question

Efficiency means that

answer

society is getting the maximum benefits from its scarce resources.

question

Using up something that has been produced is called

answer

consumption

question

The satisfaction created by the consumption of goods and services is called

answer

incentive

question

A marginal change is a

answer

small, incremental adjustment

question

Economics is the study of

answer

how society makes decisions to manage its scarce resources

question

The diamond-water paradox illustrates the principle of

answer

scarcity

question

The value of what you give up to obtain an item is called your

answer

opportunity cost

question

When economists are trying to explain the world using facts and data, they are acting in the realm of

answer

scientists using positive economics

question

In a market economy (or capitalistic economy), economic activity is guided by

answer

buyers and sellers in a market.

question

is a shorthand way of saying "let one economic variable change (the cause) and see how another economic variable reacts (the effect), assuming everything else stays constant

answer

Ceteris paribus

question

In the simple circular-flow diagram, the participants in the economy are

answer

households and firms.

question

Which of the following is a correct statement about the production possibilities frontier?

answer

An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier

question

Which of the following statements is correct?

answer

Buyers determine demand and sellers determine supply

question

When studying changes in the economy over time, economists want to measure total quantity of output in terms of

answer

real values

question

Which of these statements about economic models is correct?

answer

All of the selections are correct. (For economists, economic models provide insights about the world. Economic models are often composed of equations and diagrams. Economic models are built with assumptions.)

question

Factors of production are

answer

inputs into the production process

question

Refer to Figure below, what is the area of the triangle made up of the following three points ($0, $16, and Quantity of 80 units)? Do not include $ sign or units

answer

640

question

An agricultural farm-supply store regularly sells a piece of equipment for $79.88 but at a sale to reduce inventory they have reduced the price to $69.99. What is the percent decrease of the sale price from the regular price? Round your answer to one decimal place using regular rounding rules.

answer

-12.4 %

question

A production possibilities frontier shifts outward when

answer

the economy experiences economic growth.

question

A certain factory has a cost function represented by the following linear equation: C = 100x + 2000. The slope of this equation represents the cost of producing each individual item. We call this cost, the "variable cost" of production. The variable cost of production for this factory is:

answer

$100

question

If quantity demanded decreases at price P1, we know that the demand curve has

answer

shifted to the left.

question

If a good is normal then an increase in income will result in

answer

HINT Normal goods have a positive correlation with changes in the income variable; inferior goods have a negative correlation with changes in the income variable.

question

A likely example of substitute goods for most people would be

answer

a PC computer and a Mac computer

question

Individual demand curves are summed horizontally to obtain the market demand curve

answer

True

question

A market demand curve shows

answer

the sum of all prices that the individual buyers are willing and able to pay for each possible quantity of the good.

question

The difference between a supply schedule and a supply curve is that

answer

a supply schedule is a table and a supply curve is drawn on a graph

question

A movement along the supply curve might be caused by a change in

answer

the price of the good or service that is being supplied

question

Which of the following events would cause the supply curve to shift to the right?

answer

The price of fertilizer decreases, and fertilizer is an input in the production of tomatoes.

question

Which of the following events could cause an increase in the supply of beef cattle?

answer

The number of beef cattle producers (sellers) increases

question

A wheat farmer recently has come to expect higher prices for his crop in the near future and is able to store his harvest in silos until that time. We would expect

answer

the wheat farmer to supply less wheat now than s/he was supplying previously.

question

Individual demand curves are summed horizontally to obtain the market demand curve.

answer

True

question

The term market always refers to

answer

a group of buyers and sellers of a particular good or service.

question

What would happen to the equilibrium price and quantity of peanut butter if fewer firms decided to produce peanut butter and health officials announced that eating peanut butter was good for you?

answer

Price will rise and the effect on quantity is ambiguous.

question

Suppose that demand decreases and supply decreases. What would you expect to occur in the market for the good

answer

Equilibrium quantity would decrease, but the impact on equilibrium price would be ambiguous.

question

The excess created when the quantity supplied of a commodity exceeds the quantity demanded at a price above equilibrium.

answer

surplus

question

The market in which factors of production are traded is called the

answer

factor market

question

Suppose you are in charge of setting prices at a local sandwich shop. The business needs to increase its total revenue and your job is on the line. If the demand for sandwiches is elastic, y

answer

should decrease the price of sandwiches

question

If the price elasticity of demand for a good is 0.94, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded?

answer

a 3.760 percent increase in the price of the good

question

Other things equal, the demand for a good tends to be more inelastic, the

answer

fewer the available substitutes

question

A measure of the sensitivity of quantity demanded to changes in consumers' income.

answer

Income elasticity

question

Buyers and sellers who have no influence on market price are referred to as

answer

price takers.

question

Suppose the number of buyers in a market increases and a technological advancement occurs also. What would we expect to happen in the market

answer

Equilibrium quantity would increase, but the impact on equilibrium price would be ambiguous

question

Which of the following events would result in an increase in equilibrium price and an ambiguous change in equilibrium quantity?

answer

a decrease in supply and an increase in demand

question

The market in which final goods and services are traded is called the

answer

product market

question

An increase in price causes an increase in total revenue when

answer

demand is inelastic

question

If the price elasticity of demand for a good is 1.65, then a 3 percent decrease in price results in a

answer

4.95 percent increase in the quantity demanded

question

Which of the following is not a determinant of the price elasticity of demand for a good?

answer

the steepness or flatness of the supply curve for the good

question

The quantitative measure (a value) of the degree of responsiveness to price changes for a product in the market. Equal to the rate of change of quantity demanded (or supplied) divided by the rate of changes of the other variable which may include: price, income, or related products.

answer

Elasticity coefficient

question

A competitive market is one in which

answer

there are so many buyers and so many sellers that each has a negligible impact on the price of the product

question

If the table represents the willingness to pay of four buyers and the price of the product is $18, then their total consumer surplus is

answer

$46 mike50,sandy30,jonathan20,haley10

question

A seller is willing to sell a product only if the seller receives a price that is at least as great as

answer

the sellers's cost of production

question

One of the basic principles of economics is that markets are usually a good way to organize economic activity. This principle is explained by the study of

answer

welfare economics

question

When a buyer's willingness to pay for a good is equal to the price of the good

answer

the buyer is indifferent between buying the good and not buying it

question

Ray buys a new tractor for $118,000. He receives consumer surplus of $13,000 on his purchase. Ray's willingness to pay is

answer

$131,000

question

If the market price is $1,000, the producer surplus in the market is

answer

$750 Abe $1,500 Betsy $1,200 Carlos $1,000 Doug $750 Evelyn $500

question

Which of the following is an example of a positive externality?

answer

The mayor of a small town plants flowers in the city park.

question

A command-and-control policy is another term for a

answer

government regulation

question

Private markets fail to account for externalities because

answer

decision-makers in the market fail to include the costs of their behavior to third parties

question

A group of buyers and sellers of a particular good or service is called a

answer

Market

question

Which of the following is correct?

answer

All of the selections are correct. (In an economy-wide sense property rights are an important prerequisite for the price system to work. An absence of well-established and well-enforced property rights appears to associated with a reduced standard of living. Property rights give people the ability to exercise authority over the resources they own)

question

A nation's standard of living is determined by

answer

its productivity.

question

The inputs used to produce goods and services are also called

answer

factors of production

question

_________ measures the level of output per unit of input; crop yield is an example

answer

Productivity

question

The stock of equipment and structures that are used to produce goods and services is called ____

answer

Physical capital

question

Society's understanding of the best way to produce goods and services is called ________

answer

Technological knowledge

question

Which of the following is human capital?

answer

understanding how to use a company's accounting software

question

The Peapod Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?

answer

The tables and chairs in the restaurant

question

The property whereby the benefit from an extra unit of an input declines as the quantity of the input increases is called

answer

Diminishing returns

question

The average amount of goods and services produced from each hour of a worker's time is called

answer

productivity

question

Which of the following is human capital?

answer

for an accounting firm, the accountants knowledge of tax laws and computer software

question

Which of the following is considered human capital?

answer

All of the selections are correct.

question

The property whereby countries that start off poor tend to grow more rapidly than countries that start out rich is called _________.

answer

Catch-up effect

question

Other things equal, relatively poor countries tend to grow

answer

faster than relatively rich countries; this is called the catch-up effect

question

People are willing to pay more for a diamond than for a bottle of water because

answer

the marginal benefit of an extra diamond far exceeds the marginal benefit of an extra bottle of water.

question

In an economy in which decisions are guided by prices and individual self-interest, there is

answer

the motivation to achieve efficiency in using factors of production

question

The figure represents a circular-flow diagram. If Box A represents firms, then which box represents households?

answer

Box B box a left, box c top, box b right, box d bottom

question

The figure represents a circular-flow diagram. If the outer loop represents flows of dollars, then the inner loop includes

answer

flow of inputs, of which firms are buyers box a left, box c top, box b right, box d bottom

question

Which of the following would most likely have caused the production possibilities frontier to shift outward from A to B?

answer

a general technological advance a curve inside, arrow moving out, b curve outside

question

Microeconomics is best described as the study of

answer

how households and firms make decisions and how they interact in specific markets.

question

When economists are trying to explain the world, they are

answer

scientists.

question

Economists consider normative statements to be

answer

prescriptive, making a claim about how the world ought to be

question

What is the opportunity cost of moving from point A to point B?

answer

20 barrels 6bathtubs,30barrel[a],14bt,10brrl[b]

question

In a market economy, supply and demand are important because they

answer

All of the selections are correct (determine how much of each good gets produced, can be used to predict the impact on the economy of various events and policies. play a critical role in the allocation of the economy's scarce resources. )

question

A market is a

answer

group of buyers and sellers of a particular good or service.

question

Each of the following is a determinant of demand except

answer

technology

question

Refer to Figure 4-1. The movement from point A to point B on the graph would be caused by

answer

a decrease in price. (q1,p1)A (q2,p2)b b lower, both on Demand line

question

Refer to Table 4-1. When the price of the good is $1.00, the quantity demanded in this market would be

answer

31 units.

question

Refer to Table 4-1. Whose demand does not conform to the law of demand?

answer

Austin's

question

Wheat is the main input in the production of flour. If the price of wheat decreases, all else equal, we would expect the

answer

supply of flour to increase.

question

The greater the price elasticity of demand, the

answer

greater the responsiveness of quantity demanded to a change in price.

question

When the price of kittens was $25 each, the pet shop sold 20 per month. When they raised the price to $35 each, they sold 14 per month. The price elasticity of demand for kittens is about

answer

1.06.

question

If, at the current price, there is a shortage of a good,

answer

the price is below the equilibrium price.

question

The impact of one person's actions on the well-being of a bystander is called

answer

an externality.

question

Nancy loves to landscape her yard, but her neighbor Lee places a low value on his landscaping. When Lee's grass is neglected and gets long, Nancy will mow it for Lee. This is an example of

answer

a private solution to a negative externality problem.

question

Markets fail to allocate resources efficiently when

answer

property rights are not well established

question

Excludability is the property of a good whereby

answer

a person can be prevented from using it.

question

If one person's use of a good diminishes another person's enjoyment of it, the good is

answer

rival in consumption

question

An example of a common resource would be

answer

the environment

question

Because of the free-rider problem,

answer

private markets tend to undersupply public goods.

question

The key determinant of a person's standard of living in a country is

answer

the amount of goods and services produced from each hour of a worker's time

question

Human capital is the

answer

knowledge and skills that workers acquire through education, training, and experience.

question

The largest single item in the food marketing bill is

answer

labor

question

Agribusiness firms that transport agricultural commodities, processed foods, and manufactured food products between different parts of the agri-food system are called _________.

answer

Food Distributors

question

The linkage of successive stages in marketing and production of a commodity within one company is called _________.

answer

Vertical Integration

question

_________ are the link between farmers and the firms that sell their product; these are the companies that buy ingredients and/or raw agricultural commodities and process them into retail products.

answer

Food Processors

question

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, while Sandy can make 6 tables or 18 chairs. Given this, we know that

answer

Mike has an absolute advantage in chairs.

question

If Iowa's opportunity cost of corn is lower than Oklahoma's opportunity cost of corn, then

answer

Iowa has a comparative advantage in the production of corn.

question

A country that currently does not trade with other countries could benefit by

answer

not restricting trade.

question

By definition, exports are

answer

goods produced domestically and sold abroad

question

By definition, imports are

answer

goods produced abroad and sold domestically

question

The ability to produce a good at a lower opportunity cost than any other producer is called _________.

answer

comparative advantage

question

In a 100-percent reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits

answer

M1 would not change.

question

Under a fractional reserve banking system, banks

answer

generally lend out a majority of the funds deposited.

question

The part of disposable consumer income not spent on current consumption is called _________.

answer

Savings

question

Deposits that banks have received but have not loaned out are called _________.

answer

Reserves

question

The set of assets used in an economy that people regularly use to buy goods and services from other people is called _________.

answer

Money

question

_________ is a banking system in which banks only hold a fraction of deposits as reserves/

answer

Fractional Banking

question

What is the future value of $450 at an interest rate of 11 percent one year from today?

answer

$499.50

question

Your parents put $500 into an account paying 7 percent interest for you when you were ten. Ten years later they tell you that you can take the money out of the account. What is the balance to the nearest penny?

answer

$983.58

question

The future value of a deposit in a savings account will be smaller

answer

The future value of a deposit in a savings account will be smaller

question

George knows that he has about $95 dollars in his account. He knows he earned an interest rate of 4 percent, but he doesn't remember how much he opened the account with a year ago. How much did he put in?

answer

$91.35

question

_________ means the ability to borrow money with the promise to pay it back.

answer

Credit

question

_________ is a number that indicates how reliable you are at paying back your debts; it is generated by a computer program that analyzes your entire credit history and generates a single number usually ranging from 300 to 850 and helps lenders decide if you're a good credit risk or not.

answer

Credit Score

question

Having good credit may impact your ability to do the following: get a credit card, get service from the utility company, purchase a home, rent an apartment.

answer

True

question

According to your readings, economists state that the possible reasons for rising income inequality are: growth in foreign trade, changes in government policy, and _________.

answer

Technological Change

question

Income _________ is defined to be the disparity between high-income and low-income households.

answer

inequality

question

The share of total income that a household pays in taxes is called their _________.

answer

effective tax rate

question

A description of an economy's share of households reflecting different income levels is called income _________.

answer

distribution

question

A quintile represents a population divided into _________ parts or expressed as _________ percent of the whole.

answer

5; 20

question

According to your readings, the pay gap between college-educated individuals and those with less education is called an _________.

answer

education premium

question

The portion of the business that is owned free of debt is know as the owner's _____.

answer

equity

question

The property tax

answer

taxes land and buildings using current market value to determine the taxes owed.

question

The tax that is computed as a percentage of employees' income (also matched by the employer) and is intended to provide for income in retirement and also extended to cover disability and hospitalization is the

answer

Social Security Tax

question

A tax that requires persons with higher incomes to pay a higher fraction of their income in taxes than persons with lower incomes is called a _________.

answer

progressive tax

question

Public education and food stamps are two types of public policy goods that are considered to be an _________ transfer payment in which taxes are redistributed from one income group within the economy to provide a specific good or service to a second group.

answer

not implicit lolq

question

If annual federal government spending on obligations is greater than federal tax revenues for the year, the amount overspent for that year is referred to as the _________.

answer

government deficit

question

A tax that is based on the percentage of the sales price is called ad valorum.

answer

true

question

The decrease in total surplus that results from a market distortion, such as a tax, is called a

answer

deadweight loss

question

When the Federal Reserve conducts open-market operations to increase the money supply, it

answer

buys government bonds (Treasury securities) from the public

question

reserve the requirements are regulations concerning

answer

the amount of reserves banks must hold against deposits.

question

Velocity is

answer

(P x Y)/M and increases if dollars are exchanged more frequently

question

The 80/20 ratio provides a measure of the income gap between high-incomes (80th percentile) and low-incomes (20th percentile) and is calculated by the _________

answer

census bureau

question

A description of an economy's share of households reflecting different income levels is called income _________.

answer

distribution

question

According to the reading, the largest category of unemployed persons in the U.S. is considered to be the _________.

answer

job loser

question

The _________ is the total number of employed persons plus the total number of unemployed (who are currently looking for a job).

answer

labor force

question

Cyclical unemployment is closely associated with_________.

answer

short-run ups and downs of the economy like recessions and depressions

question

In order to be considered unemployed, an individual must:

answer

not be working, be available to work, and actively sought employement during the past four weeks.

question

An agricultural price support program using price floors will

answer

create surpluses

question

The program created to compensate producers for long-term efforts to protect their wetland, forest, grassland, and other environmentally important and sensitive natural habitat is called

answer

the Conservation Reserve Program

question

Unemployment caused bya mismatch between the skills of prospective workers and the requirement of available jobs is known as:

answer

structural unemployment

AEB2014 SP17 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards