are

attracting inputs and focusing attention

positive economics ____ value judgements, tries to establish ____ statements about economic behavior, and deals with ______ economic events

avoids; scientific; actual

the ______ system, which involves swapping goods for goods, requires coincidence of wants between the buyer and the seller.

barter

the ________ system, which involves swapping goods for goods, requires coincidence of wants between the buyer and the seller

barter

72. Suppose Elroy's budget line is as shown on the above diagram. If his tastes change in favor of Coke and against popcorn, the budget line will:

be unaffected.

Why is it in our self-interest to economize or pick and choose goods and services that maximize our satisfaction?

because of our limited incomes conflicting with our insatiable wants for goods and services

Economists develop theories of the ______ of individuals (consumers/workers) and institutions (businesses/governments) engaged in the production, exchange, and consumption of goods and services:

behavior

In order to have an​ effect, a price ceiling must be set​ ________.

below the equilibrium price

A person should consume more of something when its marginal means what?

benefit exceeds its marginal cost

In drawing a production possibilities curve we hold constant:

both technology and resource supplies.

A consumer's ________ line or constraint shows various combinations of two products that can be purchased with a specific amount of income.

budget line

which of the following would be an example of the system accommodating change?

buyers want more juice and less milk. producers increase spending only on juice. profits rise in the juice industry and fall in the milk industry

Unemployment is illustrated by what?

by a point inside the production possibilities curve.

Suppose that an economy is producing on its production possibilities curve, but is not producing quantities of each good where the marginal benefit equals the marginal cost for each good. How can this economy improve its allocation?

by producing more of one good and less of the other.

Suppose that Julia receives a $20 gift card for the local coffee shop, where she only buys lattes and muffins. If the price of a latte is $4 and the price of a muffin is $2, then we can conclude that Julia:

can buy 5 lattes or 10 muffins if she chooses to buy only one of the two goods.

If an economy is operating inside its production possibilities curve for consumer goods and capital goods, it:

can produce more of both consumer goods and capital goods by using resources that are currently idle.

For economists, ____ goods includes all manufactured aids used in producing consumer goods and services.

capital

Economic principles and models are highly useful in determining _____ and ______ relationship

cause and effect

in a command economy, how is the division of output between capital and consumer goods determined?

centrally decided

The study of economics is primarily concerned with what?

choices that are made in seeking the best use of resources

communism exhibits all the characteristics of a ________ system.

command

The slope of a straight line can be determined by:

comparing the absolute vertical change to the absolute horizontal change between two points on the line.

which of the following best serves as the regulatory mechanism of the market system?

competition

a producer that charges more than the ______ will relinquish sales to other producers in a market economy

competitive market price

which of the following describes how the market system will promote progress?

competitive markets create incentives for technological advance and capital accumulation, both of which contribute to promoting progress

The law of increasing opportunity costs is reflected in a production possibilities curve that is:

concave to the origin.

In the study of economics, the goals of efficiency and equity are often:

conflicting with one another.

The straight-line budget constraint indicates _______ opportunity cost?

constant

The basic difference between consumer goods and capital goods is that

consumer goods satisfy wants directly while capital goods satisfy wants indirectly.

____ goods satisfy wants directly, whereas ____ goods do so indirectly

consumer; capital

Consumers must forego choices based on a limited budget because:

consumers spend their limited budget purchasing a combination of goods that maximize their utility

in the circular flow model, the market economy creates

continuous, repetitive flows of goods and services, resources and money.

private property rights, coupled with the freedom to negotiate binding legal ________ enables individuals and businesses to obtain, use, and dispose of property resources as they see fit.

contracts

Normative, value-based policy questions or statements give rise to ________.

controversy or disagreement among economists

the ________ problems faced by the command economies of the former soviet union, eastern europe, and china prior to market reforms became more difficult as the economies expanded and as markets became more complex

coordination

A minimum wage set above the equilibrium wage will

create a surplus of labor.

In recent years, new MP3 and digital technologies have started to replace compact disks. This is an example of:

creative destruction

Toothpaste and toothbrushes are​ complements, so the​ ________ elasticity of demand is​ ________.

cross; negative

economic systems can be classified by the degree to which they rely upon ____ decision making based upon markets and prices or _____ government control based on orders and mandates

decentralized, centralized

Kara was out jogging and despite being tired, decided to run one more mile. Based on her actions, economists would conclude that Kara:

decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile.

In the​ figure, originally the apartment rental market is in short−run and long−run equilibrium with a rent of​ $600 per month. Then the government imposes a rent ceiling of​ $500 per​ month, which causes a shortage. Suppose that apartments are an inferior good and incomes rise. The increase in income

decreases the shortage.

When the minimum wage is set above the equilibrium wage​ rate, the number of hours of labor employed is determined by the​ ________ and the​ ________.

demand for​ labor; minimum wage

which of the following are made possible because of private property rights in a market system?

economic growth, investment, innovation, exchange, and maintenance of property

If the production possibilities curve is a straight line:

economic resources are perfectly substitutable between the production of the two products.

The _________ problem refers to the need to make choices because economic wants exceed economic means

economizing

Dan sells newspapers. Dan says that a 4 percent increase in the price of a newspaper will decrease the quantity of newspapers demanded by 8 percent. According to​ Dan, the demand for newspapers is​ ________.

elastic

A hot dog vendor on a street corner could increase the quantity of hot dogs her customers demand by 12 percent if she lowers the price of a hot dog 10 percent. The demand for the hot dogs is

elastic.

According to the total revenue​ test, a price cut increases total revenue if demand is

elastic.

Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is

elastic.

If a good is produced using inputs for which there are no​ substitutes, the​ good's

elasticity of supply is likely to be small.

What do Economic models do?

emphasize basic economic relationships by purposefully simplifying the complexities of the real world.

Karl Marx's viewpoint

emphasized how free markets tend to concentrate wealth and power in the hands of the few, at the expense of many. The government had to OWN all the means of production to avoid savage inequalities.

Freedom of ____________ ensures that entrepreneurs and private businesses are free to obtain and use economic resources to produce their choice of goods and services.

enterprise

the market system thrives on freedom of _______ and _______.

enterprise; choice

_____ ability is a special kind of economic resource, which is distinct from labor

entrepreneurial

In addition to lacking incentives, the command economies of the former Soviet Union, Eastern Europe, and China prior to market reforms also lacked ________.

entrepreneurship

which of the following is the reason why every society needs to develop an economic system?

every society has unlimited wants but limited resources

economic principles are generalizations that are:

expressed as the tendencies of average consumers, workers or firms

Economic resources are also called:

factors of production.

T/F: in a command economy, business success measured by political savvy is conductive to technological advance

false

T/F: in a market system, the government owns most of the property resources such as land and capital

false

T/F: money complicates exchange or trade

false

T/F: specialization means using available resources to produce a variety of goods and services

false

T/F: the command economies of the former soviet union, eastern europe, and china prior to market reforms rewarded innovatino, enterprise, and entrepreneurship

false

T/F: the resource market is the place where resources or the services of resource suppliers are produced

false

capital

final goods produced for use in the production of other goods (ex. equipment, structures, etc)

according to the circular flow model, ________ will buy resources from and sell products to households

firms

in the circular flow model, households sell resources to, and buy products from _________.

firms

An minimum wage set above the equilibrium wage rate is a price

floor that results in a surplus of lowminus−skilled labor.

An active, but limited government is characteristic of which market system in modern advanced industrial economies?

free market system

division of labor that works on a regional or international basis is known as _____ specialization

geographic

which of the following is/are found in the product market?

goods and services

complements

goods and services that are used together.

substitutes

goods and services that can be used for the same purpose.

Who owns most property resources in a command system?

government

government failure

government intervention that fails to improve economic outcomes

Between 1940 and 2007, the percentage of Americans 25 years and older who had completed high school:

has more than tripled.

which of the following does NOT occur in the RESOURCE market?

households purchase goods and services from firms

The basic economic problem is scarcity because:

human wants are unlimited and resources are limited

The production possibilities curve illustrates the basic principle that:

if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

The law of increasing opportunity costs states that:

if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.

Why should you decide to go to a movie?

if the marginal benefit of the movie exceeds its marginal cost.

production possibilities schedule

illustrates the the full range of production choices in a chart or table

Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. What does this fact imply?

implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

If the longminus−run supply of rice is perfectly​ elastic, then

in the long​ run, an increase in the demand for rice leaves the price of rice unchanged.

the economies of the former soviet union, eastern europe, and china prior to market reforms faced problems caused by a lack of coordination and a lack of _______

incentive

_____ comes in the forms of wages, interest, rent, profit, and even from government programs

income

Opportunity costs _____________ as we move along the production possibilities curve.

increase

If demand is​ inelastic, an increase in the price will

increase total revenue.

A rent ceiling below the equilibrium rent will create

increased search time and black markets.

In the​ figure, originally the apartment rental market is in shortminus−run and longminus−run equilibrium with a rent of​ $600 per month. Then the government imposes a rent ceiling of​ $500 per​ month, which causes a shortage. Suppose that apartments are a normal good and incomes rise. The increase in income

increases the shortage.

If two variables are inversely related, then as the value of one variable:

increases, the value of the other decreases.

What does purposeful behavior suggest?

individuals will make different choices because of different desired outcomes

If the price elasticity is between 0 and​ 1, demand is

inelastic.

If the quantity demanded changes by a relatively small amount for a given change in​ price, then demand is

inelastic.

The main function of the entrepreneur is to:

innovate

Points lying ___ the production possibilities curve are attainable, reflecting less total output than can be produced

inside

In economics, the term _______ describes spending that pays for the production and accumulation of capital goods

investment

Assume the price of product Y (the quantity of which is on the vertical axis) is $15 and the price of product X (the quantity of which is on the horizontal axis) is $3. Also assume that money income is $60. The absolute value of the slope of the resulting budget line:

is 1/5.

A minimum wage​ ________.

is a price floor in the labor market

A normative statement is one that:

is based on value judgments.

Microeconomics:

is concerned with individual economic units and specific markets.

A supply curve that is horizontal reflects a supply that

is elastic.

Scarcity:

is faced by all individuals and societies.

Any combination of goods lying outside of the budget line is what?

is unattainable, given the consumer's income.

which of the following can be stated as potentially true about any economy?

its current choice of positions on its production possibilities frontier helps determine its future location

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

its substitutes and its complements.

The work-related activities of a teacher and doctor fall under the category of

labor

scarcity

lack of enough resources to satisfy all desired uses of those resources

The four factors of production are:

land, labor, capital, and entrepreneurial ability

The supply of lettuce in the short run will be​ ________ than the supply in the long run and​ ________ than the supply today.

less​ elastic; more elastic

The economizing problem is one of deciding how to make the best use of:

limited resources to satisfy virtually unlimited wants.

the term "laissez-faire" refers to

limiting the government's interference in the economy

When economists say that people act rationally in their self interest, they mean that individuals do what?

look for and pursue opportunities to increase their utility

just as a producer that charges more than the competitive price will relinquish sales to other producers, so will an employer who pays less than the competitive wage rate will:

lose workers to other employers

_____ is the discipline that examines the performance and behavior of an economy as a whole

macroeconomics

The problems of aggregate inflation and unemployment are:

major topics of macroeconomics.

In constructing models, what do economists do?

make simplifying assumptions

A price ceiling​ ________.

makes it illegal to charge a higher price than specified

To economists, the term that means "extra", "additional", or "changes in" is _____ (one word)

marginal

Recently, you decided to super-size your fries at McDonald's. On the one hand, your decision to super-size considered the additional costs associated with the super-size, including the additional monetary, caloric and cholesterol intake, as well as the extra time you had to wait for those fries because a new batch was being prepared. On the other hand, you determined that the extra benefits from super-sizing included a few more mouthfuls of satisfaction from an increased portion of fries. The benefits clearly outweighed the costs since you chose to super-size. Which of the following does this illustrate?

marginal analysis

When comparing the additional or incremental costs versus additional or incremental benefits of a decision, one is engaging in:

marginal analysis

People use _____ to determine how many hours to work, and businesses use _____ to determine how much of their product they are willing to supply to the market.

marginal analysis; marginal analysis

For conducting a marginal analysis, individuals compare _____.

marginal benefit and marginal costs

Suppose you are given a $100 gift card and you choose to spend it on a number of goods. You will select a combination of goods that is best for you and that maximizes your satisfaction. In other words, your choices will account for the effects of:

marginal benefit and marginal costs of each good considered

When entering a building, Sam diverts his path to go through an open door rather than make the physical effort to open the closed door that is directly in his path. This is an example of what?

marginal benefit-marginal cost analysis

a _____ is an institution or mechanism that brings buyers and sellers into contact.

market

in a ________ system, people act in their own self-interest

market

private individuals and firms, not the government, own most of the property resources such as land and capital in a free _______ system

market

product markets

markets for goods- such as computers- and services- such as medical treatment

factor markets

markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability.

Under the market system, ____ and ____ coordinate the decisions made by households and businesses

markets; prices

efficiency

maximum output of a good from the resources used in production

The economics of uranium mining would be studied in:

microeconomics

____ is the discipline of economics concerned with individual units such as households, firms and government.

microeconomics

An example of a price floor is a

minimum wage.

A theory composed of a number of assumptions and facts boiled down to their basic relevant elements is called a:

model

in a market system________ create powerful incentives for firms to innovate and entrepreneurs to pioneer new products and processes

monetary rewards

the use of ______ in market systems facilitates the exchange of goods and services that specialization requires

money

Economists do not include money as an economic resource because:

money produces nothing

Why is money not an economic resource?

money, as such, is not productive.

Advances in production technology enable a society to produce

more goods with current or less resources

Economics involves marginal analysis because:

most decisions involve changes from the present situation

Assume an economy is incurring unemployment. The effect of resolving this problem will be to:

move the level of actual output to the economy's production possibilities curve.

Assume an economy is operating at some point on its production possibilities curve, which shows civilian and military goods. If the output of military goods is increased, the output of civilian goods:

must be decreased.

To economists, land includes all _____, or gifts of nature, used in the production process

natural resources

which of the following best illustrates a coincidence of wants?

nebraska has excess wheat to trade and wants oranges. Florida has excess oranges and wants wheat. Therefore, an exchange occurs.

A positive statement is one that is:

objective and is based on facts.

A production possibilities curve (PPC) illustrates the attainable combination:

of two goods that can be produced given a specific set of resources

The efficient output of an economy with a specific level of resources is reflected by the points ____ the production possibilities curve

on

Due to scarce resources, every individual, whether rich or poor, is faced with an ____ cost when choosing to produce or consume more of one good over another.

opportunity

As more and more of a particular good is produced, which of the following rises?

opportunity costs

Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of what?

opportunity costs

The law of increasing _____ states that as production of a particular good increases, the cost of producing an additional unit rises

opportunity costs

Trade-offs arising from limited resources give rise to:

opportunity costs

What does the term "ceteris paribus" mean?

other things equal

Points lying _____ the production possibilities curve represent greater, but unachievable levels of output with current inputs, than that at any point on the curve

outside

in a market system, firm _____ are subject to business risk

owners

the way to get ahead in a command economy, such as in the economies of the former soviet union, eastern europe, and china prior to amrket reforms, was through:

participation in the political hierarchy of the communist party

intellecutal property is an extension of property rights through:

patents trademarks copyrights

The various forms of intellectual property rights include ____, ______, ______.

patents, copyrights, and trademarks

The assumption behind purposeful behavior means that:

people act in such a way as to rationally pursue their own interests

Economics is BEST defined as the study of how:

people make rational decisions.

Purposeful behavior means that:

people weigh costs and benefits to make decisions.

The price elasticity of demand is defined as the magnitude of the

percentage change in quantity demanded divided by the percentage change in price.

The price elasticity of demand is equal to the​ ________ in the​ ________ divided by the​ ________ in the​ ________.

percentage​ change; quantity​ demanded; percentage​ change; price

If the supply curve is vertical then supply is

perfectly inelastic.

Why does the scarcity problem persist?

persists because economic wants exceed available productive resources.

For economists, the word "utility" means

pleasure and satisfaction

The figure represents the behavior of total revenue as price falls along a straightminus−line demand curve. Unit elasticity of demand occurs at

point h.

Unemployment in the economy is represented by:

points inside the production possibilities curve

business success in the command economies of the former soviet union, eastern europe, and china prior to market reforms failed because it was based on:

political savvy

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is​ ________.

positive

_____ economics focuses on facts and cause-and-effect relationships

positive

____ economic analysis concerns what is, whereas ____ economic analysis embodies subjective feelings about what ought to be.

positive; normative

Suppose the price of burgers increases from​ $2 to​ $3 each. The degree to which quantity demanded responds to this price increase depends on the

price elasticity of demand.

The price elasticity of demand for oil is estimated at 0.05. This value means a 10 percent increase in the

price of oil will decrease the quantity of oil demanded by 0.5 percent.

What does the slope of a budget line reflect?

price ratio of the two products

Suppose the equilibrium wage is​ $10 per hour. A minimum wage is a​ ________ and affects employment if it is set at​ ________.

price​ floor; $12 per hour

______ property rights help to facilitate exchange in a free market system

private

economic growth, investment, innovation, exchange, and maintenance of property are all possible because of __________.

private property rights

according tot he circular flow model, households buy goods and services that businesses make available in the _______ market

product

the interaction between buyers and sellers in a market system determine _______ and _______

product; resource prices

When goods are produced at the lowest possible cost, an economy is said to have achieved:

production efficiency.

An important determinant of the price elasticity of supply is the extent to which

production requires the use of particularly scarce or specialized resources.

Which of the following is assumed in constructing a typical production possibilities curve?

production technology is fixed.

A _____ lists the different combinations of two products that can be produced with a specific set of resources, assuming full employement

productions possibilities table

According to Emerson: "Want is a growing giant whom the coat of Have was never large enough to cover." According to economists, "Want" exceeds "Have" because what?

productive resources are limited

entrepreneurs and owners of businesses use part of their ________ in order to accumulate more capital goods

profits

mutually agreeable economic transactions take place as a result of:

property rights

Economists contend that most economic decisions are what?

purposeful

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase. What is this a reflection of?

purposeful behavior

The cross elasticity of demand is calculated as the percentage change in the

quantity demanded of one good divided by the percentage change in the price of another good

If the supply for a good is​ elastic, that means that when price increases the

quantity supplied will increase by a greater percentage than the price increased.

Unit elastic demand means that the

ratio of a percentage change in the quantity demanded to a percentage change in the price equals 1.

Because individuals weigh costs and benefits, their economic decisions are _____.

rational

Alex sees that his neighbors' lawns all need mowing. He offers to provide the service in exchange for a wage of $20 per hour. Some neighbors accept Alex's offer and others refuse. Economists would describe Alex's behavior as:

rational self-interest, because he attempting to increase his own income by identifying and satisfying someone else's wants.

in developing economic theories, principles, or models, economists:

remove clutter and simplify

Both land and labor would be bought and sold in the _________ market.

resource

factors of production

resource inputs used to produce goods and services (land, labor, capital, entrepreneurship)

Households obtain income in the _________ market in order to buy the goods and services that businesses produce in the _________ market.

resource; product

When an economy produces a good where the marginal benefit equals the marginal cost it is implied that

resources are allocated efficiently

When an economy is operating under conditions of full employment, the production of more of commodity A will mean the production of less of commodity B because:

resources are limited.

A nation's production possibilities curve is bowed out from the origin because:

resources are not equally efficient in producing every good.

The law of increasing opportunity costs exists because:

resources are not equally efficient in producing various goods.

If the production possibilities curve were a straight down-sloping line, this would suggest that:

resources are perfectly shiftable between the production of these two goods.

A price floor

results in a surplus if the floor price is greater than the equilibrium price

in the market system, competition, freedom of choice, self-interest, and personal _____ provide the opportunity and motivation for technological advance

reward

In the short run, falling inflation is associated with:

rising unemployment (not good!!!).

For a market system to maximize its potential it must develop methods for assessing and managing ________.

risk

______ economic resources means limited goods and services.

scarce

Land and mineral resources, transportation and communication facilities, factories and farm buildings, equipment, tools and machinery are all examples of _______.

scarce economic resources

The concept that "there is no free lunch" reflects the notion that:

scarce resources are used to produce so-called "free goods" that have alternative uses that are given up

In deciding whether to study for an economics quiz or go to a movie, one is confronted by the idea(s) of what?

scarcity and opportunity costs

in the circular flow model, households _______ resources and __________ products

sell; buy

competition among _____ and _______ diffuses economic power within the economic units that make up an economy

sellers; buyers

A rent ceiling​ ________.

set above equilibrium price has no effect

An increase in income will:

shift the budget line to the right.

Other things equal, an increase in a consumer's money income does what?

shifts her budget line rightward because she can now purchase more of both products.

A normal good is defined as a good for which the demand curve

shifts rightward as income increases.

An increase in money income does what?

shifts the consumer's budget line to the right.

If the equation y = 5 + 6x was graphed, the slope would be what?

slope would be +6.

If the equation y = 15 - 4x was plotted, the slope would be what?

slope would be -4.

a ______ proprietorship is a business owned and managed by a single person.

sole

entrepreneur

someone who operates a business, bringing together the factor of production-labor, capital, and natural resources-to produce goods and services.

economic variable

something measurable that can have different values, such as the wages of software programmers

in a market system, consumers exercise consumer ___________, which is crucial in determining the types and quantities of goods purchased

sovereignty

_________ is the use of resources by an individual, firm, region, or nation to produce one or a few goods or services rather than the entire range of goods and services

specialization

_____ increases the total output society derives from ______ resources

specialization; scarce

which of the following have historically been used as mediums of exchange?

stones shells metals cigarettes cattle all but human organs

What can Macroeconomics best be described as?

study of the large aggregates of the economy or the economy as a whole.

What does the concept of opportunity cost suggest?

suggests that the use of resources in any particular line of production means that alternative outputs must be forgone.

In drawing the production possibilities curve we assume that:

technology is fixed.

The construction of a production possibilities curve assumes:

technology is fixed.

goods and services are produced efficiently when production is organized in combinations and ways:

that minimize the cost per unit of output

Any point inside the production possibilities curve indicates:

that more output could be produced with available resources.

scarce resources and opportunity costs (in relation to the PPC)

the PPC illustrates these two essential principles; there is a limit to how much we can produce with available resources and we can obtain additonal quantities of a good only by reducing production of another good)

economic growth

the ability of an economy to produce increasing quantities of goods and services

comparative advantage

the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors

absolute advantage

the ability of an individual, a firm, or country to produce more of a good or service than competitiors, using the same amount of resources

tax incidence

the actual division of the burden of a tax between buyers and sellers in a market

marginal benefit

the additional benefit to a consumer from consuming one more unit of a good or service.

marginal cost

the additional cost to a firm of producing one more unit of a good or service

production possibilities

the alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

A budget line describes:

the alternative combinations of two goods that a buyer can purchase with a given money income

Quantity demanded

the amount of a good or service that a consumer is willing and able to purchase at a given price

quantity supplied

the amount of a good or service that a firm is willing and able to supply at a given price

Opportunity cost is best defined as:

the amount of one product that must be given up to produce one more unit of another product.

entrepreneurship

the assembling of resources to produce new or improved products and technologies

ceteris paribus

the assumption of nothing else changing

If the US could triple its per capita income:

the basic economic problem would still be scarcity.

substitution effect

the change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to the other goods that are substitutes

income effect

the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power.

demographics

the characteristics of a population with respect to age, race, and gender.

If the output of product X is such that marginal benefit equals marginal cost:

the correct amount of resources is being allocated to X's production.

Jill is unemployed and decides to spend the day at the spa. Jill's opportunity cost of spending a day at the spa is equal to:

the daily spa rate, any other monetary expenses, and the value of the best alternative activity in which Jill could be engaged

Marginal costs exist because:

the decision to engage in one activity means forgoing some other activity.

In a world of scarcity, _____.

the decision to obtain the marginal benefit associated with some specific option always includes the marginal cost of forgoing something else.

market demand

the demand by all the consumers of a given good or service.

consumer surplus

the difference between the highest price a consumer is willing to pay and the price the consumer actually pays

producer surplus

the difference between the lowest price a firm would be willing to accept and the price it actually receives

laissez-faire

the doctrine of "leave it alone," of nonintervention by government in the market mechanism

Macroeconomics approaches the study of economics from the viewpoint of:

the entire economy

the price signal

the essential feature of the market mechanism

The opportunity costs of attending college do NOT include:

the expenditures for food

equity

the fair distribution of economic benefits

"If I have money, I will be better off. Therefore, if everyone has more money, everyone will be better off." This statement is an example of:

the fallacy of composition

which of these countries or areas have transformed from a pure command economy to a market-orientated economy?

the former soviet union

the elasticity of supply does NOT depend on

the fraction of income spent of the product

If someone produced too much of a good, this would suggest that:

the good was produced to the point where its marginal cost exceeded its marginal benefit.

which of the following describes how a market system decides what will be produced?

the goods and services produced at a continuing profit will be produced, and those produced at a continuing loss will not

opportunity cost

the highest valued alternative that must be given up to engage in an activity

trade-off

the idea that because of scarcity, producing more of one service or good means producing less of another good or service.

factors of production

the inputs used to makegoods and services

The outward bowing shape of the production possibilities curve is due to

the law of increasing opportunity costs

The economic perspective refers to what?

the making of purposeful decisions in a context of marginal costs and marginal benefits.

The optimal level of an activity occurs where:

the marginal benefit and the marginal cost are equal

The optimal allocation of resources is such that

the marginal benefit of the good equals the marginal costs

John Maynard Keynes's viewpoint

the market was pretty efficient in organizing production itself, but the government would intervene when needed. Government should play an active but not all-inclusive role in managing the economy.

A production possibilities curve shows:

the maximum amounts of two goods that can be produced assuming the full use of available resources.

opportunity cost

the most desired goods or services that are forgone to obtain something else

What is the economizing problem?

the need to make choices because economic wants exceed economic means.

What is an economic explanation for why most college-aged movie stars do not attend college?

the opportunity cost in terms of reduced income is too great

When the demand for a good is perfectly​ elastic, ________.

the price elasticity of demand is infinite

In moving along a given budget line:

the prices of both products and money income are assumed to be constant.

the "invisible hand" guides firms and resource suppliers, in seeking to further their own interests, by promoting _____.

the public or social interest

deadweight loss

the reduction in economic surplus resulting from a market not being in competitive equilibrium.

If a positive relationship exists between x and y:

the relationship will graph as an upsloping line.

The price elasticity of demand measures

the responsiveness of the quantity demanded to changes in price.

property rights

the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

law of demand

the rule that, holding everything else constant, when the price of a product falls, the quantity demanded of the product will increase, and when the price of the product rises, the quantity demaded of the product will decrease

Utility is defined as:

the satisfaction or pleasure obtained by consumers from consuming a good or service

productive efficiency

the situation in which a good or service is produced at the lowest possible cost

voluntary exchange

the situation that occurs in markets when both the buyer and seller of a product are made better off by the transaction

labor

the skills and abilities to produce goods and services (both the quantity and the quality of human resources)

Economics may best be defined as what?

the social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

macroeconomics

the study of aggregate economic behavior, of the economy as a whole

economics

the study of how best to allocate scarce resources among competing uses

microeconomics

the study of how households and firms make choices, how the interact in markets, and how the government attempts to influence their choices

microeconomics

the study of individual behavior in the economy, of the components of the larger economy

economics

the study of the choices people make to attain their goals, given scarce resources

macroeconomics

the study of the economy as a whole, including topics such as inflation, unemployment and economic growth

economic surplus

the sum of consumer surplus and producer surplus

An important determinant of the price elasticity of supply is

the time period firms have to adjust to a new price.

market mechanism

the use of market prices and sales to signal desired outputs (or resource allocations)

When the economist says that economic wants are insatiable, this means that:

these wants are virtually unlimited and therefore incapable of complete satisfaction.

in a market economy, goods and services are distributed:

to consumers on the basis of their ability and willingness to pay their existing market price

The basic goal in dealing with the problem of scarcity is:

to produce as much consumer satisfaction as possible with limited resources available.

In a competitive market, the self-interest of the resource owners will cause resources to be directed:

to the use that is most highly valued by consumers.

which of the following best exemplifies a noncoincidence of wants?

tom wants cherries from jack. jack wants mary's oranges but not tom's apples. mary wants some of tom's apples but not jack's cherries.

Which of the following most closely relates to the idea of opportunity costs?

tradeoffs

T/F: Technology and capital goods are synonymous concepts in a market system

true

T/F: freedom of choice allows workers to enter any line of work for which they are qualified. it also ensures that consumers are free to buy the goods and services that best satisfy their wants

true

T/F: in a command system, the government or state decides how a country's resources will best be utilized

true

T/F: in order to serve as money, an item must be widely accepted by the parties involved in a transaction as currency.

true

a person's income depends on the quantities of property and human resources that the person supplies to the market and the prices the resources command in the resource market

true

When a minimum wage is set above the equilibrium wage​ rate, ________.

unemployment increases

A point inside a production possibilities curve best illustrates:

unemployment.

If an increase in price results in no change in total​ revenue, then demand must be

unit elastic.

in which country is laissez-faire capitalism most likely to be practiced?

united states

For better or worse, people have virtually ____ wants.

unlimited

People desire goods and services that provide maximum utility. In fact, our desires or wants are:

unlimited

which of the following is a more desirable method of production?

using a combination of labor, capital and technology

In economics, the pleasure, happiness, or satisfaction received from a product is called what?

utility

Because of scarcity:

we face tradeoffs in nearly every choice we make.

The economic assumption that human behavior reflects rational self-interest is predicated on individuals:

weighing the costs and benefits of their decisions

What are Positive statements concerned with?

what is.

What are Normative statements concerned with?

what ought to be.

Because consumers behave in a rationally self-interested manner, the consumer will purchase a good or service:

when the marginal benefit is greater than or equal to the marginal costs

Which of the following is a case when the government should intervene in the economy?

when the market fails to provide goods efficiently

The optimal allocation of resources is found:

where MB = MC.

If a minimum wage is set above the equilibrium wage​ rate, employment

will decrease.

The price elasticity of demand for oranges​ ________ change if the units of the quantity was changed from pounds to kilograms and​ ________ change if the units of the price was changed from dollars to cents.

would​ not; would not

The price elasticity of demand can range between

zero and infinity.

A good with a vertical demand curve has a demand with

zero elasticity.

the demand curve in the figure above illustrates the demand for a product with

zero price elasticity of demand at all prices

In the​ figure, if the minimum wage is equal to​ ________, there would be​ ________ hours of labor employed.

​$8 per​ hour; 2,000

The figure illustrates the demand for hamburgers. When the price is​ $1.00 a​ hamburger, the elasticity of demand is​ ________ and a 1 percent increase in the price will​ ________ the quantity of hamburgers demanded by​ ________ percent.

​0.40; decrease; 0.40

Bus rides and canned soup are inferior​ goods, so the​ ________ elasticity of demand is​ ________.

​income; negative

If the demand for a good is perfectly​ elastic, the price elasticity of demand is​ ________ and the demand curve is​ ________.

​infinite; horizontal

Demand is price inelastic if a relatively​ ________ price increase leads to a relatively​ ________ in the quantity demanded.

​large; small decrease

The cross elasticity of demand between Coca−Cola and Pepsi−Cola is​ ________ so that Coke and Pepsi are​ ________.

​positive; substitutes