Microeconomics Study Guide – Flashcards
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Holding the nonprice determinants of demand constant, a change in price would
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result in a movement along a stationary demand curve
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In economics, the cost of something is
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what you give up to get it.
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A competitive market is one in which there
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are so many buyers and so many sellers that each has a negligible impact on the price of the product
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An increase in quantity supplied
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results in a movement upward and to the right along a fixed supply curve
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When two variables have a negative correlation and the x-variable decreases,
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the y-variable increases.
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If a study by medical researchers finds that eating brown rice causes weight loss while eating white rice causes weight gain, then we likely would see
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an increase in demand for brown rice and a decrease in demand for white rice.
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It once took 90 percent of our population to grow our food. It now takes only 3 percent of the population to grow our food. Which of the following statements is true?
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This is progress because freed-up labor is used to produce other goods.
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In the reading "How to Start a Business With Very Little Money" the author recommends
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having customers pay in advance for their purchases
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The forces that make market economies work are
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supply and demand.
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Suppose the equilibrium price of a physical examination ("physical") by a doctor is $200, and the government imposes a price ceiling of $150 per physical. As a result of the price ceiling, the
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quantity demanded of physicals increases, and the quantity supplied of physicals decreases.
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Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is
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the enjoyment she would have received had she gone to the park.
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The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand" that leads them to desirable market outcomes comes from whose 1776 book?
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Adam Smith
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A downward-sloping demand curve illustrates
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the law of demand.
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A $5 tax levied on the buyers of pants will cause the
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demand curve for pants to shift down by $5.
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Rational people make decisions at the margin by
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comparing marginal costs and marginal benefits.
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Suppose that in a particular market, the demand curve is highly elastic, and the supply curve is highly inelastic. If a tax is imposed in this market, then the
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sellers will bear a greater burden of the tax than the buyers
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After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?
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The marginal cost of going to Ft. Lauderdale decreases
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Suppose the number of buyers in a market decreases and a technological advancement occurs also. What would we expect to happen in the market?
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Equilibrium price would decrease, but the impact on equilibrium quantity would be ambiguous.
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The field of economics is traditionally divided into two broad subfields,
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national economics and international economics
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Other things equal, when the price of a good rises, the quantity demanded of the good falls, and when the price falls, the quantity demanded rises." This relationship between price and quantity demanded is referred to as
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the law of demand.
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Almost all economists agree that rent control
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adversely affects the availability and quality of housing.
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Advocates of the minimum wage
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emphasize the low annual incomes of those who work for the minimum wage.
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If something happens to alter the quantity supplied at any given price, then
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the supply curve shifts
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Consumer surplus equals the
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value to buyers minus the amount paid by buyers.
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Price controls
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can generate inequities of their own.
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The minimum wage was instituted to ensure workers
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a minimally adequate standard of living.
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Recall the reading "How OPEC Weaponized the Price of Oil Against U.S. Drillers". If you were to graph the supply and demand curves for U.S. crude oil drillers, the situation described in this article would best be represented as
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a shift in the quantity supplied
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A price ceiling is
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a legal maximum on the price at which a good can be sold.
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Communist countries worked under the premise that
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central planners were in the best position to determine the allocation of scarce resources in the economy.
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The price paid by buyers in a market will increase if the government
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(i) increases a binding price floor in that market.
(ii) increases a binding price ceiling in that market.
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In a competitive market, the quantity of a product produced and the price of the product are determined by
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all buyers and all sellers.
