Terms in this set (45)
Which of the following is the best definition of economics?
The study of how individuals and societies choose to use scarce resources that nature and previous generations have provided.
Scarcity is a problem
because human wants are unlimited while resources are limited.
which of the following is a question answered with normative economic reasoning?
Should the college increase tuition to fund its athletic programs.
Deciding if a power company will generate electricity from wind power or coal answers the economic question of
how will the products be produced.
Microeconomics is best described as the study of
the choices made by individual households, firms, and governments.
Which of the following is a micro economic question
is it sensible for a company to reimburse its employees for college tuition.
Jacinda quit her job as a blackjack dealer where she made $42,000 a year to start her own florist business. Her business expenses are $14,000 per year on rent, $21,000 per year on supplies, and $9,000 per year on part time help. As for her personal expenses, her apartment costs her $12,000 per year and her personal bills are an extra $6,000 per year. What is Jacinda`s opportunity cost of running the business.
You have an hour between your economics and math classes. What is the opportunity cost of that time if you use it to complete your math homework instead of your economics homework.
the economics homework you could have completed.
A production possibilities curve indicated that when resources are being used efficently
You can produce more of one good only if you produce less of another good.
On a production possibilities curve, a change from economic inefficiency to economic efficiency is obtained by.
movement from a point inside the curve to a point on the curve.
Because resources are scarce, the opportunity cost of investment in capital is
foregone present consumption.
According to the principle of diminishing returns, if the number of workers is increased beyond the point of diminishing returns, then the additional worker
increased total output by less than the amount of previous workers
A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation for this finding.
the principle of diminishing returns
The marginal principle implies that an individual should produce or consume where
marginal benefit equals marginal cost
When referring to marginal changes, the economic focus is on
small or incremental changes
People acting in their own self interest is the basis off the
principle of voluntary exchange.
The real value of money
reflects the purchasing power of money
If real salaries decrease but nominal salaries do not, this means that
prices have risen
Assume that coffee and tea are substitutes. When the price of coffee increases
the demand for tea increases.
Suppose that consumers expect that the price of a product will increase in the future. The result is that
the current demand for the product increases.
If the population increases, the market demand for most products will
The price of DVD`s has fallen dramatically. Which of the following is likely to happen?
The quantity supplied of DVD`s will decrease.
An increase in the price of gasoline shifts the demand for tires to the
left, because gasoline and tires are normally used together.
Flour is used to produce bread. If the price of flour decreases the
supply of bread increases.
If a technological advance makes it possible to produce computers at a lower cost
the supply of computers increases.
Suppose that drought kills half of wheat crop. As a result, the equilibrium quantity of bread would _____, and the equilibrium price of bread would _____.
Which of the following would raise both the equilibrium price and the equilibrium quantity of strawberries
an increase in the demand for strawberries.
Which of the following will occur if there is an increase in the supply of and decrease in the demand for cassette tapes.
A decrease in equilibrium price.
Suppose that in 2012, 3 million plasma TV`s were purchased at $2,200 each, while in 2013, 4 million plasma TV`s were purchased at $1,750 each. What might have caused this change?
There was an advance in plasma TV manufacturing technology.
A good is said to be inferior if
it has a negative income elasticity of demand.
During an economic downturn when consumer incomes fall, the demand for ice cream cones increases and the demand for chocolate cheesecake decreases. This implies ice cream cones
are an inferior good and chocolate cheesecake is a normal good.
If the supply curve is a vertical line, it means that
regardless of price, the quantity supplied is a constant
In the event of excess demand in the coffee market
the price of coffee will increase.
When consumers are willing to buy more than producers are willing to sell
there is an excess demand for the product in the market.
Suppose that the quantity supplied of cars exceeds the quantity of cars demanded. We would expect that
the price of cars will decrease
If the quantity supplied of gasoline exceeds the quantity demanded when gasoline is $2.35 a gallon, and the quantity demanded exceeds the quantity supplied at $2.25 a gallon, the equilibrium price of gasoline is
between $2.25 and $2.35
Ceteris Paribus, if more alternative forms of energy become available, we would expect the demand for gasoline to become.
The price elasticity of demand for higher education is about 1.4. A 5% increase in tuition would lead to a
decrease in enrollment by 7%
An economist estimates that .58 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could
raise the price of disposable diapers.
Suppose that the elasticity of demand for newspapers is 2 and quantity demanded decreases by %40. What must the percentage increase in price have been.
Suppose that the elasticity of demand for chocolate is 3 and price decreases by 20% by what percentage will quantity demanded for chocolate increase.
Suppose that the elasticity of demand for a product is .5. What will happen to total revenue as a firm increases the price.
total revenue will increase
The bus fare charged by the mass transit authority is $1.25 during the morning rush, but only $1.00 during the early afternoon. This can be explained by the fact that the demand for bus rides during the morning rush hour is ______ but the demand in the early afternoon for bus rides is ________.
more elastic, less elastic
If quantity demanded of a good falls by 2% when income falls by 10%, the goods demand is
A 10 percent rise in the price of housing reduces the quantity demanded of housing by 4 percent. We conclude that the demand for housing is
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