Microeconomics Exam 1
A rule that every imported product, must be opened by hand and inspected with a magnifying glass, by one of just three government inspectors available at any given time might be referred to as __________________.
A non-tariff barrier
The infant industry argument for protectionism suggests that an industry must be protected in the early stages of its development so that:
Domestic producers can attain the economies of scale to allow them to compete in world markets
What is meant by fiscal policy?
Economic policies that involve government spending and taxation
A price cut will increase the total revenue a firm receives if the demand for its product is:
Elastic
When economists are sketching examples of a demand or supply curve that is close to horizontal, they refer to that demand or supply curve as __________.
Elastic
What name is given to the percentage of change in quantity demanded divided by the percentage change in price?
Elasticity of demand
If the supply curve for a product is vertical, then the elasticity of supply is:
Equal to zero
When the price of labor is not at the ____________, economic incentives tend to move salaries toward the equilibrium.
Equilibrium
In many cases, it is reasonable to refer to the __________________ as the price.
Opportunity cost
What is meant by ceteris paribus?
Other things being equal
High-income countries of the world, meaning primarily the United States, Canada, countries of European Union, and Japan, subsidize their domestic farmers by roughly ___________ per day, including the value both of direct subsidizes to farmers and indirect subsidizes that come in the form of limiting imports of farm products.
$1 billion
Refer to Figure 7-1. With reference to Graph A, at a price of $10, total revenue equals:
$400
Refer to Table 5-1. If D1 and S1 represent the demand and supply schedules in a particular market, the equilibrium price and quantity are _____ and _____, respectively.
$4; 16
Refer to Figure 7-1. With reference to Graph A, at a price of $5, total revenue equals:
$500
In 2012, Americans had about _______________ outstanding in credit card debts not paid on time.
$900 billion
The International Labor Organization (ILO) was founded in ______.
1919
Billy Bob's Barber Shop known that a 5 percent increase in the price of their haircuts results in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of demand facing Billy Bob's Barber Shop?
3.0
Which of the following is most likely a topic of discussion in macroeconomics?
A decrease in the unemployment rate
What is meant by goods and services market?
A market in which firms are sellers of what they produce and households are buyers
The imposition of price ceiling on a market often results in:
A shortage
Which of the following lies primarily within the realm of macroeconomics?
A study of how tax cuts stimulate aggregate production
A tariff differs from a quota in that a tariff is:
A tax imposed on imports, whereas a quota is an absolute limit to the number of units of a good that can be imported
Refer to figure 2-1. Along the production possibilities frontier, the most efficient point of production depicted is:
All points on the production possibilities frontier are equally efficient.
The choice on a production possibilities set that is socially preferred, or the choice on an individual's budget constraint that is personally preferred, will display________________.
Allocative efficiency
Which of the following will not result in a leftward shift of the market demand curve for labor?
An increase in the wage rate
Andy views beer and pizza as complements to one another. If the price of pizza decreases, economists would expect:
Andy's demand for beer to increase
The model that economists use for illustrating the process of individual choice in a situation of scarcity is the ______________, sometimes also called the opportunity set, a diagram which shows what choices are possible.
Budget constraint
The slope of the ______________________ is determined by the relative price of the two goods, which is calculated by taking the price of one good and dividing it by the price of the other good.
Budget constraint
As an international trade increases, in contributes to a shift in jobs away from industries where that economy does not have a _________ advantage and toward industries where it has a __________ advantage.
Comparative; comparative
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of soda demanded. It appears that:
Cross-price elasticity of demand for soda is -3
_________ in the credit card market are households; suppliers are the companies that issue credit cards.
Demanders
refer to Table 5-1. Suppose that D2 and S1 are the prevailing demand and supply curves for a product. If the demand schedule changes from D2 to D1, then:
Equilibrium quantity decreases from 15 to 13
If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to:
Fall and the equilibrium quantity to stay the same
Imports means the market in which households sell their labor as workers to businesses or other employees?
False
In a situation of excess supply in the labor market, with many applicants for every job opening, employers who hire applicants will have an incentive to offer higher wages than they otherwise would have.
False
Production possibilities frontier means when the mix of goods being produced represents the allocation that society most desires.
False
The term inferior good refers to the percentage change in the quantity of savings divided by the percentage change in interest rates.
False
The term law of supply describes a line that shows the relationship between price and quantity demanded of a certain good or service on a graph, with quantity on the horizontal axis and the price on the vertical axis.
False
From the 1970s through the first decade of the 2000s, the wage gap narrowed between high-skill and low-skill labor.
False; widened
What name is given to a market in which firms are sellers of what they produce and households are buyers?
Goods and services market
In a command economy, the _________ either makes most economic decisions itself or at least strongly influences how the decisions are made.
Government
Which of the following is not a short-run impact of imposing quotas on the American industries they seek to protect?
Government tax revenues increase
Refer to Figure 4-3. A change from Point A to Point B represents a(n):
Increase in quantity supplied
Improvements in the productivity of labor will tend to:
Increase wages
What term is used to describe a good for which the quantity demanded declines as income increases?
Inferior good
What name is given to the extremely elastic situation where quantity change by an infinite amount in response to even a tiny change in price?
Infinite elasticity
A price floor that makes it illegal for an employer to pay employees less than a certain hourly rate is known as:
Minimum wage
Are markets always in equilibrium?
No, but if there is no outside interference, they tend to move toward equilibrium
Philosophers draw a distinction between positive statements, which describe the world as it is, and ___________________, which describe how the world should be.
Normative statements
The elasticity of supply is defined as the _________ change in quantity supplied divided by the _________ change in price.
Percentage; percentage
The law of supply functions in labor markets; that is, a higher _________ for labor leads to a higher quantity of labor supplied.
Price
In contrast to goods and services markets, ______________ are rare in labor markets, because rules that prevent people from earning income are not politically popular.
Price ceilings
________________ are enacted when discontented sellers, feeling that prices are too low, appeal to legislatiors to keep prices from falling.
Price floors
What term is used to describe the total number of units of a good or service sold at a certain price?
Quantity supplied
When economists talk about supply, they are referring to a relationship between price received for each unit sold and the ________________.
Quantity supplied
Which of the following characteristics relate to dumping?
Selling internationally traded goods below their cost of production
As the ___________________ complement for high-skill labor becomes cheaper, the demand curve for high-skill labor will shift to the right.
Technology
Which of the following characteristics relate to inelastic?
The elasticity calculated from the appropriate formula has an absolute value less than 1
What term is used to describes the stipulation that a nation should not depend too heavily on the other countries for supplies of certain key products?
The national interest argument
Which of the following characteristics relate to elasticity of supply?
The percentage change in quantity supplied divided by the percentage change in price
What is meant by cross-price elasticity of demand?
The percentage change in the quantity of good A that is demanded as a result of a percentage change in the price of good B
If cola and iced tea are good substitutes for consumers, then it is likely that:
Their cross price elasticities are greater than zero
A change in salary will lead to a movement along labor demand or labor supply curves, but it will not shift those curves.
True
According to the law of supply, a higher price increases the quantity supplied.
True
Elasticity of savings means the percentage change in the quantity of savings divided by the percentage change in interest rates.
True
Goods and services market is a market in which firms are sellers of what they produce and households are buyers.
True
In financial capital markets, those who supply financial capital through saving expect to receive a rate of return.
True
Inflation is rise in the overall level of prices.
True
Price floor means a law that prevents a price from falling below a certain level.
True
Protectionism is government policies to reduce or block imports.
True
Supply is a relationship between price and the quantity supplied of a certain good or service.
True
The term microeconomics describes the branch of economics that focuses on actions of particular actors within the economy, like households, workers, and business firms.
True
The term supply schedule refers to a table that shows a range of prices for a good or service and the quantity supplied at each price.
True
Time value of money is the cost of having to wait for repayment.
True
Demand is said to be __________ when the quantity demanded changes the same proportion as the price.
Unit elastic
The general pattern that consumption of the first few units of any good tends to bring a higher level of _________ to a person than consumption of later units is a common pattern.
Utility
What is meant by specialization?
When workers or firms focus on particular tasks in the overall production process for which they are well-suited
