Econ Test 1 Definitions – Flashcards
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Which of the following is not one of the four broad categories of resources?
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government
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The opportunity cost of attending college is
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the highest valued alternative one forfeits to attend college
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It usually takes less time to buy a six-pack of 7-up, a loaf of bread, and a half gallon of ice cream at a small convenience store than at a large, full-service grocery store. Which of the following persons is most likely to buy these items at a convenience store?
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a person with high opportunity cost of time
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Which of the following is an example of a positive economic statement?
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if you drop a ball from the top of a building, it will fall to the ground
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Microeconomics is the branch of economics that deals with
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human behavior and choices as they relate to relatively small units - an individual, a firm, an industry
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Which of the following is a positive microeconomics statement?
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ford motor company's new advertising campaign ended up hurting General Motor's sales
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What is the most prominent rationing device you will likely find at your campus bookstore?
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dollar price
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Opportunity cost is the value of
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the best (or most highly valued) forfeited alternative
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Which of the following is a positive economic statement?
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the temperature is 105 degrees today
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In economics, scarcity implies
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choice
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All sellers may be tempted to raise the price of what they sell, but a negative unintended effect of raising the price could be ______ in units sold large enough to ______ their total revenue earned.
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a decrease; lower
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A mandatory seatbelt law ends up raising the number of traffic fatalities if it lowers fatalities per accident from 0.11 to 0.08 while raising the number of accidents per period from 100,000 to any more than
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137,500
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The branch of economics that studies he decisions of individuals and firms is called
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microeconomics
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Amy's opportunity cost of going to the movies is
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the price of the ticket plus the value to Amy of what she would have chosen to do with her time had she not chosen to go to the movies
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In an interview an economist states, "This problem should be of greater concern to the federal government." We can explicity put this statement in the category of
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normative goods
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If variable X goes up as variable Y goes down, then X and Y are
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inversely related
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A person goes into a store and buys a computer for $1,210. In this case, price is acting as a
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rationing device
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How is scarcity related to competition?
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competition is an effect of scarcity
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Which of the following statements is false?
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Positive and normative economics both address what should be
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How are changes in opportunity cost predicted ti affect behavior?
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b and c
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Variable X rises as a result of variable Y rising. Variables X and Y are
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directly related
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In general, there is a _____ relationship between the number of hours spent studying for a test and the grade earned on the test.
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direct
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The answer is, "This is principally used to exhibit changes in data over time." The question is,
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what is a line graph
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To an economist, utility means
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satisfaction
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Many people buy one newspaper per day, but rarely do they buy two of the same newspapers on the same day. What is the economic justification for this behavior?
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the marginal cost of purchasing the second newspaper exceeds the marginal benefit f purchasing that paper
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A theory is
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a,b,andc
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If an economist says, "the higher the price of oranges, the fewer oranges individuals will buy, ceteris paribus", this means that
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as the price of oranges rises, individuals preferences do not change, nor does anything else, but individuals buy fewer oranges in response to the higher price of oranges
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The condition often used in economics to isolate the relationship between two variables is
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ceteris paribus
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The coordinates of point A are 300 units of X and 40 units of Y. The coordinates of point B are 280 units of X and 30 units of Y. With X on the horizontal axis and Y on the vertical axis, the slope of the line between point A and B is
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+0.50
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Points inside (or below) the PPF are
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attainable but productive inefficient
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An increase in the quantity of resources
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shifts the PPF rightward
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Which of the following statements is true?
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Productive inefficiency implies that it is possible to produce more of one good and no less of another, even w/out additional resources
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A productive efficient society
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all of the above
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The law of increasing opportunity costs states that as
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more of a good is produced, the higher the opportunity costs of producing that good
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What is the reason for the law of increasing opportunity costs?
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Resources have varying abilities and those with lower opportunity costs of producing a good will be used to produce if before resources with higher opportunity costs produce it
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If an economy is operating on its production possibilities frontier (PPF), are there any unemployed resources in the economy?
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No, because if there were any unemployed resources the economy would be producing below its PPF
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Which of the following is not true about production possibilities frontiers?
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unemployment of resources is shown by shifting the PPF inward
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The PPF between goods X and Y will be a downward-sloping
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straight line if constant opportunity costs exist
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An increase in the number of buyers in a particular market will result in a
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rightward shift in the demand curve
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If people begin to favor science fiction novels to a greater degree than previously, the demand curve for science fiction novels
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shifts rightward
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A rightward shift in the demand curve for tennis balls could be caused by
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a fall in the price of tennis rackets
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Given that frozen yogurt and ice cream are substitutes, a shift in preferences in favor of yogurt would be predicted to do all of the following except
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increase the supply of ice cream
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A decrease in the expected price of corn would likely do the following to the current supply and demand for corn
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increase the supply, but decreased the demand
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An "increase in demand" means that
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the demand curve has shifted to the right
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Which of the following pairs of goods would be most likely to be substitutes?
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butter and margarine
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As Jamal's income rises, his demand for DVD rentals does not change. It follows that, for Jamal, DVD rentals are
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neutral good
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Jerry has $50000 in his savings account and the average new car price is $23000. Does Jerry have a demand for a new car?
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not necessarily Jerry has the ability to buy a new car, but we don't know if he also has the willingness to buy a new car
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If the price a buyer pays for a good is $50 and the maximum price should would be willing and able to pay is $53, then ______ is ________.
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consumers' surplus; $3
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If the maximum price a person is willing and able to pay for a good is $50, and consumers' surplus is $20, then it follows that the price the buyer paid for the good is
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$30
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One can determine the consumers' surplus if the _____ is known
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b and c
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A price ceiling is a government-mandated
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maximum price above which legal trades cannot be made
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Which of the following is true?
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buyers prefer lower prices to higher prices, ceteris paribus
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If the minimum wage is set above the equilibrium wage, then
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there will be fewer labor hours purchased by employers than at the equilibrium wage
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The minimum wage is an example of a
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price floor
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The higher the price of medical care in general, the lower the _____ medical care and the ______ specific items that make up medical care.
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quantity demanded of; lower the demand for
