Microeconomics Ch 1-4

In most societies, resources are allocated by a. a single central planner b. a small number of central planners c. those firms that use resources to provide goods and services d. the combined actions of millions of households and firms

When a society cannot produce all the goods and services people with to have, it is said that the economy is experiencing a. scarcity b. surpluses c. inefficiencies d. inequalities

Which of the following is not and example of scarcity? a. Only some people can afford to buy a Ferrari b. Every individual in society cannot attain the highest standard of living to which he or she might aspire c. Doug has an unlimited supply of apples in his orchard d. Each member of a household cannot get everything he or she wants

The phrase "no such thing as a free lunch" means a. people must face tradeoffs b. rational people think at the margin c. people respond to incentives d. trade can make everyone better off

Efficiency means that a. society is conserving resources in order to save them for the future b. society's goods and services are distributed equally among society's members c. society's goods and services are distributed fairly, though not necessarily equally, among society's members d. society is getting the maximum benefits from its scarce resources

Economists make assumptions to a. provide issues for political discussion b. make a complex world easier to understand c. make it easier to teach economic concepts and analysis d. create policy alternatives that are incomplete or subject to criticism

A circular-flow diagram is a model that a. helps to explain how participants in the economy interact with one another b. helps to explain how the economy is organized c. incorporates all aspects of the real economy d. both a and b are correct

By looking at the chart "The production possibilities frontier" - This economy has the ability to produce at which points

By looking at the chart "The production possibilities frontier" - which point is unattainable?

By looking at the chart "The production possibilities frontier" - which points are efficient?

By looking at the chart "The production possibilities frontier" - which points are inefficient?

By looking at the chart "the production possibilities frontier" - How could we get to the point outside the frontier?

By looking at the chart "the production possibilities frontier" - The fact that the frontier slopes downward reflects......

By looking at the chart "the production possibilities frontier" - Why not a straight line?

The producer that requires a smaller quantity of inputs to produce a certain amount of a good, relative to the quantities of inputs required by other producers to produce the same amount of that good.... a. has a low opportunity cost of producing that good, relative to the opportunity costs of other producers b. has a comparative advantage in the production of that good c. has an absolute advantage in the production of that good d. should be the only producer of that good

When describing the opportunity cost of two producers, economists use the term a. natural advantage b. trading advantage c. comparative advantage d absolute advantage

Specialization and trade are based on: a. absolute advantage b. comparative advantage c. gains to some traders that exactly offset losses to other traders d. shrinkage of the economic pie

True/False = Absolute advantage causes specialization and hence trade.

True/False - Total output of the world economy increase as each country specializes in production of goods that they have comparative advantage in.

In a market economy.... a. supply determines demand and demand, in turn, determines prices b. demand determines supply and supply, in turn, determines prices c. the allocation of scarce resources determines prices and prices, in turn, determine supply and demand d. supply and demand determine prices and prices, in turn, allocate the economy's scarce resources

In a competitive market, the quantity of a product produced and the price of the product are determined by..... a. buyers b. sellers c. both buyers and sellers d. None of the above is correct

A monopoly is a market with one.... a. seller, and that seller is a price taker b. seller, and that seller sets the price c. buyer, and that buyer is a price taker d. buyer, and that buyer sets the price

At higher prices lower quantities are demanded is known as

A movement along the demand curve might be causes by a change in.... a. income b. the prices of substitutes or complements c. expectations about future prices d. the price of the good or service that is being demanded

If a good is inferior, then an increase in income will result in.... a. income b. the prices of substitutes or complements c. expectations about future prices d. the price of the good or service that is being demanded

If muffins and bagels are substitutes, a higher price for bagels would result in a(n): a. increase in the demand for bagels b. decrease in the demand for bagels c. increase in the demand for muffins d. decrease in the demand for muffins

At higher prices higher quantities are supplied:

Movement along the supply curve caused by: A price change The movement from Point A (farther from 0) to Point B (closest to 0) represents a(n): a. increase in the price b. decrease in the quantity supplied c. shift in the supply curve d. Both a and b are correct

None-Price Determinants of Supply - What would cause the supply curve to shift to the left: a. a decrease in the price of tennis balls b. an expectation by firms that the price of tennis racquets will increase in the very near future c. a decrease in the price of tennis racquet strings d. an improvement in technology that allows firms to use less labor in the production of tennis racquets

Who faces scarcity?

What does the economic deal with?

Why do we have to make decision to allocate resources?

The concept of trade off exist among

Define opportunity cost and give an example

What is the largest cost to going to college?

Why do we make assumptions in economics?

Who are the participants in a simple circular flow?

What markets do we explore in a simple circular flow?

What is referred to as capital in economics?

Who is the buyer in the goods and services market and resource market?

Who is the seller in the goods and services market?

What does the production possibilities frontier demonstrate?

Why is the production possibilities frontier backward sloping?

What does a straight line P.P.F. demonstrate?

True/False - Trade allows a country to consume outside its P.P.F.

Who determines demand?

Who determines supply?

When do we have a monopoly in a market?

What is an example of a local monopoly here in our area?

What determines the quantity demanded?

What determines the quantity supplied?