question

High-school athletes who skip college to become professional athletes

answer

Understand that the opportunity cost of attending college is very high

question

The terms equality and efficiency are similar in that they both refer to benefits to society. However they are different in that

answer

equality refers uniform distribution of those benefits and efficiency refers to maximizing benefits from scarce resources

question

College age athletes who drop out of college to play professional sports

answer

are well aware that the opportunity cost of college is very high

question

Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal

answer

benefit of leaving was greater than the marginal cost

question

What you give up to obtain an item is called your

answer

opportunity cost

question

When computing the opportunity cost of attending a concert you should include

answer

the price of the ticket you pay and the value of your time

question

When studying the effects of changes in public policy, economists believe that

answer

it is more important to distinguish between the long run and the short run

question

Which of the following statements about the circular flow diagram is correct?

answer

the diagram leaves out the details that are not essential for understanding the economic transactions that occur between households and firms

question

A statement describing how the world should be

answer

is a normative statement

question

The field of economics is traditionally divided into two broad subfields

answer

Macroeconomics and Microeconomics

question

You know an economist has crossed the line from policy advisor to scientist when he or she

answer

makes positive statements

question

An economies production of two goods is efficient if

answer

it is impossible to produce more of one good without producing less of the other

question

In the circular flow diagram, another name for goods and services produced by firms is

answer

output

question

In the markets for goods and services in the circular flow diagram,

answer

firms provide households with output

question

If consumers often purchase muffins to eat while they drink their lattés at local coffee shops, what would happen to the equilibrium price and quantity of lattés if the price of muffins falls?

answer

Both the equilibrium price and quantity would increase

question

If sellers expect higher basket prices in the near future, the current

answer

supply of baskets will decrease

question

When quantity demanded decreases at every possibly price, the demand curve has

answer

shifted to the left

question

What would cause price to decrease?

answer

a surplus of a good

question

Which of the following might cause the demand curve for an inferior good to shift to the left?

answer

an increase in the price of the complement

question

A market demand curve shows

answer

how much of a good all buyers are willing and able to buy at each possible price

question

What would happen to the equilibrium price and quantity of lattés if consumers' incomes rise and lattés are a normal good?

answer

Both the equilibrium price and quantity would increase

question

A movement upward and to the left along a demand curve is called an

answer

decrease in quantity demanded

question

The supply curve for a good is a line that relates

answer

price and quantity supplied

question

If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese?

answer

an increase in the price of American cheese

question

Good X and Y are substitutes. If the price of good Y increases, then the

answer

price of good x increases

question

If something happens to alter the quantity supplied at any given price, then

answer

the supply curve shifts

question

An increase in the price of the good will

answer

increase quantity supplied

question

When all market participants are price takers who have no influence over prices, the markets have

answer

numerous buyers and sellers

question

What would happen to the equilibrium price and quantity of lattés if coffee shops began using a machine that reduced the amount of labor necessary to produce steamed milk, which is used to make lattés, and scientists discovered that lattés cause heart attacks?

answer

the equilibrium price would decrease, and the effect on equilibrium quantity would be ambiguous

question

Suppose the United States has a comparative advantage over Mexico in producing pork. The principle of comparative advantage asserts that

answer

the United States should produce more pork than what it requires and export some of it to Mexico

question

"Allowing all individuals access to Medicare and Medicaid for health insurance is the fair thing to do" is an example of a

answer

Normative statement

question

In the markets for factors of production in the circular flow diagram

answer

households provide firms with labor, land, capital,

question

Economic models are built with

answer

assumptions

question

In the circular-flow diagram, which of the following items flows from households to firms through the markets for goods and services?

answer

dollars spent on goods and services

question

You know an economist has crossed the line from policy advisor to scientist when he or she

answer

makes positive statements

question

A certain production possibilities frontier shows production possibilities for two goods, jewelry and clothing. Which of the following concepts cannot be illustrated by this model?

answer

the flow of dollars between sellers of jewelry and clothing and buyers of jewelry and clothing

question

A model that shows how dollars flow through markets among households and firms is called the

answer

circular flow diagram

question

Which of the following would cause the supply curve to shift from Supply B to Supply A in the market for tennis racquets?

answer

an expectation by firms that the price of tennis racquets will increase in the very near future

question

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

answer

price takers

question

If a firm is price taker, it operates in a

answer

competitive market

question

An example of a perfectly competitive market would be the market for

answer

wheat

question

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation?

answer

New medical evidence has been released that indicates a negative correlation between a persons beef consumption and life expectancy

question

Pens are normal goods. What will happen to the equilibrium price of pens if the price of pencils rises, consumers experience an increase in income, writing in ink becomes fashionable, people expect the price of pens to rise in the near future, the population increases, fewer firms manufacture pens, and the wages of pen-makers increase?

answer

price will rise

question

Holding all other things constant, a higher price for ski lift tickets would

answer

decrease the number of skis sold

question

If a shortage exists in a market, then we know that the actual price is

answer

below the equilibrium price, and quantity demanded is greater than quantity supplied

question

A market supply curve is determined by

answer

horizontally summing individual supply curves

question

Which of the following events would unambiguously cause a decrease in the equilibrium price of cotton shirts?

answer

a decrease in the price of wool shirts and a decrease in the price of raw cotton

question

Which of the following changes would not shift the demand curve for a good or service?

answer

a change in the price of the good or service

question

Suppose Jim and Tom can both produce baseball bats. If Jim's opportunity cost of producing baseball bats is lower than Tom's opportunity cost of producing baseball bats, then

answer

Jim as a comparative advantage in the production of baseball bats

question

Which of the following statements about comparative advantage is not true?

answer

Comparative advantage is determined by which person or group of persons can produce a given quantity of a good using the fewest resources

question

Mike and Sandy are two woodworkers who both make tables and chairs. In one month, Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given this, we know that the opportunity cost of 1 table is

answer

5 chairs for Mike and 3 chairs for Sandy

question

Assume that Maya and Miguel each has 40 hours available. If each person divides his/her time equally between the production of mixers and toasters, then total production is

answer

3.5 mixers and 6 toasters

question

George has spent $600 purchasing and repairing an old fishing boat, which he expects to sell for $900 once the repairs are complete. George discovers that, in addition to the $600 he has already spent, he needs to make an additional repair, which will cost another $400, in order to make the boat worth $900 to potential buyers. He can sell the boat as it is now for $400. What should he do?

answer

He should complete the repair and sell the boat for $900

Test Questions on Econ Test 1 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards