ECON 201 Quiz Questions

The need to study economics would cease to exist if
there were enough resources to produce all the goods and services people would like
to obtain

Microeconomics is the study of:
individual decision-making units.

What is a normative statement?
Can’t be tested

If Elaine can produce more output from a set amount of resources than Jerry can, you know that
Elaine has an absolute advantage.

What is the indirect incentive in the unemployment insurance program?
Workers face no incentive to find a new job until the insurance runs out.

A society that is producing its maximum combination of goods and using all available resources for
production
is operating on its production possibilities frontier (PPF)

Economic growth can be depicted on a production possibilities frontier (PPF) as an
outward shift of the PPF

A model without any simplifying assumptions:
is highly complex and likely unworkable

Suppose you find a production possibilities frontier (PPF) that is shaped like a straight line. What can you determine about the production of the two goods?
Production of the two goods is subject to constant opportunity cost anywhere along
the PPF

A monopoly:
exists when a single company supplies the entire market for a particular good or
service.

The law of supply states that, all other things being equal
the quantity supplied falls when the price falls, and the quantity supplied rises when
the price rises.

What causes both a shift in supply and a shift in demand?
Expectation of future price

When the government places a tax on the producer of a good or service:
the supply curve for the good or service shifts to the left.

As the life expectancy in the United States increases, which of the following could likely happen to the
demand curve for items such as health care, cancer treatments, and nursing facilities, holding all else
constant, and why?
There would be an increase because there will be more buyers in these markets.

Susie decided to start selling lemonade on her street. The other kids in the neighborhood noticed that
Susie was making a lot of money selling lemonade. These kids decided to open their own lemonade stand.
When they opened their own lemonade stand, the equilibrium price:
decreased and the equilibrium quantity increased.

When supply shifts right and demand shifts left, the:
equilibrium price always falls.

James specializes in college-level economics tutoring. He knows that, during the two weeks before finals,
he can charge more for an hour of private tutoring. Expecting this price increase, James will:
supply less tutoring now, shifting supply to the left.