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174 Cards in this Set
- Front
- Back
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Because it is impossible to have all that we want, people are forced to make_____.
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...choices
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Economics is a____ science.
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... social
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Economics is the study of how poeple make _____ to satisfy their _____.
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...choices; wants
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Macroeconomics deals with _______.
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....individual units
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A nation's unemployment level is analyzed in_________.
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...macroeconomics
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______ studies the causes and effects of inflation.
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....Macroeconomics
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Economists maintain that a member of a group usually attempts to make decisions that are in _____ interest.
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...her own
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The rationality assumption is that individuals _____ they are rational.
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...act as if
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Economic models are _____ representations of the real world.
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...simplified
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The ceteris paribus assumption permits us to consider______.
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...one thing at a time
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Ceteris paribus, payment of bonuses to physicians for pushing preventive health care gives physicians an incentive to ______.
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...suggest treatments to deter illnesses
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Economists maintain that incentives _____ important to decision making.
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...are
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Economists define self-interest______.
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...broadly
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Economists take the ____ as the unit of analysis.
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...individual
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Behavioral economics is an approach that assumes that individuals are _____ rational.
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...nearly
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Economic statements that are testable and are of an "if/then" nature are ______.
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...positive
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Economics is the study of how people think about economic phenomena.
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False
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Economists' definition of self-interest includes only the pursuit of material goods.
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False
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Macroeconomics deals with aggregates, or totals, of economic variables.
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True
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When economists attempt to predict the number of Web servers that an Internet bank will utilize, they are studying macroeconomics.
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False
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Economists maintain that people respond in a predictable way to economic incentives.
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True
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The rationality assumption is that individuals attempt, quite consciously, to make rational economic decisions, and will admit to it.
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False
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It is justifiable to criticize theories on the realism of the assumptions employed.
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False
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Households cannot be thought of as producers.
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False
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A statement of fact is an example of a positive statement.
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True
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Because economics is a science, economists do not make normative statements.
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False
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Economics is...
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...a social science
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Wants include desires for...
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...material possessions, love and power
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Which of the following areas of study is concerned, primarily, with microeconomics?
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...the personal computer industry
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Macroeconomics analysis deals with...
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...inflation
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Economists maintain that Ms. Chung will usually make decisions that promote the interests of...
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...herself
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Economic models...
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... use unrealistic assumptions, are seldom tested in laboratories, and are concerned with how people behave, not with how they think
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An economic model is justifiably criticized if...
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...it fails to predict
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According to the rationality assumption, people...
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...do not intentionally make decisions that would leave them worse off.
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Economics...
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...is concerned with how people respond to incentives
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As is true of a road map showing how a traveler can move about a geographic region, a model of economic behavior typically...
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...omits trivial details and emphasizes factors most relevant to the problem under consideration
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Which one of the following is a normative economic statement?
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...If price rises, the poor will be injured; therefore, price should not be permitted to rise.
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Which one of the following is a positive economic statement?
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... If minimum wage rates rise, then unemployment will rise
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Normative economic statements...
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...are subjective, value judgements
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Which one of the following is a normative economic statement?
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...Capital punishment is a morally wrong way to try to deter homicides.
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normative economics
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...nonscientific value judgements
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macroeconomics
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...study of economic aggregates
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self-interest
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...rational behavior
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positive economics
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...objective, scientific hypotheses
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microeconomics
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...study of individual behavior
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The factors of production include ______, ______, ___________,__________, and ________.
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...land; labor; physical capital; human capital; entrepeneurship
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People tend to specialize in those activites for which they have ______ advantage.
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...a comparative
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When people choose jobs that maximize their income, they are specializing according to their _______ advantage.
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...comparative
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If at a zero price quantity demanded exceeds quantity supplied for a good, that food is an ________; if at a zero price quantity supplied exceeds quantity demanded for a good, that good is an _________.
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...economic good; economic "bad"
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The________ of good A is the highest-valued alternative that must be sacrificed to attain it.
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...opportunity cost
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If the opportunity cost of additional units fo a good remains constant, the production possibilites curve will be _____; if the opportunity cost of additional units of a good rises, the production possibilities curve will be _____.
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...linear; bowed outward
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Because specialized resources are more suited to specific tasks, the opportunity cost of producing additional units of a specific good will_____.
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...rise
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If an economy is inefficient, its actual output combination will lie_____ the production possibilities curve.
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...inside
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Most individuals' needs exceed their wants.
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False
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Because resources are scarce, the goods that they produce are also scarce.
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True
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For most activities no opportunity cost exists.
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False
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If a production possibilities cure is lenear, the opportunity cost of producing additional units of a good rises.
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False
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At any given moment in time. it is impossible for an economy to be inside its production possibilities curve.
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False
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The opportunity cost to a motorist of the time that she is stuck in traffic is the next-highest value of the equivalent amount of time.
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True
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People have little incentive to specialize in jobs for which they have a comparative advantage
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False
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Economic growth shifts the production possibilities curve outward.
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True
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If the price to a specific user is zero, the good must be a noneconomic good
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False
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Evidence indicates that developing new technologies, specializing, and engaging in trade helped Home sapiens win out over the Neanderthals.
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True
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Because of scarcity...
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...people are forced to make choices, opportunity costs exist, and people face trade-offs
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Which one of the following is NOT considered to be "land"?
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capital
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Which one of the following words does not belong with the others?
-opportunity costs -economic "bad" -scarcity -economic good |
....economic "bad"
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Which statement concerning a production possibilites curve is NOT true?
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...it is usually linear
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When the production possibilities curve is bowed outward, it is because...
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...the relative cost of producing a good rises
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When nations and individuals specialize,
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...overall living standards rise,
trade and exchange increase, people because more vulnerable to changes in tastes and technology |
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When a nation expands its capital stock, it is usually true that...
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...it must forego output of some consumer goods in the present
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Ms. Boulware is the best lawyer and the best secretary in town.
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...she has an absolute advantage in both jobs
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From 2:00 to 4:00 on a Thurs afternoon, Ms. Stapleton, a fast-food worker who ears the min. wage, waits while her daughter is examined at a doc's office. Ms. Rodriguez, a successful marketing consultant who normally charges a fee of $100/hr and who recently has turned down several potential clients, spends exactly the same amount of time wating for her own daughter at the doc. The doc charges Mr. S $100 for the whole visit. Ms. R also pays the doc $100. we may conclude that during this 2-hr period...
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...Ms. R incurred a higher child-raising cost, bc she otherwise could have been earning consulting fees during this time
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absolute advantage...
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...ability to produce at a lower unit cost
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efficiency
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...specializing in one's comparative advantage
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trade-offs
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...production possibilities curve
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comparative advantage
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...specialization
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resource
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...capital
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economic good
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...society cannot get all it wants at a zero price
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inefficiency
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...inside PPC
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opportunity cost
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...highest-valued foregone alternative
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A_________ relates various possible prices to the quanitities demanded at each price, and a _____________ relates various prices to the quantities supplied at each price.
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... demand curve/schedule;
supply curve/ schedule |
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A change in quantity demanded is a ________ the demand curve; and a change in demand is a _______ the demand curve.
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...movement along;
shift in |
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At the intersection of the supply and demand curve, the quantity supplied equals the quantity demanded, and at that price an _________ exists; at a price above that intersection, quantity supplied exceeds quantity demanded and a _______ exists; at a price below that intersection, quantity demanded exceeds quantity supplied, and a _____ exists.
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...equilibrium;
surplus; shortage |
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The law of demand states that, other things being equal, more items are purchased at a ____ price and fewer are purchased at a ______ price.
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...lower;
higher |
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There is an _____ relationship between price and quantity demanded, and demand curves will be ______ sloped.
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... an inverse;
negatively |
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When the other determinants of demand change, the entire demand curve shifts; the five major cereris paribus conditions affecting demand are _______, _______, ________, _________, and ________.
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... income;
tastes and preferences; prices of related goods; expectations about future relative prices; number of buyers |
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If the demand for Internet access services rises, given the supply, then the equilibrium price of Internet access will______ and the equilibrium quantity of Internet access services purchased will _____.
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...rise;
rise |
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The law of supply relates prices to quantities supplied; in general, as price rises, quantity supplied ______. Therefore _____ relationship exisits and the supply curve is ____ sloped.
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... increases;
a direct; positively |
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The supply curve is positively sloped because as price rises, producers have an incentive to produce ______.
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...more
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When the determinants of supply change, the entire supply curve will shift; five major determinants of supply are _____, __________, ___________, ________ and ________.
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... prices of inputs;
technology; taxes and subsides; price expectations; number of firms in industry |
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Digital music downloads and iPod music players are ______ if the price of iPod music players rise, then the demand for digital downloads will ______.
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...complements;
fall |
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When the price of rewriteable CD drives rises, the demand for flash memory drivers rises; rewriteable CD drives and flash memory drives are ______.
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...substitutes
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Analogy: An excess quantity supplied is to a surplus as an __________ is to a shortage.
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...excess quantity demanded
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A rise in demand causes the demand curve to shift to the _____; an increase in quantity demanded occurs when there is a movement ____ the demand curve.
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...right;
down |
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By convention, economists plot ______ on the vertical axis and ____ on the horizontal axis.
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...price;
quantity |
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A demand schedule relates quantity demanded to quantity supplied, other things being constant.
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False
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A change in the quantity of cigs demanded results from a change in the price of cigs.
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True
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A graphical representation of a demand curve is called a demand schedule.
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False
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An increase in price leads to a leftward shift in demand and a rightward shift in supply.
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False
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An increase in the price of MP3 players causes a rise int he supply of MP3 players.
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False
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Buyers are concerned with absolute, not relative, prices.
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False
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As producers increase output in the short run, the cost of additional units of output tends to rise.
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True
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If the price of tennis racquets rises, the demand for tennis balls will tend to rise also.
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False
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If the price of butter rises, the demand for margarine will rise.
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True
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If price is below the equilibrium price, a shortage exists.
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True
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A demand schedule...
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... when graphed, is a demand curve.
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If the price of milk rises, other things being constant,
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... buyers will drink less milk
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Which one of the following will NOT occur if the price of widescreen digital tvs falls, other things being constant?
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...the demand for standard tvs will rise
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If the price of good A rises and the demand for good B rises, then A and B are
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...substitutes
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Consider a city that establishes a law prohibiting the use of lawn spinklers and limiting showers to 4 mins. Which one of the following is probably true in this city?
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...the price of water is below the equlibrium price.
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If the supply of gas rises, which a given demand, then...
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... the equilibrium quanitity of gas will increase
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If income falls and the demand for widescreen tvs falls, then widescreen tvs are a....
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... normal good
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If the demand for satellite Internet access servies increases, which a given supply, then
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...the equilibrium quantity and the equilibrium price of satellite Internet access services will rise.
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If a shortage exists at soem price, then
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... sellers can sell all they desire to sell at that price;
sellers have an incentive to raise the price; buyers cannot get all they want at that price |
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Which one of the following will lead to a rise in supply?
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...a technological improvement in the production of the good in question
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Whicho ne of the following probably will NOT lead to a fall in the demand for hamburgers?
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... an expectation that the price of hamburgers will rise in the future
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When a demand curve is derived,
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...quantity is in constant-quality units
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If a surplus exists at some price, then
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... sellers cannot sell all they wish to at that price
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excess quantity demanded
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...shortage
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supply curve
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...law of supply
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demand curve
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...relation between price and quantity demanded
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bread and butter
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...complements
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eyeglasses and contact lenses
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... substitutes
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demand curve for a normal good shifts to the left
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...community money income falls
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supply shifts to the left
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... raw material prices rise
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equilibrium price
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... market clearing price
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equilibrium quantity rises
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... population increases
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excess quantity supplied
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...surplus
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Resources are scarce; therefore, we cannot have all we want at a ____ price and there will be various ways in which people will ____ for resources.
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...zero
compete |
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If demand shifts to the left, given supply, then the equilibrium price will ___ and the eqililibrium quanitity will _____.
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...fall;
fall |
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If supply shifts to the right, given demand, then the equilibrium price will ____ and the equilibrium quantity will _______.
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...fall;
rise |
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If both demand and supply shift to the right, then the equilibrium price _____ and the equilibrium quantity ______.
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...is indeterminate;
will rise |
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If both demand and supply shift to the left, then the equilibrium price _____ and the equilibrium quantity_____.
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...is indeterminate;
will fall |
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If the demand for good A or resource A rises relative to its supply, A has become relatively ____ and its relative price will ____; if the demand for good B or resource B falls relative to its supply, then B has become relatively ____ and its relative price will ______.
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...more scarce;
rise; less scarce; fall |
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If the published price of good A remains constant, but its quality falls, then its relative price has actually _____. If the published price of good A remains constant, but people have to wait in line to get it, then the relative price of good A has actually _____, because people have an opportunity cost for their _________.
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...risen;
risen; time |
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If the demand for a good rises relative to its supply, that good becomes _____ and its relative price will ____; this leads to ______ in the quantity of the good supplied by producers of the item.
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... more scarce;
rise; an increase |
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Price performs a _____ function; inputs or outputs go to the _____ bidders, if people are free to exchange voluntarily in markets. If such economic freedoms do not exist, then other _____ determinants will allocate goods and services.
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... rationing;
highest; nonprice |
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Price controls that put a price ceilingo n goods and services create _____; and price floors create ______.
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... shortages;
surpluses |
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If governments place price ______ on goods, then black markets might emerge.
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...ceilings
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Rent control is a form of price______; rent control _____ the future supply of apt construction, ___ tenant mobility, ______ the quality of the existing stocks of apts, and hurts __________.
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... ceiling;
reduces; reduces; causes a deterioration in; landlords and low income apt hunters |
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By prohibiting the sale and use of tobacco products, the gov't would cause the supply of cigs to shift to the ___, make cigs _____ scarce, and cause their relative price to _____.
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...left;
more; rise |
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Import quotas, licensing arrangements, and outright bans on specific goods are forms of gov't _____ restrictions.
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...quantity
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An import quota tends to ____ the price to consumers.
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...raise
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If governments put price floors on agricultural goods, a _____ will result.
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...surplus
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If supply shifts to the left, given demand, then the equilibrium price and the equilibrium quantity will rise.
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False
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If demand shifts to the left, given supply, then the equilibrium price and the equilibrium quantity will fall.
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True
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If both supply and demand shift to the right, then the equilibrium price and equilibrium quantity are indeterminate.
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False
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If the supply of good A increases relative to its demand, then good A is now moer scare, and its relative price will rise.
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False
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If the published price is constant, but it takes consumers longer to wait in lines, the total price has really risen.
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True
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If markets are flexible and no markets restrictions exist, then surpluses and shortages will not occur, even in the short run.
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False
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Minimum wage laws are a form of price ceiling.
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False
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Rent controls help the poor who are looking for apartments, because rents are lower.
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False
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Black markets, in effect, cause prices to rise for certain buyers.
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True
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Agricultural surpluses arise when governments put price ceilings on such goods.
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False
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Because resources are scarce,
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...-buyers compete with buyers for outputs;
-there must be some method for rationing goods; -people cannot have all they want at a zero price. |
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If markets are free and prices are flexible,
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...shortages and surpluses eventually disappear.
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If demand shifts to the right (given supply), then equilibrium...
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... quantity will rise
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If supply shifts to the right (given demand), then equilibrium...
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... quantity will rise
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If both supply and demand shift to the left, then equilibrium...
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...price is indeterminate and equilibrium quantity falls
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If the demand for good A falls relative to its supply, then
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...good A is now relatively less scarce
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If the demand for good B rises relative to its supply, then
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... -good B is not relatively more scarce;
-the relative price of good B will rise; -the total price of good B will rise, even if good B is price inflexible |
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If the demand for good A rises relative to its supply, and markets are price flexible, then...
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...no shortage of A can exist in the long run
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If the demand for good A rises relative to its supply, and markets are price inflexible, then...
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...-a shortage can exist in the short run;
-a shortage can exist in the long run; -the published price of A might remain constant, but its total price rises |
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A simultaneous increase in the market clearing price of cheese and decrease in the equilibrium quantity of cheese could result from...
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...-a higher price of beef that induces farmers to sell dairy cows for use in beef production, with the milk produced by dairy cows being a key input in cheese production;
-a higher price of hormones used to stimulate production of milk in dairy cows, with milk being a key input in the production of cheese; -any factor that reduces the supply of cheese |
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Which one of the following can influence how a society rations a specific good?
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...-price system that rations to the highest bidder;
-political power; -religion |
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Prolonged shortages arise if...
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...prices are not allowed to rise to equilibrium
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Black markets may arise if...
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...price ceilings exist
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Rent controls...
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...make tenants less mobile
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If an effective minimum wage is imposed, then...
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...-more workers will be unable to find jobs;
-the quantity of labor demanded will fall; -some workers will move to sectors not covered by minimum wages |
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Prolonged agricultural surpluses can arise if governments...
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...-set price above equilibrium;
-institute price floors. or price supports; -purchase the excess supply |
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price floor
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...minimum wage law
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price ceiling
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...rent control
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Scarce resources
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...buyer competition
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nonprice rationing
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...black market, long lines
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