Test 1 Flashcards

Terms Definitions
If the cost of producing a product increases, then:
the supply of the product will decrease
The existence of a shortage in a market will cause:
market price to rise and quantity supplied to decrease
Which of the follow is correct?
1. economics is a social science that studies the tradeoffs we are forced to make because of scarcity2. anytime you have to decide which action to take you are facing an economic tradeoff.3. every individual, no matter how rich or poor, is faced with making tradeoffs.
Specializing in production of a good or service in which one has a comparative advantage leads to:
a consumption possibilities frontier for the producing unit that is increased beyond its production possibilities frontier.
What does the adjective "marginal" mean in economics?
additional or extra
The slope or rate of change along a production possibilities frontier:
measures the opportunity cost of producing one more unit of a good.
Among the characteristics of the circular flow in a market economy is:
1. households spend earnings from resource sales on goods and services in the product market.2. firms hire resources sold by households in the factor market3. firms sell good and services in the product market
An example of something that is NOT a factor of production is:
$1,000
The basic economic problem of scarcity:
has always existed and will continue to exist
The cost of producing one more unit of a good is:
marginal cost
Demand shows:
the quantities of a good that buyers will buy at all possible prices
After a city imposes a rent control law:
landlords reduce the quantity of apartments offered for rent.
If the marginal costs of a TV are $200, the firm should produce and sell this TV:
until marginal benefits just equal $200.
When the market price is artificially kept too high, then:
a deadweight loss is incurred.
Which of the following is a positive economic statement?
scarcity causes people to have to make trade-offs.
Shortly after the price of beef increases, the price of chicken increases also because:
the good are substitutes and the higher price of beef increases demand for chicken.
Which of the following is an example of an economic trade-off that a profit-making firm has to make?
1. whether it is cheaper for a firm to produce with more machines or more workers2. whether a firm should produce more of its product3. whether it is cheaper for a firm to outsource the production of a good or service
If society decides it wants more of one good and there is some unemployment:
it can achieve this without giving up another good by employing more resources
Which of the following is a positive economic statement?
Scarcity causes people to have to make trade-offs
The attainable production points on a production possibilities curve are:
The points along and inside the production possibility frontier
Which of the following forces productive efficiency?
competition among sellers
Economic surplus is equal to:
consumers surplus plus producers surplus
Which of the following is a result of a market economy?
voluntary exchange
If you would have been willing to pay $10 for a pizza and you only had to pay $8, what does the difference between $10 and $8 represent?
marginal benefit
Economics is the study of:
the choices people make to attain their goals, given their scarce resources
Which of the following would NOT increase the demand for coffee?
A drop in the price of coffee
When marginal benefit in a market is equal to $75 while marginal cost is equal to $54, the economic efficiency:
has not been achieved; more needs to be produced
A worker is hired in a:
factor market
A production situation with constant opportunity cost would be graphed as:
a negatively sloped straight line
If demand increase and supply decreases, then equilibrium:
price rises
A price floor invariably creates a surplus of the commodity affected, which means:
at the price floor, quantity supplied is greater than quantity demanted
Human capital is:
the accumulated skills and training workers have
A surplus in a market means:
quantity supplied is greater than quantity demanded
Two-dimensional graphs have a horizontal and a vertical axis and are used in economics to illustrate:
relationships between two economic variables
If the demand for good X increases, when the price of good Y decreases, then:
Goods X and Y are complements
Economists assume that:
humans are rational and respond to incentives
If a nation's production possibilities frontier moves outward, this represents:
economic growth
If a market is in equilibrium:
quantity supplied equals quantity demanded
The phrase ceteris paribus means:
all else equal
A producer's supply curve shows:
the minimum price at which the producer will sell each quantity
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Term:
Definition:
Definition:

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