Microeconomics: Chapters 1-4- Homework Study Guide
Which of the following is not a factor of production? 1) Six thousand acres of farmland 2) A bulldozer 3) $100,000 cash 4) A psychiatrist
$100,000 cash
Over many years the capital stock in the United States has grown to approximately
$80 trillion
Table 1.1 shows the hypothetical trade-off between different combinations of Stealth bombers and B-1 bombers that might be produced in a year with the limited U.S. capacity, ceteris paribus....The lowest opportunity cost e in Table 1.1 for B-1 bombers in terms of Stealth bombers is
1 Stealth bomber per B-1 bomber
The US has roughly how much of the world's arable land?
12 percent
The amendment to the U.S. Constitution that granted the federal government the authority to collect income taxes was the
16th
Approximately how much of the world's output does the United States produce?
18 percent
The 20 percent of families with the lowest income in the United States receive approximately ______ percent of total income.
3
Ceteris paribus, which of the following is most likely to cause an increase in the quantity demanded of perfume?
A decrease in the price of perfume
Which of the following will cause the production possibilities curve to shift inward? 1) An increase in knowledge 2) A technological advance 3) A decrease in the size of the labor force 4) An increase in the working-age population
A decrease in the size of the labor force
A point on a nation's production possibilities curve represents
A full employment of resources to achieve a particular combination of goods and services
A lower quantity demanded of a good reflects, ceteris paribus,
A higher price of the good
To calculate market demand, we
Add the quantities demanded for each individual demand schedule horizontally.
Which component(s) of U.S. real GDP decreased in size relative to total U.S. real GDP from 1950 to 2000?
Agriculture and manufacturing
Who participates in markets? 1) Business firms 2) Business firms and consumers 3) Consumers and government agencies 4) All of the choices are correct
All choices are correct
The term opportunity cost refers to 1) The most a consumer is willing to exchange to get an item. 2) The slope of the demand line for a consumer or slope of the supply line for the producer. 3) The minimum price that a producer will accept for a product. 4) All of the choices are correct
All of the choices are correct
Ceteris paribus, which of the following would generally cause an increase in the demand curve for new automobiles?
An increase in consumers' income.
Suppose there are a series of forest fires that affect the lumber industry while, at the same time, consumers demand more wooden furniture. The wooden furniture market would experience
An increase in price and an indeterminate change in quantity.
An increase in the equilibrium price of electricity can be caused by
An increase in the demand for electricity.
Which of the following is a determinant of market supply?
Available technology.
An example of human capital would be
Carpentry skills
Which of the following is the government most likely to discourage because of the existence of externalities?
Cars that create an excessive amount of exhaust fumes.
A decrease in the price of bubble gum below equilibrium will
Cause a shortage of bubble gum.
An increase in the price of gasoline above equilibrium will
Cause a surplus of gasoline
Which of the following countries had the highest average growth rate for per capita GDP from 2000 to 2009?
China
Assume a series of forest fires reduces the supply of lumber, which is an input in the production of wooden bats. Baseballs and wooden bats are complements. If the price of wooden bats increases, we can expect the
Demand for baseballs to decrease
Jessie's demand schedule for candy bars indicates
Her opportunity cost of buying candy bars
A rightward shift in a demand curve and a leftward shift in a supply curve both result in a
Higher equilibrium price
The majority of federal expenditures is spent on
Income transfers
A country that increased its literacy rate and thereby its average human capital would probably
Increase GDP
The World View article titled "The Education Gap between Rich and Poor Nations" says that a greater percentage of people graduate from high school in rich nations than in poor nations. This investment in human capital can lead to
Increased output per worker
Outsourcing leads to
Increases in productivity and increases in total output.
Outsourcing leads to
Increases in total output, but with temporary job losses for some domestic workers.
Per capita GDP will rise if GDP
Increases more rapidly than the population increases.
As a nation's average education level increases, the nation's level of productivity
Increases, and the production possibilities curve shifts to the right. Correct
The federal government's role in providing aid to the poor and the aged is justified because of concerns about
Inequity
A public good
Is subject to the free-rider dilemma
If an economy is producing inside the production possibilities curve, then
It can produce more of one good without giving up some of another good
The term market mechanism refers to
The use of market prices and sales to determine resource allocation.
The government regulates food additives
To assess their safety
The goal of the business firms in a market economy is to maximize
Total profits
According to the World View article that compares GDP per capita figures for several nations, which of the following nations has the highest GDP per capita?
United States
Which of the following is a source of government failure but is not typically an example of market failure?
Waste
As a country's human capital increases, we observe that
Worker productivity increases
The income distribution of the United States is basically the nation's answer to the
FOR WHOM question
When workers move from one industry to another in response to demand changes, this is an example of
Factor mobility
True or False: Market price is the same thing as equilibrium price
False
True or False: The desire for carrots changes as one moves down the demand curve for carrots.
False
From the In the News article titled, "Firefighters Watch as Home Burns to the Ground," Which of the following is true?
Fire protection paid for like fire
If Good X has social demand that is less than market demand, then Good X must be a
Good with an external cost
A city's decision to limit smoking in public areas is an example of
Government intervention
Government failure will likely arise if
Government officials attempt to maximize their own utility.
According to the law of increasing opportunity costs
Greater production of one good requires increasingly larger sacrifices of other goods
Which of the following explains why flood control is a public good?
It is not divisible and therefore cannot be kept from people who do not pay.
The market tends to underproduce public goods because
Joint consumption allows those who do not pay for the good to still benefit from the good.
Market failure implies that the market mechanism
Leads the economy to the wrong mix of output.
Social demand is equal to
Market demand plus or minus externalities.
A production possibilities curve indicates the
Maximum combinations of goods and services an economy can produce given its available resources and technology.
Generally speaking, monopolies
May be beneficial to society if they are natural monopolies and are regulated.
As the U.S. economy relies more and more heavily on the production of services rather than goods,
Nearly all future job growth will be in service-producing industries.
The market
On its own may not always provide the optimal mix of goods and services.
Government failure may result from
Outright waste of resources by the public sector or misallocation of resources.
Income inequalities are greatest in
Poor countries
The market will overproduce goods that have external costs because
Producers experience lower costs than society.
A market in which final goods and services are exchanged is a
Product market.
n a market economy, which of the following is an incentive for producers to produce efficiently?
Profits
Cities and other local governments receive most of their tax revenues from
Property taxes
Governments usually build highways because it is difficult to exclude individuals who don't pay for the highways from using them. What type of market failure is involved?
Public goods
The federal government's role as the provider of national defense is justified by considerations of
Public goods
When market failure occurs, the role of government is to
Push market outcomes closer to the ideal
Suppose that if your income is $50,000, your tax is $5,000, but if your income is $100,000, your tax is $8,000. Such a tax is
Regressive
Which of the following has been a century-long trend in the United States? 1) Relative decline in manufacturing to the service sector. 2) Relative increase in farming to manufacturing 3) Decline of total value of world trade 4) Relative decline in service sector to manufacturing
Relative decline in manufacturing to the service sector.
Productivity
Rises when the ratio of output to input increases.
Factors of production are
Scarce in every society
The law of supply implies that
Supply curves are upward-sloping to the right
If there is a surplus at a given price, then
That price is greater than the equilibrium price.
Microeconomics is concerned with issues such as
The demand for bottled water by individuals.
In 2007 a company sold 35,000 drones at $150 each. In 2008 the same company sold 40,000 drones at $170 each. This information suggests that
The demand for drones increased from 2007 to 2008
Per capita GDP is
The dollar value of GDP divided by total population
Per capita GDP will definitely rise if
The population falls and GDP does not fall
The In the news article titled "Gas Prices Jump in Matthew's Wake" suggests gasoline prices increased a s a result of damage caused by Hurricane Matthew. When the availability of gasoline decreases as a result of this damage the supply curve shifts to the left, causing
The price of gasoline to move up along the market demand curve.
Which of the following can change without shifting demand, ceteris paribus?
The price of the good itself
If corn and wheat are alternative pursuits for a farmer, a change in the supply of corn will take place when, ceteris paribus,
The price of wheat changes.
Which curve shifts and in which direction when the following events occur in the domestic car market? a. The U.S. economy falls into a recession. b. U.S. autoworkers go on strike. c. Imported cars become more expensive. d. The price of gasoline increases.
a. Demand decreases b. Supply decreases c. Demand increases d. Demand decreases
Air pollution best illustrates
an external cost
Approximately how much of the world's output does China produce?
approximately 11 percent
Market power may result from
control of resources
Antitrust activity addresses
market power