Economics

Front 1

One of its most basic economic problems is that society

Back 1

must decide how to allocate available resources

Front 2

The process of analyzing the additional or incremental costs or benefits arising from a choice or decision is called

Back 2

marginalism

Front 3

You purchased a ticket to a concert for $30 a month ago. Last week someone invited you to a party on the same night as the concert. You would much rather go to the party than the concert. You have tried unsuccessfully to sell the concert ticket. Which of the following statements regarding this situation is correct?

Back 3

The $30 you paid for the concert ticket should be irrelevant in your decision making, because it is a sunk cost

Front 4

You have $100 in savings. You could earn four percent interest if you put the $100 in a bank savings account for a year. What is your opportunity cost if you put the $100 under the pillow of your bed instead?

Back 4

$4

Front 5

The ________ is NOT an opportunity cost of attending college.

Back 5

cost of the food that you consume while you are attending college

Front 6

You own The Wizard of Oz on DVD. The opportunity cost of watching this DVD for the second time

Back 6

is the value of the alternative use of the time you spend watching the DVD

Front 7

A market in which profit opportunities are eliminated almost instantaneously is a(n) ________ market

Back 7

efficient

Front 8

In an efficient market

Back 8

profit opportunities are eliminated almost instantaneously

Front 9

________ focuses on the prices of individual goods and services and ________ focuses on the rate of inflation.

Back 9

Microeconomics; macroeconomics

Front 10

Positive economics is an approach to economics that

Back 10

describes the economy and how it works

Front 11

If the price of a product falls, then the quantity demanded of that product will rise. This is best described as a ________ statement

Back 11

positive

Front 12

Which of the following is a positive question?

Back 12

Will the level of teenage unemployment increase if the minimum wage is increased?

Front 13

An example of descriptive economics is when an economist

Back 13

collects data on the wage rates and employment levels in the steel industry

Front 14

To isolate the impact of one single factor, economists invoke the assumption of

Back 14

ceteris paribus

Front 15

Voluntary exchange is efficient when the two trading parties are ________ the exchange than they were ________ the exchange.

Back 15

better off after; before

Front 16

A government policy that tries to minimize variations in aggregate output can best be described as trying to achieve economic

Back 16

stability

Front 17

In an efficient economy

Back 17

what consumers want is produced at the least possible cost.

Front 18

The process by which resources are transformed into useful forms is

Back 18

production

Front 19

A(n) ________ is an input into the production process while a(n) ________ is a useable product

Back 19

factor of production; output

Front 20

According to the theory of comparative advantage, specialization and free trade will benefit

Back 20

all trading parties, even when some are absolutely more efficient producers than others

Front 21

as economists use the term, an act of ʺinvestmentʺ occurs when a(n)

Back 21

truck manufacturer builds a new plant to make more trucks

Front 22

The process of using resources to produce new capital is

Back 22

investment

Front 23

The opportunity cost of investment in capital is forgone present consumption because

Back 23

resources are scarce

Front 24

Production inefficiency occurs when an economy is producing

Back 24

either when an economy is producing inside its production possibility frontier or when the economy is producing the wrong combination of goods on its production possibility frontier.

Front 25

A society can produce two goods: bread and cookies. The societyʹs production possibility frontier is negatively sloped andʺbowed outwardʺ"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

Back 25

increases

Front 26

The marginal rate of transformation is the

Back 26

slope of the production possibility frontier

Front 27

As an economy produces more of a good, the opportunity costs of producing it increases. This most likely occurs because

Back 27

resources are not equally well suited to producing all goods and as more of a good is produced it is necessary to use resources less well suited to the production of that good

Front 28

During the war in Iraq some Iraqi oil refineries were destroyed. This would best be represented by a

Back 28

shift of Iraq's production possibility frontier toward the origin.

Front 29

For an economy to produce at a point beyond its current ppf, the economy must

Back 29

increase its resource base

Front 30

An economy in which individual people and firms pursue their own self-interest without any central direction or regulation is a(n) ________ economy

Back 30

laissez-faire

Front 31

In a laissez-faire economy ________ what gets produced, how it is produced, and who gets it.

Back 31

buyer and seller behavior determines

Front 32

Consumer sovereignty is

Back 32

the idea that consumers determine what is produced in the economy through their demands.

Front 33

Households are on the ________ side of input (factor) markets and on the ________ side of output (product) markets

Back 33

supply; demand

Front 34

________ causes a shift in the demand curve for compact discs

Back 34

A change in the price of prerecorded cassette tapes

Front 35

Which of the following is held constant along a given demand curve?

Back 35

income

Front 36

The ʺlaw of demandʺ implies that as prices ________ increases

Back 36

fall, quantity demanded

Front 37

As an individual consumes more of a product within a given period of time, it is likely that each additional unit consumed will yield

Back 37

successively less satisfaction.

Front 38

As long as households have limited incomes and wealth, all ________ curves will intersect the ________ axis.

Back 38

demand; price

Front 39

If a buyer's demand for chicken thighs decreases as her income increases, chicken thighs for her are a(n) ________ good

Back 39

inferior

Front 40

When the decrease in the price of one good causes the demand for another good to decrease, the goods are

Back 40

substitutes

Front 41

A change in the price of a good or service leads to a change in ________ that leads to a ________ the demand curve.

Back 41

quantity demanded; movement along

Front 42

A frozen food manufacturer can produce either pizzas or calzones. As the result of a rise in the price of calzones, the firm produces more calzones and fewer pizzas. An economist would explain this by saying

Back 42

there has been an increase in the quantity supplied of calzones and a decrease in the supply of pizza

Front 43

Presently the tire market is unregulated and characterized by excess supply. You accurately predict that the price of tires will ________, the quantity demanded will ________, and the quantity supplied will ________.

Back 43

fall; rise; fall

Front 44

Improvements in technology have reduced the cost of producing personal computers. As a result, you accurately predict that in the market for personal computers, there will be a(n)

Back 44

increase in the supply of personal computers, a decrease in the price, and an increase in the quantity demanded

Front 45

Apples and oranges are substitute goods. A freeze in Florida destroyed a good portion of the orange crop. Ceteris paribus, the price of

Back 45

both apples and oranges will rise

Front 46

The adjustment of ________ is the rationing mechanism in free markets

Back 46

price

Front 47

A price ceiling is

Back 47

a maximum price set by government that sellers may charge for a good

Front 48

If the equilibrium price of gasoline is $2.00 per gallon and the government will not allow oil companies to charge more than $1.00 per gallon of gasoline, which of the following will happen?

Back 48

A nonprice rationing system such as ration coupons must be used to ration the available supply of gasoline

Front 49

If government sets a price floor below an equilibrium price,

Back 49

the floor will have no effect on the market

Front 50

People scalping tickets for the Super Bowl will be successful

Back 50

when the price set by the National Football League is less than the market equilibrium price

Front 51

Consider a market that has many buyers but only one seller. Assume the seller has only one unit of the product to sell. Then the market demand curve will be ________ and the seller's supply curve will be ________.

Back 51

downward sloping; vertical

Front 52

The difference between the minimum amount a firm is willing to accept for a good and its current market price is known as

Back 52

producer surplus

Front 53

You would be willing to pay a maximum of $100 to attend a football game, and you can buy a ticket for $30. Your consumer surplus is

Back 53

$70

Front 54

When the equilibrium price of ginger ale increases while your demand schedule for ginger ale remains unchanged, then your consumer surplus

Back 54

decreases

Front 55

When buyer and seller trade to the market equilibrium quantity, they

Back 55

minimize deadweight loss

Front 56

There will be a deadweight loss in a market if

Back 56

the actual quantity traded is other than the market equilibrium quantity

Front 57

When the government sets a price floor above the equilibrium price in a market, consumer surplus will

Back 57

fall

Front 58

Assume the government imposes a price ceiling on sugar that is ABOVE the market equilibrium price. You are asked to suggest a rationing scheme that will minimize the misallocation of resources. You suggest

Back 58

that no rationing system will be necessary