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Economics deals primarily with the concept of

answer

scarcity

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By instituting a binding price ceiling on apartments (the price ceiling did what it was supposed to do) after World War II, the government inadvertently caused

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a decrease in the quantity of apartments supplied

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Behavioral economics studies how ____ influences the decision-making process

answer

human psychology

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A person who is ____ is likely to pay more for insurance to protect against financial loss than a person who is _____.

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risk averse; a risk taker

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Because you can only get more of one good by giving some of another good, the shape of a production possibilities curve is :

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downward sloping

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why would a firm exit a competitive market

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prices can't cover the costs

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microeconomics focuses on

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the behavior of individuals and firms

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Suppose the equilibrium price of cigarettes is $2.00, but government takes steps to prevent the price from falling below $4.00. The likely result will be

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surplus of cigarettes as the price floor keeps the market from reaching equilibrium

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The opportunity cost of attending college is likely to be HIGHEST for a high school graduate:

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Who is able to immediately compete successfully in professional basketball

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If profits occur in a perfectly competitive market

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firms enter the market and price falls until profits are competed away

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In the fall of 2010 the price of gasoline dramatically increased. Which of the following could have caused this change?

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Hurricanes during the late summer damaged oil platforms in the Gulf of Mexico.

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Both competitive and monopolistically competitive firms:

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can maximize profit by producing to the point where marginal cost = marginal revenue

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An explicit cost for a business that manufactures bicycles would be the:

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wages paid to employees

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The price elasticity of demand is defined as the:

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percentage change in quantity demanded divided by the percentage change in price

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The ____ states that the opportunity cost of producing a good always rises as you produce more of it.

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law of increasing relative cost

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Wine and cheese are complement goods because they are consumed together. What would you expect to happen to the equilibrium quantity of cheese if the price of wine increased and all else is held constant

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It would increase because of a demand shift

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Economists consider both explicit and implicit costs when measuring economic profit. The reason they consider implicit costs is that

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a business must cover its opportnity costs as well as its out-of-pocket expenses to be truly profitable

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The goal for any firm is to

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maximize profits

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If Alabama's opportunity cost of steel is lower that Pennsylvania's opportunity cost of steel, then

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Alabama has a comparative advantage in the production of steel

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Firms are on the :

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demand side of the resource markets and the supply side of product markets

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Suppose that in an experimental setting, 100 students are asked to evaluate a gamble with the following payouts: The student will receive $5,100 with a 50% probability, $200 with a 25% probability, and $0 (nothing) with a 25% probability. What is the expected value of the gamble?

answer

EV= 0.5 x ($5,100) + 0.25 x ($200) + 0.25 x ($0)

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What is true of the long run that is not true of the short run?

answer

All costs are variable in the long run

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In response to hurricanes Charlie, Frances, and Ivan in the fall of 2004, sales of plywood, used to protect windows from high winds, soared in Florida. Using the supply and demand model, what would be the best way to show the effects of the hurricane preparation on the plywood market?

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Demand curve shifted to the right, supply curve did not shift

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As you add more variable inputs to a fixed input you will eventually experience

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diminishing marginal productivity

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The average price of a ticket to an Adele is set at $420. All the tickets for the game sell out one hour after they go on sale and there are still 1000 fans who want to buy tickets. It follows that:

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The equilibrium price of tickets to go to the concert is more than $420

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When we are studying the behavior of sellers, we are studying

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supply

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Which of the following situations BEST demonstrates the law of demand

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Moviegoers react to an increase in the price of a theater ticket by seeing fewer movies per year

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Assume all markets are in equilibrium. Market price in an oligopoly would be _____ the market price in monopoly, and ____ the market price in a competitive market.

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less than; greater than

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When the price of snow shovels increases by 25%, the quantity demanded falls by 20%. You know that the price elasticity of demand for scooters is

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inelastic

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Which of the following would cause quantity demanded to change?

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A change in the price of the good

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Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually beneficial trades are

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a deadweight loss to society

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In 1950, Nicaragua and Brazil had roughly the same-sized economics. Now, Brazil's economy is almost five times as large as Nicaragua's. This is likely because:

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Brazil had better resources and technology

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To evaluate the change in average living standards over time it is best to use:

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real GDP per capita

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Which activity is most likely to create a positive externality

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A person receives a flu shot

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Frictional unemployment is present in an economy because:

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workers take time off to decide what is best for them

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A rightward shift of the long-run aggregate supply curve means there has been:

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economic growth

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The root cause of cyclical unemployment is:

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downturns in the business cycle

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Which good is most easily excludable

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education at a community college

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If people expect higher income in the future, then spending today____ and aggregate demand____.

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increases; increases

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The long run is best defined as a period of time such that:

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all prices have adjusted

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GDP is not a good measure of

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the income inequality that exists between people in the country

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Today, not all regions of the world enjoy the same level of annual real per capita gross domestic product (GDP). The regions that have higher levels of real per capita GDP probably also have:

answer

growth-promoting institutions like property rights

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From 2009 to 2010, nominal gdp in the united states grew by 3.8%. Given that prices increased by 1% and the population grew by 1%, we know that per capita real GDP gross domestic product grew by

answer

1.8%

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In 1950, residents in Liberia were wealthier than those in Taiwan. Today, per capita gdp in Taiwan is more than twenty times that of Liberia. Which of the following best explains why Taiwan is now so much wealthier than Liberia?

answer

Liberia lacks the sort of institutions that promote growth that Taiwan has

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The long-run aggregate demand curve is

answer

vertical at the level of full employment output

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Which good is nonrival

answer

listening to public radio

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A decrease in aggregate demand is harmful in the short run because ____, but beneficial in the long run because ____.

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unemployment rises; the price level falls

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A severe drought hits a country and reduces farm output by 50%. This will impact:

answer

short-run aggregate supply

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Amy just applied for a position with Rory's firm. Rory knows that Amy will earn $20 and hour and can produce a value of the marginal product (VMPL) of $40 per hour. Rory will ____ Amy because her VMPL is _____.

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hire; positive

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Which of the following is not a goal of macroeconomics?

answer

equality

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Which of the following choices is the correct sequence of the business cycle

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peak, recession, trough, recovery

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The business cycle model describes how ____ changes over time.

answer

Gross domestic product

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Which of the following statements about unemployment is true?

answer

To be officially unemployed, a person has to be in the labor force.

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In the US professional football players earn much higher incomes than professional football players earn much higher incomes than professional soccer players. This occurs because:

answer

consumers have a greater demand for football games than for soccer games

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When wages fall:

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the opportunity cost of an hour of leisure declines

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Companies begin to find that customers, when calling customer service, want to talk to real people rather than to a recordin. What wil happen to demand for receptionists and the market equilibrium wage?

answer

demand will increase; the equilibrium wage will increase

question

Bobbi knows that she is producing a value just equal to her wage. If the price of what she makes falls, Bobbi knows that she:

answer

is likely to be fired

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From 2009 to 2014, per capita real gdp in the Pilhippines grew an average of 5% per year. At that rate, according to the rule of 70, in roughly how many years will the Filipino economy economy double in size?

answer

14 years

question

Which of the following is an example of structural unemployment

answer

Jasmine loses her job as a newspaper editor because the publication has gone digital

question

A school of thought is

answer

a cohesive way of thinking about a subject

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A profit maximizing firm will hire labor resources as long as:

answer

VMRP> wage

question

Due to unrest in northern Africa thousands of refugees fled across the mediterranean Sea to Italy where they sought relief from the fighting. Assume that the Italian labor market was in equilibrium before the unrest in Africa. At the equilibrium wage that prevailed in Italy prior to the unrest, what would the post war status of the labor market be?

answer

a surplus of labor

question

A primary cause of inflation is:

answer

the government central bank printing excess money

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Consider a market with a negative externality. The market will tend to ____ the good because the market participants tend to ignore the ___ of their decision.

answer

overproduce; external cost

question

The sale of American-grown corn to china is included in the ___ category of gdp

answer

export

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