Pre-Test – Flashcards
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It is possible for an economy to increase its production of both goods if the economy
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moves from a situation of inefficient production to a situation of efficient production.
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For an economist, the idea of making assumptions is regarded generally as a
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good idea, since doing so helps to simplify the complex world and make it easier to understand.
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Total output in an economy increases when each person specializes because
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each person spends more time producing that product in which he or she has a comparative advantage.
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The law of demand states that, other things equal,
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when the price of a good falls, the quantity demanded of the good rises.
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Which of the following demonstrates the law of demand?
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Dave buys more donuts at $0.25 per donut than at $0.50 per donut, other things equal.
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Which of the following demonstrates the law of supply?
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When ketchup prices rose, ketchup sellers increased their quantity supplied of ketchup.
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The presence of a price control in a market for a good or service usually is an indication that
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the usual forces of supply and demand were not able to establish an equilibrium price in that market.
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When a binding price ceiling is imposed on a market to benefit buyers,
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some buyers will not be able to buy any amount of the good.
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If a price floor is not binding, then
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there will be no effect on the market price or quantity sold.
