Opportunity Cost
If lima beans are an inferior good for Alice, a decrease in her income would...
Shift her demand curve for lima beans to the right
True or False
The price of limes could be a nonprice determinant of the supply of lemons.
True. For example, if limes command a high price, lemon producers might switch to lime production, thus decreasing the total supply of lemons available.
The value of the best alternative you must pass up of a chosen item or activity.
What is Opportunity Cost?
What is the opportunity cost (in civilian output) of a defense buildup that raises military spending from 4.0 to 4.4 percent of a $16 trillion economy?
$64 Billion
That is an increase of 0.4%. $16 Trillion * 0.4% = $0.064 Trillion or $64 Billion
Which one of the following statements is false? a. Demand curves tend to slope downward. b. The relationship between price and quantity demanded is generally positive. c. The relationship between price and quantity supplied is generally direct. d. At equilibrium, the quantity demanded equals the quantity supplied. e. A shortage occurs when the quantity demanded exceeds the quantity supplied.
B
The relationship between price and quantity demanded is generally positive.
Which of the following statements is true, regarding the supply of a particular good, and that good’s own price? a. A price increase shifts the supply curve to the right. b. A price decrease shifts the supply curve to the right. c. A price increase shifts the supply curve downward. d. A price change alone does not shift the supply curve. e. A price change is the only way to shift the supply curve.
D
A curve indicating the quantities that buyers are willing to purchase at various prices is known as a(n) ________________ curve.
Demand
What is the opportunity cost (in dollars) to attend an hour-long Economics lecture for a $230,000 per year corporate executive who works 2,000 hours per year?
$115
Calculate the wage per hour of the executive who works 2,000 hours for $230,000. So you would take his total salary and divide by the number of hours he works. $230,000/2,000 = $115
Which one of the following would be most likely to increase (shift to the right) the demand curve for public transportation? a. Increasing the frequency of bus stops b. Lower fares for bus tickets c. Lower prices for airline tickets d. Higher gasoline prices e. Lower automobile prices
Higher gasoline prices
Which of the following is an example of movement along a supply curve? a. The quantity of apples offered for sale increases as the price of apples rises. b. An apple orchard burns down in an accidental fire, decreasing the number of suppliers on the market. c. Thanks to good weather conditions, apple growers enjoy a bumper crop this year. d. The price of pears doubles, increasing demand for apples. e. The price of fertilizer increases, making it more expensive to produce apples.
A
Tabitha needs furniture for her room. She is deciding between a medium-sized couch and a large armchair. Either the couch or the armchair could fulfill her need for sitting space in the room. The couch and the armchair can be referred to as ___________________ goods.
substitute
In one day, Joan can change the oil on 15 cars or the tires on 10 cars. In one day, Fred can change the oil on 12 cars or the tires on 10 cars. Joan and Fred can gain from trade if Joan changes the _______ and Fred changes the _______.
oil; tires
Why do demand curves generally slope downward?
The demand curve slopes downward because in general, the higher the price of the good, the fewer people will want to buy it
Which of the following is likely to result in a shift in the supply curve for sweaters? a. an increase in consumer incomes b. an increase in tariffs that forces sweater manufacturers to import wool at higher prices c. an increase in sweater prices d. higher prices for coats, which are substitutes in consumption but not substitutes in production
b. an increase in tariffs that forces sweater manufacturers to import wool at higher prices
True or False
If both supply and demand increase, the price of the good will also increase.
False. The impact of these changes on equilibrium price is ambiguous.
China and the U.S produce two goods: wild rice and coconut ice cream. The opportunity cost of coconut ice cream (in terms of wild rice) is 2 for the U.S and 4 for china. Using the information given above, which of the following statement(s) can we definitively say are true? I. China has an absolute advantage in coconut ice cream production. II. China has a comparative advantage in coconut ice cream production
Neither
Suppose we observe an increase in the world price of corn. Which of the following could have caused the price increase? a. A decrease in the demand for corn by households in China and India. b. An increase in the demand for corn for use in ethanol production in the U.S. c. A rise in the supply of corn due to a drought in Australia. d. A fall in the price of fertilizer, a key input in the production of corn.
b. An increase in the demand for corn for use in ethanol production in the U.S.
Name three nonprice determinants of supply, for a producing business.
example answers:
Available technology of production; resource prices; number of producers; producer expectations about future prices and technology; prices of related goods and services; physical supply of a natural resource.
What is wrong with the statement: Demand refers to the willingness of buyers to purchase different quantities of a good at different prices during a specific time period:
Demand refers to the willingness and ability of buyers, not just willingness.