MICROECONOMICS CHAPTERS 1 & 2 UNIT TEST STUDY GUIDE – Flashcards
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Scarcity refers to the situation in which unlimited wants exceed limited resources.
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Which of the following statements is true about scarcity?
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the choices people make to attain their goals, given their scarce resources.
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By definition, economics is the study of
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are rational and respond to incentives.
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Economists assume that individuals
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marginal revenue
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A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?
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$40
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Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is the marginal cost of moving up from the 1-color application to the 3-color application?
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What goods and services to produce; how will these goods and services be produced; and who receives them
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The three fundamental questions that any economy must address are:
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opportunity cost.
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The highest valued alternative that must be given up to engage in an activity is the definition of
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What to produce?
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Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products
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those who are willing and able to buy them
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Who receives the most of what is produced in a market economy?
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There is too little production of low quality goods and services.
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Which of the following is a problem inherent in centrally planned economies?
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Scarcity necessitates that people make trade
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Which of the following is a positive economic statement?
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hypotheses
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Which of the following is part of an economic model?
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The minimum wage law causes unemployment.
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Which of the following is a positive economic statement?
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data
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Which of the following is part of an economic model?
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microeconomics
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The branch of economics which studies how households and firms interact in markets is called
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What determines the growth rate of gross domestic product?
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Which of the following is a macroeconomics question?
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macroeconomics
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The branch of economics which studies the behavior of entire economies is called
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How will Apple decide on a selling price for the iPad?
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Which of the following is a microeconomics question?
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microeconomics
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The branch of economics which studies how households and firms make choices, interact in markets and how government attempts to influence their choices is called
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opportunity cost
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The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.
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the maximum attainable combinations of two products that may be produced in a particular time period with available resources.
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The production possibilities frontier shows
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25 pedicures
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Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?
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opportunity costs are constant as more of one good is produced.
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If the production possibilities frontier is linear, then
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bowed outward
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A production possibilities frontier with a ________ shape indicates increasing opportunity costs as more and more of one good is produced.
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a worker hired by Dell.
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An example of a factor of production is
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Labor
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The resource income earned by those who supply ________ is called wages.
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factor market
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The natural resources used in production are made available in the
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circular flow model
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The ________ demonstrates the roles played by households and firms in the market system.
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purchase; product
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Households ________ final goods and services in the ________ market.
