Microeconomics
Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand A to Demand B in the market for oranges in the United States?
an announcement by the FDA that oranges prevent heart disease
The circular-flow diagram is an example of
an economic model.
The demand curve for a good is a line that relates
price and quantity demanded.
A market demand curve shows how the total quantity demanded of a good varies as
price varies
A market demand curve shows how the total quantity demanded of a good varies as
price varies.
Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that
the nation is not using all available resources or is using inferior technology or both.
A city wants to raise revenues to build a new municipal swimming pool next year. The mayor suggests that the city raise the price of admission to the current municipal pools this year to raise revenues. The city manager suggests that the city lower the price of admission to raise revenues. Who is correct?
The mayor would be correct if demand were price inelastic; the city manager would be correct if demand were price elastic.
Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Which of the following statements is correct?
The opportunity cost of a bushel of corn increases as more corn is produced.
Which of the following events would cause a movement upward and to the left along the demand curve for olives?
The price of olives rises.
Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless keyboards, a complementary good, increases. Which of the following changes would occur?
a shift from D1 to D2
Refer to Figure 4-8. Suppose the figure shows the market demand for laptop computers. Suppose the price of wireless printers, a complementary good, decreases. Which of the following changes would occur?
a shift from D2 to D1
Economics is the study of
how society manages its scarce resources.
The word "economy" comes from the Greek word oikonomos, which means
"one who manages a household."
Approximately what percentage of the world's economies experience scarcity?
100%
Refer to Figure 4-3. If these are the only two consumers in the market, then the market quantity demanded at a price of $6 is
19 units.
Refer to Figure 4-2. Suppose Phil and Miss Kay are the only consumers in the market. If the price is $12, then the market quantity demanded is
2 units
Refer to Table 5-2. Using the midpoint method, if the price falls from $200 to $150, the absolute value of the price elasticity of demand is
2.8
Refer to Figure 2-5. The opportunity cost of this economy moving from point A to point B is
20 dryers.
Refer to Figure 2-10, Panel (a). The opportunity cost of one sofa is highest when the economy produces
24 Sofas
If the law of demand applies to these pizzas, then A could be
30
Refer to Figure 2-5. It is possible for this economy to produce
60 dryers and 50 washers.
Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by
60%
Refer to Figure 2-1. Which arrow represents the flow of spending by households?
A
What is an example of a capital input?
A computer
A society allocates its scarce resources to various jobs. These scarce resources include
All of the above are correct.
In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now?
All of the above are correct.
In considering how to allocate its scarce resources among its various members, a household considers
All of the above are correct.
Which of the following is a decision that economists study?
All of the above are correct.
Which of the following is a subject that economists study?
All of the above are correct.
Which of the following products would be considered scarce?
All of the above are correct.
Refer to figure 2-13. One difference between points F and G is that
All resources are fully employed at point F but there is unemployment at point G.
The circular-flow diagram is an example of
An economic model
Refer to Figure 2-1. Which arrow represents the flow of goods and services?
B
Refer to Figure 2-15. Consider the production possibilities frontier for an economy that produces only sofas and cars. The opportunity cost of each car is
Both a and b are correct.
In the circular-flow diagram, which of the following items does not flow from firms to households?
Capital
Coal is considered to be a non-renewable energy source. Which of the following statements is correct?
Coal is a scarce resource.
Refer to Figure 2-1. Which arrow represents the flow of income payments?
D
Which of the following is correct?
Economists study the management of scarce resources.
Refer to Figure 2-2. Carla regularly buys fruits and vegetables at a grocery store. Roberto regularly pays a lawn-care company to mow his lawn. If the flow of fruits and vegetables from the grocery store to Carla is represented by an arrow from Box C to Box B of this circular-flow diagram, then the money paid by Roberto to the lawn-care company is represented by an arrow
From Box B to Box C
Indiadesh is a country that produces two goods, textiles and computers. Last year, Indiadesh produced 50,000 textiles and 1300 computers. This year it produced 45,000 textiles and 1100 computers. Given no further information, which of the following events could explain this change?
Indiadesh experienced a reduction in resources.
When studying the effects of public policy changes, economists believe
It is important to distinguish between the short run and long run
Refer to Figure 2-8. Efficient production is represented by which point(s)?
J,K
Refer to Figure 2-8. Inefficient production is represented by which point(s)?
M
Which of the following is not an example of scarcity?
Miranda has an unlimited supply of oranges in her orchard.
In the circular-flow diagram, another name for goods and services produced by firms is
Output
Refer to Figure 2-10, Panel (a) and Panel (b). Which of the following is not a result of the shift of the economy's production possibilities frontier from Panel (a) to Panel (b)?
Production of 2 tractors and 10 sofas becomes efficient.
Which of the following is not correct about most economic models?
They contribute very little to economists' understanding of the real world.
If the price elasticity of demand for a good is 0.4, then which of the following events is consistent with a 2 percent decrease in the quantity of the good demanded?
a 5 percent increase in the price of the good
Which of the following changes would not shift the demand curve for a good or service?
a change in the price of the good or service
Refer to Figure 4-7. The shift from Db to Da is called
a decrease in demand.
Suppose scientists provide evidence that people who drink energy drinks are more likely to have a heart attack than people who do not drink energy drinks. We would expect to see
a decrease in the demand for energy drinks.
Refer to Figure 4-5. Which of the following would cause the demand curve to shift from Demand C to Demand A in the market for tennis balls in the United States?
a decrease in the number of people in the United States under age 70
If toast and butter are complements, then which of the following would increase the demand for toast?
a decrease in the price of butter
A circular-flow model and production possibilities frontier are similar in that
both make use of assumptions.
Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is
bowed outward indicating increasing opportunity costs.
Today, people changed their expectations about the future. This change
can affect today's demand.
Economic models
can be useful, even if they are not particularly realistic.
Most studies indicate that tobacco and marijuana tend to be
complements
Two goods are substitutes when a decrease in the price of one good
decreases the demand for the other good.
If the number of buyers in a market decreases, then
demand will decrease.
Which types of models are built with assumptions?
economic models as well as models in other disciplines such as physics and biology
The study of how society manages its scarce resources is most closely associated with which field of study?
economics
The English word that comes from the Greek word for "one who manages a household" is
economy
Opponents of cigarette taxes often argue that tobacco and marijuana are substitutes so that high cigarette prices
encourage marijuana use, but the evidence does not support this argument.
Which of the following is not an expression for the sum of all the individual demand curves for a product?
equilibrium demand
If textbooks and study guides are complements, then an increase in the price of textbooks will result in
fewer study guides being sold.
An increase in the number of college scholarships issued by private foundations would
increase the demand for education.
Elena loves orange juice. She reads in the newspaper that 20 percent of the Florida orange crop was destroyed by a late spring frost. Economists predict that the price of oranges will rise by 50 percent by the end of the year. As a result, Elena's demand for orange juice
increases today.
Refer to Table 5-2. Using the midpoint method, if the price falls from $100 to $50, the price elasticity of demand is
inelastic
You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)
inferior good
You lose your job and, as a result, you buy more frozen pizzas. For you, frozen pizza are a(n)
inferior good.
Kara receives a promotion at work, which increases her income. We would expect Kara's demand for
inferior goods to decrease.
Factors of production are
inputs into the production process.
Suppose that when income rises, the demand curve for doctor's visits shifts to the right. In this case, we know doctor's visits are
normal goods
Suppose John and Wayne are the only two demanders of cowboy movies. Each month, John buys six cowboy movies when the price is $10 each, and he buys four cowboy movies when the price is $15 each. Each month, Wayne buys four cowboy movies when the price is $10 each, and he buys two cowboy movies when the price is $15 each. Which of the following points is on the market demand curve?
quantity demanded = 10; price = $10
Refer to Figure 5-4. Assume the section of the demand curve from B to C corresponds to prices between $0 and $15. Then, when the price changes between $7 and $9,
quantity demanded changes proportionately less than the price.
The price elasticity of demand measures how much
quantity demanded responds to a change in price.
The local bakery makes such great cinnamon rolls that consumers do not respond much at all to a change in the price. If the owner is only interested in increasing revenue, she should
raise the price of the cinnamon rolls.
The phenomenon of scarcity stems from the fact that
resources are limited.
The overriding reason why households and societies face many decisions is that
resources are scarce.
Resources are
scarce for households and scarce for economies.
What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?
scarcity
When quantity demanded decreases at every possible price, the demand curve has
shifted to the left.
When quantity demanded increases at every possible price, the demand curve has
shifted to the right.
You wear either shorts or sweatpants every day. You notice that sweatpants have gone on sale, so your demand for
shorts will decrease.
The production possibilities frontier is a graph that shows the various combinations of output that an economy can possibly produce given the available factors of production and
the available production technology
If buyers today become more willing and able than before to purchase larger quantities of stand up paddle boards (SUPs) at each price of SUPs, then
the demand curve for SUPs will shift to the right.
A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?
the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing
Refer to Figure 2-2. If the flow of goods and services is part of what is represented by the inner loop of this circular-flow diagram, then
the flow of factors of production is also part of what is represented by the inner loop.
Efficiency is illustrated by
the production possibilities frontier only
If an economy is producing efficiently, then
there is no way to produce more of one good without producing less of another good.
When an economy is operating at a point on its production possibilities frontier, then
there is no way to produce more of one good without producing less of the other.
Which of the following is an example of using the scientific method with a natural experiment?
tracking the price of oil when a war in the Middle East interrupts the flow of crude oil
Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is
unit elastic.
The demand curve for coffee shifts
when a determinant of the demand for coffee other than the price of coffee changes.
The quantity demanded of a good is the amount that buyers are
willing and able to purchase.