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Scarce for households and scarce for economies

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Resources are

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resources are limited

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The phenomenon of scarcity stems from the fact that

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A. automobiles B. baseballs autographed by Babe Ruth C. pickles D. all of the above are correct D. all of the above are correct

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Which of the following products would be considered scarce?

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people face tradeoffs

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The adage, "There is no such thing as a free lunch," means

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society is getting the maximum benefits from its scarce resources

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Efficiency means that

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what you give up to get that item

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The opportunity cost of an item is

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understand that the opportunity cost of attending college is very high

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High-School athletes who skip college to become professional athletes

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the value of the best opportunity a student gives up to attend college

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The opportunity cost of going to college is

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you should include only the amount by which your room-and-board expenses exceed the expenses for rent and food if you were not in college

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When you calculate your true costs of going to college, what portion of your room-and-board expenses should be included?

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the cost of rent for your off campus apartment

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When calculating the cost of college, which of the following should you probably not include?

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takes an action only if the marginal benefit of that action exceeds the marginal cost of that action

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A rational decisionmaker

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buildings and machines used in the production process

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In economics, capital refers to

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can produce

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The production possibilities frontier is a graph that shows the various combinations of output that an economy

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outside its production possibilities frontier

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Where can an economy not produce?

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on the production possibilities frontier

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Production is efficient if the economy is producing at a point

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there are unused resources or inefficiencies in the economy

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When an economy is operating inside its production possibilities frontier, we know that

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produce inside its production possibilities frontier

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Unemployment would cause an economy to

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resources are SPECIALIZED; that is, some are better at producing particular goods rather than other goods

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Production possibilities frontiers are usually bowed outward. This is because

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there is a technological improvement

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A production possibilities frontier can shift outward if

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introducing inventions

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Economic growth may result from

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a. drought b. increasing unemployment c. an epidemic that causes widespread death d. all of the above except for b e. all of the above D. all of the above except for b

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Economic decline may result from

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It does not change

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If price rises, what happens to demand for a product?

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change in the income of buyers of milk

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Which of the following will shift the demand curve for milk?

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It decreases

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If price rises, what happens to quantity demanded for a product?

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grapefruit to the right

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If oranges and grapefruit are close substitutes, an increase in the price of oranges will shift the demand curve of

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an increase in the price of heating oil

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Which of the following would be most likely to cause an outward shift of the demand curve for electricity?

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connects points describing how much consumers would have been willing and able to buy at different prices during a particular period

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The demand curve for a good

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a negative slope because some consumers switch to other goods as the price of the good rises

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The demand curve for a typical good has

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suppliers are willing to increase production of their goods if they can receive higher prices for them

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An upward-sloping supply curve shows that

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No, but if there is no interference, they tend to move toward equilibrium

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Are markets always in equilibrium?

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At equilibrium quantity demanded equals quantity supplied

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Which of the following is the correct way to describe equilibrium in a market?

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decrease the price and decrease the quantity of autos exchanged

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Other things equal, a decrease in consumer income would (automobiles are normal goods)

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increase the current price and increase the current quantity exchanged

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An increase in the expected future price of a good by consumers would, other things, equal,

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increase both the price and the quantity of airline travel

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Assume that airline travel is a normal good and intercity bus travel is an inferior good. Higher incomes would

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a decrease in supply

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If you observed the price of a good increasing and the quantity exchanged decreasing, it would be most likely caused by

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the printed price is below the equilibrium price

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Ticket scalping is selling a ticket for a sporting or entertainment event at a price above the price printed on the ticket. Scalping occurs because

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an increase in the equilibrium quantity of wheat, but the effect on equilibrium price is uncertain without more information

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An increase in the foreign demand for the US wheat, combined with improved technology in production of wheat, would lead to

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is the amount by which quantity demanded exceeds quantity supplied

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A shortage

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As the price rises, the quantity demanded decreases while the quantity supplied increases

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Which of the following correctly describes how price adjustment eliminates a shortage?

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allowing the price to fall

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A surplus can be eliminated by

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a decrease in the price of apples, a substitute

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Suppose we observe an increase in the price of oranges. Which of the following is NOT a possible cause?

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An increase in demand combined with a decrease in supply

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Which of the following will definitely cause an increase in the equilibrium price?

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an increase in income causes the demand for a to increase

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Good a is a normal good if

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a decrease in the demand for turnips

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If turnips are an inferior good, then, an increase in income will cause

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a movement upward and to the left along the demand curve

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A decrease in quantity demanded is represented by

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the quantity demanded exceeds the quantity supplied at the current price

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The price of a good will tend to rise if

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the law of supply

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The fact that a decline in the price of a good causes producers to reduce the quantity of the good they plan to produce illustrates

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An increase in the cost of machinery used to produce x

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Which of the following will shift the supply curve for good x to the left?

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substitutes in production

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If a producer can use its resources to produce either good a or good b, then a and b are

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