PACE15MICRO
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the study of choice under the conditions of scarcity
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Economics is...
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scarcity of time and money
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People and organizations have to make choices about how to allocate time and money because of...
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both scarce time and scarce spending power
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Under capitalism, individuals are forced to make choices due to...
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FALSE
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Land, labor, and money are the three categories of economic resources.
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every society must choose among competing uses of available resources
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Due to a scarcity of resources,
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households, business firms, governments, and the nation as a whole
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In every economic sstem, scarcity imposes limitations on...
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households, business firms, and governments
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The three groups of decision makers in the economy are...
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FALSE
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Macroeconomic topics include the overall unemployment rate in the United States and the rate of inflation.
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FALSE
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Macroeconomics focuses on the behavior of economic agents such as the consumer, a business firm, or a specific market.
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how producers and consumers interact in individual markets
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Microeconomics deals with which of the following?
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"Central Bank Raises Interest Rates"
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Suppose that the following headlines appeared in a newspaper. Which would most clearly represent a macroeconomic issue?
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an increase in the price of a Ford Taurus
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Which would most likely be a microeconomics topic?
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TRUE
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If the president of Chile commented that "the crime rate in Chile is currently too high," this would be an example of a normative statement.
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FALSE
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Economists tend to disagree primarily over positive statements about the economy.
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POSITIVE
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"The Consumer Price Index increased by 4.2 percent in the first quarter of this year." What kind of statement is this?
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the Philadelphia Phillies need a better manager
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Which of the following is a normative statement?
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when per capita income falls, fewer meals are consumed at restaurants
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Which of the following is a positive statement?
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a normative statement
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"Senior citizens deserve an income that will allow them to live in comfort for their remaining years." This is...
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a positive statement
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A newspaper headline announces that "more college graduates than ever are in the labor force." This is an example of...
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TRUE
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Economic models do not have to completely describe every aspect in the economy in order to be useful.
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3 dimensional objects, mathematical equations, words, diagrams ALL OF THEM
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Economic models come in the form of
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simplifying assumption
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Consider an economic model designed to analyze the purchasing decisions of households. An assumption that a household chooses between only two goods would be an example of...
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TRUE
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Suppose your friends take you out for dinner on your birthday and you have a much better time than you would have doing anything else. There is still an opportunity cost, even though they will not let you pay for anything.
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FALSE
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Opportunity costs arise because of resource scarcity.
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May include both monetary costs and forgone income
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The opportunity cost of a particular activity...
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the income her could have earned at the printed circuit board factory plus the direct cost of attending college here.
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After graduating high school, Steve had three choices, listed in the order of preference: (1) matriculate at our campus, (2) work in a printed circuit board factory, (3) attend a rival college. His opportunity cost of going to college here includes which of the following?
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it would increase the opportunity cost of becoming a broadcaster
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A professional basketball players' union negotiates a contract that dramatically increases all players' salaries. How would this influence the opportunity cost for a player who was considering giving up basketball to pursue a career in broadcasting?
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value of the next most valuable alternative activity.
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Assume that Kelly's various possible activities are mutually exclusive. The opportunity cost from choosing one activity equals the...
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$30
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Carl is considering attending a concert with a ticket price of $35. He estimates that the cost of driving to the concert and parking there will be an additional $20. In order to attend the concert, Carl will have to take off from is part-time job. He estimates that he will lose 5 hours at work, at a wage of $6 an hour. CArl's opportunity cost of attending the concert equals
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crowded and understaffed discount stores impose high TIME costs
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High income people will sometimes pay higher prices at convenience stores for goods that are available at discount stores. They do this because...
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resources must be shifted away from producing food in order to product another
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Opportunity costs arise in production because...
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1 word
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In one hour, George can fix 4 flat tires or type 200 words. His opportunity cost of fixing a flat tire is
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some resources are being wasted
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If the economy is producing a combination of good inside its production possibilities frontier, then...
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the production possibilities frontier will shift outward
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when there is an improvement in technology, holding all else constant,
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economic growth
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If an economy's production possibilities frontier shifted to the right, this would illustrate
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available resources are being used efficiently
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Along society's production possibilities frontier,
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most resources are better suited to producing some goods than others
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The law of increasing opportunity cost is based on the idea that...
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the cost of producing an additional unit of health care will rise
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If a society is on its production possibilities frontier, and decides to produce more healthcare,
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The income he could have earned at the printed circuit board factory plus the direct cost of attending college here (tuition, textbooks, etc.)
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After graduating from high school, Steve had three choices, listed in order of preference : (1)study economics at Iowa State University, (2) work in a printed circuit board factory, or (3) attend a rival college. His opportunity cost of going to college here includes which of the following?
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command, market, and socialism
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Three primary systems for allocating resources are...
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TRUE
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Different types of washing-up liquid are likely to have a positive cross-elasticity of demand.
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FALSE
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A rise in the price of a product is likely to raise total revenue where price elasticity of demand is unit elastic
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TRUE
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If the price of a product is unchanged, a rightward shift in the firm's demand curve will increase the consumer surplus available.
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FALSE
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A A government seeking to raise revenue should increase taxes on products with relatively elastic demands.
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TRUE
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A positive income elasticity of demand will indicate that a rise in real income will shift the demand curve to the right (increase)
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FALSE
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Price elasticity of demand refers to shifts in the demand curve for a product
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TRUE
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The "Veblen effect," supports a downward-sloping demand curve.
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TRUE
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We might expect the income elasticity of demand for health-related service to be positive in sign and relatively high in size.
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FALSE
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Tennis rackets and tennis balls are likely to have a positive cross-elasticity of demand.
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TRUE
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We might expect a fall in price for a product with a relatively price elastic demand to raise total revenue.
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marginal utility is 0
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Total utility will be maximum when:
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Raise the price of electricity by 12.5%
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The government wants to reduce the consumption of electricity by 5%. The price elasticity of demand for electricity is 00.4. The government should...
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-1
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At the price of $11.00, quantity demanded is 90; and at a price of $9.00, quantity demanded is 110. The price of elasticity of demand is:
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an income-neutral good.
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If the income elasticity of a demand for a good is negative, then the good is...
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Less elastic; more elastic
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THe bus fare charged by the local bus company is $2.00 during the morning rush hour, bus only $1.50 during the early afternoon. This can be explained by the fact that the demand for bus rides during the morning is ____; but during the early afternoon the demand for bus rides is _____.
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becomes more elastic
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As you move down a straight-line-downward-sloping demand curve, the price elasticity of demand:
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INELASTIC
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A university decides to raise tuition fees to increase total revenue it receives from students. This strategy will work if the demand for education at that university is:
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FALSE
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Demand elasticity of college education is estimated to be -1.25. University A is raising it's tuition by 15% At that rate, next year enrollment will rise and tuition revenue will be up.
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FALSE
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Given the information in the previous question, tuition revenue will rise by 18.6%
