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### 23 Cards in this Set

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 The relationship between quantity demanded and price is ___________ and the relationsihp between quantity supplied and price is _____________. a.) Direct; direct b.) Inverse; direct c.) Inverse; inverse d.) Direct; inverse b.) Inverse; direct It has been observed that I-Pods have been increasing in popularity in recent weeks. When an economist says that demand for such items has increased, she means that: a.) consumers are now more willing and able to buy these items at each and every price. b.) the price of these items has fallen and as a result, consumers are purchasing more of them c.) the demand curve for these items has shifted to the left. d.) the price of these items has risen and as a result, consumers are purchasing more of them a.) consumers are now more willing and able to buy these items at each and every price. A production possibilities curve that is concave to the origin reflects all of the following except. a.) the "law of variable proportions" b.) the "law of decreasing costs" c.) the "law of diminishing returns" d.) the "law of increasing costs" b.) the "law of decreasing costs" The elasticity of demand. a.) will be the same at each price-quantity combination along a single demand curve. b.) tends to be inelastic in high-price ranges and inelastic in low-price ranges c.) tends to be elastic in high-price ranges and inelastic in low-price ranges d.) is equal to zero for perfectly elastic demand curve c.) tends to be elastic in high-price ranges and inelastic in low-price ranges The distribution question that each economy has had to answer is a.) how many goods/services to produce b.) how to produce goods/services c.) who will get the goods/services produced d.) what good/services to produce c.) who will get the goods/services produced If the supply of a product decreases and the dmand for that product simultaneously increases we can conclude. a.) equill. quantity must decrease, but equill. price may either rise, fall, or remain unchanged. b.) equill. price and equill. quantity must both decline c.) equill price and equill. quanty must both rise. d.) equill price must rise and requill quantity must fall. e.) equill price must rise but equill quantity may either rise, fall, or remain unchanged. e.) equill price must rise but equill quantity may either rise, fall, or remain unchanged. The demand of a product is said to be elastic if: a.) a drop in price is accompanied by an increase in the quantity demanded b.) the elasticity coefficient is less than one c.) consumers are largely responsive to a per unit price change d.) a drop in price is accompanied by a decrease in the quantity demanded. c.) consumers are largely responsive to a per unit price change If the government set a price floor below the equill price, the ultimate effect of such an action int he marketplace would: a.) cause a shortage as the quantity demanded will exceed the quantity supplied at the floor price. b.) create an excess demand in this market c.) cuase a surplus, as the quantity demanded will exceed the quantity demanded at the floor price d.) allow the market price to remain at equilibrium d.) allow the market price to remain at equilibrium If an economist says that a good is price elastic, then price elasticity is: a.) greater than 1.0 b.) less then 1.0 c.) equal to 1.0 d.) greater than 0.0 a.) greater than 1.0 A change in the quantity demanded of a product is: a.) caused by a change in the buyers' income b.) caused by a change in the number of buyers in the market c.) represented by a movement along the product demand curve d.) represented by a shift of the product demand curve to the right or left. c.) represented by a movement along the product demand curve The following statement recently appeared in a college newspaper: "The demand for parking space on this campus is very high. If we were to raise the price of parking stickers, we would then decrease the quantity demanded" This statement: a.) confuses a change in quantity demanded with a change in demand b.) confuses a change in quantity demanded with a change in demand c.) confuses a change in demand with a shift of the entire demand curve d.) is correct as stated d.) is correct as stated In general, the more that an economy invests in capital goods this year: a.) the more capital goods only it will be capable of producing next year b.) the more consumption goods only it will be capable of producing next year c.) the greater the potential for economic growth of all goods next year d.) the more consumption goods it will be capable of producing this year c.) the greater the potential for economic growth of all goods next year The importance of "ceterus parabus" in the definition of demand is that it allows us to: a.) simultaneously examine more than one of the determinants of demand at a time b.) examine only movements along a single demand curve c.) examine only shifts of the entire demand curve d.) examine only one of the determinants of demand at a time d.) examine only one of the determinants of demand at a time In the city of St. Louis, firewood and old economics textbooks are consided substitue goods. If the price of firewood beings to decrease, the result would be: a.) that the quantity of firewood demanded would decrease and the equilibrium price of old economics textbooks would increase b.) that the quantity of firewood demanded would increase and the equilibrium price of old economics textbooks would increase. c.) that the quantity of firewood demanded would increase and the equilibrium price of old economics textbooks would decrease. d.) that the demand for firewood would increase and the equillibrium price of old economics textbooks would decrease. c.) that the quantity of firewood demanded would increase and the equilibrium price of old economics textbooks would decrease. To an economist, the concept of scarcity of a good means that: a.) there is a shortage or insufficient supply of a good at the existing price. b.) increasing production will not expand the availability of goods. c.) the demand for a good at zero cost exceeds the supply that is freely available from nature. d.) people would want to purchase more of the good regardless of price. c.) the demand for a good at zero cost exceeds the supply that is freely available from nature. Which of the following would NOT shift the production possibilities frontier? a.) an increase in worker training b.) a war that destoryed buildings c.) a technological improvement that improved fuel efficiency in cars d.) a decrease in the size of the labor force e.) a change to a more inefficient production process. e.) a change to a more inefficient production process. Which of the following statements about markets is false? a.) markets are used to allocate resources in the market systems b.) markets can vary in geographical size c.) prices are used to allocate goods in markets d.) markets are used to allocate resources in centrally-planned socialists economic systems e.) supply and demand explains how prices are set in competitive markets d.) markets are used to allocate resources in centrally-planned socialists economic systems If coffee consumers are in a state o equilibrium and then they suddenly experienced and increase in their income levels and coffee is considered a normal good to them, which of the following statements would correctly describe the situation? 1. the equil. price has increased 2. the equil. price has decreaed 3. the equil price is unchanged 4. the equil quantity has increased 5. the equil quantity has decreased 6. the equil is unchanged. a.) statements 1 and 4 b.) statements 2 and 5 c.) statements 1 and 6 d.) statements 3 and 5 e.) statements 1 and 6 c.) statements 1 and 6 e.) statements 1 and 6 The fallacy of "composition" states that: a.) comparisons between two or more categories may be misleading b.) generalizations which ar accurate at the level of microeconomics may not necessarily be accurate at the level of macroeconomics c.) the branches of positive and normative economics are mutually exclusive d.) because event A preceds event B, A is necessarily the cause of B. b.) generalizations which ar accurate at the level of microeconomics may not necessarily be accurate at the level of macroeconomics A society can produce 2 goods: bread and cookies. The society's production possibility frontier is negatively sloped and "bowed outwared" from the origin. As this society moves down its production possibility frontier producing more and more units of cookies, the opportunity cost of producing cookies, a.) decreases b.) remains constant c.) increases d.) could decrease or increase depending on the technology. c.) increases According to the law of comparative advantange, an individual should produce a good if he or she: a.) can produce it with the fewest resources b.) has the lowest opportunity cost of producing the good regardless of wheter it is produced with the fewest resources c.) has the greast opportunity cost of producing the good regardless of whether it is produced with the fewest resources d.) has the greatest opportunity cost of producing the good and produces it with the fewest resources b.) has the lowest opportunity cost of producing the good regardless of wheter it is produced with the fewest resources The "Law of Diminishing Returns" would be reflected on which of the following production possibilities diagrams. a.) convex curve b.) concave curve c.) linear curve d.) all of the above curves show diminishing returns b.) concave curve Who is the first economist? Adam Smith