question

If, as people's incomes increase, the demand for a good increases, the good is called what?

answer

A normal good

question

The Law of demand implies that demand curves do what?

answer

Slope down

question

What happens to the demand for Xbox games if the price of an Xbox falls?

answer

The demand for Xbox games increases because the price of a complement falls.

question

An increase in the expected future price of a good

answer

Increases its demand

question

A substitute is a good

answer

That can be used in place of another good

question

When a nation has a comparative advantage in the production of a particular good it can do what?

answer

The nation can gain from trade

question

The opportunity cost of good A in terms of good B is equal to the

answer

Ration of the money price of good A to the money price of good B

question

The price of a tomato increases and people buy more lettuce. You infer that lettuce and tomatoes are

answer

Substitutes

question

By specialization and trade, two individuals can

answer

Consume at a point beyond their individual production possibilities frontiers

question

Because of the existence of comparative advantage, the total output of goods is higher when each producer

answer

specializes in the production of one good or a few goods.

question

The quantity demanded is

answer

The amount of a good that consumers plan to purchase at a particular price

question

The opportunity cost of producing one ton of wheat for Germany is 4 tons of corn. The opportunity cost of producing one ton of wheat for Belgium is 8 tons of corn. Which country has the comparative advantage in the production of wheat?

answer

Germany

question

Suppose that in an hour Joe can prepare 10 sandwiches or 5 pizzas. The opportunity cost of Joe producing one sandwich is what?

answer

1/2 pizza

question

The quantity of iPods that people plan to buy this month depends on all of the following EXCEPT the

answer

The technology used to produce an iPod.

question

The "Law of Demand" states that changes in

answer

The quantity demanded of a good are inversely related to changes in its price.

question

If the technological advances lower the cost of computer chips, in the market for computers the equilibrium price will BLANK and the quantity demanded will BLANK.

answer

Fall; increase

question

A Relative price is what?

answer

The ration of one money price to another

question

According to the principle of comparative advantage, if a rich country trades with a poor country, then...

answer

Both countries benefit.

question

Comparative advantage is what?

answer

The ability to perform an activity at a lower cost than anyone else.

question

In an hour, Andy can make either 5 pizzas or 12 pies and Chirs can make either 6 pizzas or 18 pies. BLANK advantage in making pizzas

answer

Andy has a comparative

question

If the price of a candy bar is $1 and the price of a fast food meal is $5, then the

answer

relative price of a fast food meal if 5 candy bars per fast food meal.

question

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Better can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is BLANK, and she should specialize in the production of BLANK

answer

1/3 coconut per fish; fish

question

If a technological advance takes place in the computer industry, then the equilibrium price of a computer will BLANK and the quantity demanded will BLANK

answer

fall;increase

question

You observe the price of a good rises and quantity decreases. These observations can be the result of the

answer

supply curve shifting leftward

question

A Complement is a good

answer

that is used in conjunction with another good.

question

When the demand for a good increases, its equilibrium price BLANK and the quantity supplied BLANK

answer

rises; increases

question

Coffee (the product under study) and sugar are complements. If there is an increase in the price of sugar there will also be...

answer

A Decrease in the price of coffee

question

A decrease in demand combined with no change in supply

answer

lowers the equilibrium price

question

It is expected that the price of a bushel of wheat will increase in one month. This belief will result in

answer

a decrease in current supply of wheat

question

Which of the following is NOT one of the factors that influences the supply of a product: income, expected future prices, technology, and number of suppliers?

answer

Income

question

A Change in the price of a good

answer

Does not shift the good's demand curve but does cause a movement along it.

question

Each point on the demand curve reflects what?

answer

The highest price consumers are willing an able to pay for that particular unity of a good

question

On the issue of free trade, economists (on average):

answer

Strongly Support

question

Positive and normative statements differ in that

answer

positive statements can be tested, whereas normative statements cannot.

question

According to your instructor (Class discussion), the "bounce" theory of economics is supported by:

answer

classical economists and many Republicans

question

Marginal cost is the cost

answer

that arises from an increase in an activity

question

The term ceteris paribus means

answer

All other things remaining equal

question

Most economists agree that tariffs are import restrictions make most people worse off

answer

True

question

"The rich should pay higher income tax rates than the poor" is an example of a

answer

normative statement

question

the current price of gasoline is modest in real inflation adjusted terms by historical standards

answer

True

question

The "big" trade off is between efficiency and equity (fairness) in any economy.

answer

True

question

The benefit that arises from an increase in an activity is called?

answer

The marginal benefit

question

Scarcity applies both to the poor and the rich.

answer

True

question

Because wants and desires are unlimited; in a well functioning economy there cannot be any substantial long-term involuntary unemployment (regardless of future productivity and technology increases.)

answer

True

question

The inability of the government and government agencies to efficiently allocate resources is called:

answer

Government failure

question

One economists says that raising taxes on gas would be in the social interest. What does this economists mean?

answer

Higher taxes would benefit society as a whole

question

The fallacy of composition is the false belief that

answer

what is true for each parts is also true for the whole.

question

The 2007-2009 recession

answer

was the worst recession since 1937-1938 recession.

question

Most economists believe that: (Invisible hand)

answer

prices are the best way to ration goods and services

question

Free Market economists (classical) are more likely to be allied with Republicans than are Keynesian economists who are likely be allied with the Democrats.

answer

True

question

The birth of economics as an intellectual discipline can be dated fairly precisely in the eighteenth century with

answer

the publication of the book, The Wealth of Nations

question

The majority of economists favor less restrictive immigration policies in the U.S.

answer

True

question

Most economists believe that "exporting jobs" in the process of globalization is good for the U.S. and world economy

answer

True

question

On the issue of immigration, economists (on average):

answer

Strongly support

question

The economic school of thought that emphasizes the role of government in today's economic problems is called the

answer

Classical

question

The political party that emphasizes the role of market failure in today's economic problems is called the BLANK party

answer

Democratic

question

When an economists refers to choices made "at the margin" the economists is referring to

answer

decisions based on the marginal benefits and marginal costs of small changes in a particular activity

question

Economic models

answer

simplify reality

question

The iron law of price is that it must rise before it can fall when a shortage occurs

answer

True

question

After you graduate, you have decised to accept a position working at the Bureau of Labor Statistics for 45,000 per year. The two other offers you received were working for Wal-Mart for 38,000 and working for Ernst and Young Consulting for 42,000. Of these two offers, you would have preferred the job at Ernst and Young. What is the opportunity cost of accepting the position at the Bureau of Labor Statistics?

answer

The 42,000 you would have been paid for Ernst and Young

question

According to Charles Jones and Peter Klenow of Stanford, France

answer

has nearly the same standard of living as the U.S.

question

Paul Krugman is considered to be a BLANK economists

answer

Keynesian

question

Many economists believe that occupational licenses are designed more to rise salaries in those professions than to protect the consumers

answer

True

question

The more we have of a good or service, the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it.

answer

True

question

The Best definition of a capital good is "foregone consumption."

answer

True

question

On the issue of agriculture price supports and subsidies, economists (on average)

answer

Strongly oppose

question

During the summer you have made the decision to attend summer school, which prevents you from working at your usual summer job in which you normally earn 6,000 for the summer. Your tuition cost is $3,000 and books and supplies cost 1,300. In terms of dollars, the opportunity cost of attending summer school is

answer

10,300

question

IN a market economy, what people do in the pursuit of their self-interest

answer

usually forwards the social interest

question

The economic school of thought that emphasizes the role of market failure in today's economic problems is called the BLANK school.

answer

Keynesian

question

Economists believe that: All resources are scarce, all human activity has an opportunity cost, consumer wants are unlimited, all of the answers are true, or none of the above

answer

All of the answers are true

question

According to Adam Smith, individuals acting in their own self-interest in the market place are also unintentionally acting in the social interest.

answer

True

question

In economics, normative statements are about

answer

The way things out to be

question

The Occupy Wall Street movement advocates for

answer

A shift away from market capitalism

question

The loss of the highest-valued alternative defines the concept of

answer

opportunity cost

question

The term human capital refers to

answer

people's knowledge and skill

question

According to Adam Smith

answer

Government intervention in markets is not desirable because an invisible hand leads decisions made in pursuit of self-interest to unintentionally promote the social interest

question

According to economists

answer

Market capitalism is the best system available and some government intervention and regulation can either help or harm the social interest

question

"As part of the financial crisis bailout plan in 2008, the Federal Reserve should not bail out banks that make risky loans." This is an example

answer

A normative statement

question

The "gifts of nature" are included as part of which factor of production?

answer

Land

question

Which of the following is NOT part of the first big economic question: Why do incentives affect only marginal costs?, what goods and services are produced? For whom are goods and services produced? How are goods and services produced?

answer

Why do incentives affect only marginal costs?

question

All economic questions are about

answer

how to cope with scarcity

question

As an economic concept, scarcity applies to

answer

both money and time

question

Which of the following questions is NOT a Microeconomic question? Can the Federal Reserve keep income growing by cutting interest rates? Does the United States have a comparative advantage in information technology services? What is Britney's opportunity cost of having another baby? How would a tax on e-commerce affect E-Bay?

answer

Can the Federal Reserve keep income growing by cutting interest rates?

question

When an economist talks of scarcity, the economist is referring to the

answer

Inability of society to satisfy all human wants because of limited resources

question

Jill, and economics student, has already spent 5 hours cleaning her room. In deciding whether or not to continue cleaning for another hour, she applies the economic principle of...

answer

choosing at the margin

question

In economics, the term "capital" refers to

answer

buildings and equipment

question

Which of the following is a positive statement? When the national unemployment rate is 9%, the unemployment rate for inner-city youth is often close to 40%. An unemployment rate of 9% is a national disgrace. Unemployment and inflation are equally important problems. Unemployment is a more important problem than inflation.

answer

When the national unemployment rate is 9%, the unemployment rate for inner-city youth is often close to 40%.

question

Macroeconomics is concerned with

answer

economy-wide variables

question

Factors of production include

answer

land, labor, capital, and entrepreneurship

question

The opportunity cost of attending college includes the cost of

answer

The highest valued alternative to attending college plus the cost of tuition

question

In the U.S. economy, which of the following statements is TRUE?

answer

More services are produced than goods.

question

When a country decides to produce fewer bombers and more public housing projects, it is answering the BLANK part of one of the two big economic questions?

answer

What

question

The fact that a rock star earns 5$ million a year while a teacher earns 25,000 annually is most directly an example of an economy answering the BLANK part of one of the two big economic questions

answer

For whom

question

The night before a midterm exam, you decide to go to the movies instead of studying for the exam. You score 60% on your exam. If you had studied the night before, you'd have scored 70%. What was the opportunity cost of your evening at the movies?

answer

10 percent off your grade.

question

The economic resource that organizes the use of other economic resources is called

answer

entrepreneurship

question

Which factor of production earns most income in the United States?

answer

Labor

question

The 2010 Patient Protection and Affordable Care Act (Obamacare) contains a provision that may require individuals to either purchase private health care or pay a tax. This is an example of.... Centrally planned socialism Market capitalism A mixed economy the Invisible hand

answer

A mixed economy

question

The marginal cost is the cost

answer

that arises from an increase in an activty

question

The analysis of the behavior of an individual decision-making units is the definition of

answer

Microeconomics

question

In every economic system, choices must be made because resources are BLANK and our wants are BLANK.

answer

Limited;unlimited

question

An outcome is considered efficient if

answer

It is not possible to make someone better off without making anyone else worse off

question

Which of the following is NOT a factor of production? 175 shares of Microsoft Stock Wilderness areas that have yet to be developed Vans used by a bakery company for deliveries A person developing a production schedule for a new product

answer

175 shares of Microsoft Stock

question

When Janet Yellen, Chair of the Federal Reserve, addresses Congress regarding the United States role in the world economy, she is discussing

answer

A macroeconomic topic

question

As a person consumes more and more of a good, the

answer

marginal benefit decreases

question

According to the classical school, the economy is situated BLANK production possibilities frontier implying an BLANK opportunity cost.

answer

on, 100%

question

If a country must decrease current consumption to increase the amount of capital goods it produces today, then it

answer

must be producing along the production possibilities frontier today and will see a shift outward of the frontier in the future if it produces more capital goods then consumer goods.

question

The principle of increasing opportunity cost leads to

answer

a production possibilities frontier (PPF) that is bowed outward from the origin.

question

If the United States can increase its production of automobiles without decrease its production of any other good, the United States must have been producing at a point

answer

within its PPF.

question

Marginal cost is the opportunity cost

answer

that arises from producing one more unit of a good or service

question

Economic growth can be pictured in a production possibilities frontier diagram by

answer

Shifting the PPF outward

question

Points outside the PPF illustrate production points that cannot be attained

answer

True

question

Production Efficiency is achieved when

answer

Producing one more unit of one good cannot occur without producing less of some other good.

question

A good or service or a resource in nonexludable if

answer

it is not possible to prevent someone from benefiting from it.

question

The principle of increasing opportunity cost occurs because

answer

resources are not equally suited to all activities

question

The PPF shifts as

answer

Technology changes

question

A bowed outward production possibilities frontier occurs when

answer

as more of a good is produced, producing additional units of it require greater reductions in the other good.

question

Which of the following is true? a) allocative efficiency occurs at a specific point (i.e. a specific mix of production) on the PPF that is valued above all alternatives B) productive or technical efficiency occurs anywhere on the PPF C) Opportunity cost can be measured by the slop of the PPC curve D) all of the above

answer

All of the above

question

We Measure the marginal BLANK of a good by what a BLANK for another unit of the good.

answer

benefit; person is willing to pay

question

A shift rightward of the PPF can be caused by

answer

an increase in human capital (Education)

question

A Straight line production possibilities curve has constant opportunity cost (constant cost technology)

answer

True

question

When government action leads to inefficiency, it is known as

answer

government failure

question

Resource use is allocatively effecient when what happens?

answer

when marginal benefit equals marginal cost

question

An expansion of the PPF is

answer

called economic growth

question

A Free rider is someone who

answer

enjoys the benefits of a good without paying for it

question

What does The PPF represent?

answer

represents (the production of) all possible combinations of any two goods or services that are technically (productively) efficient

question

The principle of decreasing marginal benefit means that as the quantity of a good consumed

answer

increases, its marginal benefit decreases

question

When consumption is rival and excludable, the product is

answer

a private good

question

Generally, opportunity costs increase and the PPF bows outward. Why?

answer

Resources are not equally useful in all activities

question

If the consumption of a good or service by one person does not decrease the quantity available for another person, the good or service is

answer

nonrival

question

Which of the following will shift the PPF rightward? A) An increase in technology B) an increase in the capital stock C) increase in labor and other natural resources D)All of the above

answer

All of the above

question

In our Macro example using the PPC model, according to the Keynesian school of thought, the economy is typically:

answer

Inside the PPC frontier implying 0% opportunity cost to government stablizatoin efforts.

question

What are the PPC Assumptions?

answer

All resources in the economy are fully and efficiently utilized and fixed in the short run The economy is utilizing the highest possible level of technology The Economy is at a state of full employment There is an opportunity cost.

question

What are the three factors that influence economic growth

answer

Increase in raw materials or labor supply Technological changes Capital accumlation

question

What are the determinants of Demand?

answer

Price (nonshifter) Income (Shifter) Population of consumers (Shifter) Tastes and Preferences (Shifter) Prices of related goods such as substitutes and complements (shifter) Expected future price, income, and credit changes (Shifter)

question

What are the four parts of the Economic Coordination or Barter System

answer

Factor Markets, Good Markets, Households, and Firms Household send labor, land, capital, entrepreneurship to factor markets. Firms send wages, rent interest, and profits back to households through the factor markets. Firms get expenditures on goods and services from the goods markets, and the goods markets sends finished goods to households

question

What are the Determinants or factors of Supply?

answer

Price (Non-Shifter) Technology (Shifter Costs of inputs - i.e. prices of factor of production and productive resources (Shifter) Prices of alternative goods in production (Shifter) Expectations of future (seller) prices (Shifter) Number of Suppliers (Shifters) State of nature (Shifter

question

What is a deadweight loss

answer

It equals the decrease in total surplus. Consumer and producer surplus

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