Study Guide
Which best represents the concept represented by the adage, "There is no such thing as a free lunch"?
Kendra must decide between going to Colorado or Cancun for spring break.
A rancher can produce only hamburgers, and a farmer can produce only french fries. The rancher and the farmer both like both foods. They
could gain from trade because each would enjoy a greater variety of food.
If the price of a substitute to good X increases, then the
demand for good X will increase.
Which of the following would definitely result in a higher price in the market for Snickers?
demand increases and supply decreases
GDP
excludes the value of intermediate goods because their value is already counted in the value of final goods.
One definition of equity would be
fairness.
If the government wanted to enact a policy to increase living standards in the country, it might
increase educational opportunities for workers.
A U.S. publisher purchases new computers. This purchase by itself makes
investment and GDP higher.
A temporary partnership set up for a specific purpose for a short period of time is known as a
joint venture.
The principle that states that the more you have of something, the less satisfaction you will get from an additional unit is the
law of diminishing marginal utility.
Benefits from trade would NOT include
less competition.
If goods A and B are complements, an increase in the price of A will result in
less of good B sold.
U.S. laws requiring that drivers wear seat belts have resulted in
little change in the number of driver deaths, but more accidents and more pedestrian deaths.
The largest single cost of going to college is usually
lost wages.
Unemployment compensation is
not part of GDP because it is a transfer payment.
What you give up to obtain an item is called your
opportunity cost.
When the government redistributes income from the rich to the poor,
people work less and produce fewer goods and services.
A direct or positive relationship exists between a country's
productivity and its standard of living.
Which of the following is included in the investment component of GDP?
purchases of capital equipment that were manufactured in a foreign country by a foreign firm
The invisible hand works to promote general well-being in the economy primarily through
self interest.
The country that has a comparative advantage in a product
should export that product.
In a free market, who determines how much of a good will be sold and the price at which it is sold?
suppliers and demanders together
A technological advancement will shift the
supply curve to the right.
Workers at a bicycle assembly plant currently make minimum wage. If the federal government increases the minimum wage by $1.00 an hour it is likely that the
supply of bicycles will shift to the left.
Which of the following non-market goods or services is included as an estimate in U.S. GDP?
the estimated rental value of owner-occupied homes
Unlimited liability means that
the owner of the business bears complete legal responsibility for all debts and damages arising from doing business.
Inflation causes
the value of money to fall.
The adage, "There is no such thing as a free lunch," is used to illustrate the concept of
tradeoffs.
Canada can benefit from trade
with any nation.
Suppose that demand decreases AND supply decreases. What would you expect to occur in the market for the good?
Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.
Efficiency means that
society is getting the most it can from its scarce resources.
If buyers now wanted to purchase larger quantities of Vanilla Coke,
the demand curve for Vanilla Coke would shift to the right.
If a decrease in income increases the demand for a good, then the good is
an inferior good.
College-age athletes who drop out of college to play professional sports
are well aware that their opportunity cost of attending college is very high.
Trade can benefit a family
by allowing the family to buy a greater variety of goods and services at a lower cost.
M2 is
a broader definition of the money supply than M1.
Suppose that the incomes of buyers in a particular market for a normal good decline and there is also a reduction in input prices. What would we expect to occur in this market?
The equilibrium price would decrease, but the impact on the amount sold in the market would be ambiguous.
Which of the following is NOT correct?
Trade is based on absolute advantage.
A supply curve slopes upward because
an increase in price gives producers incentive to supply a larger quantity.
