Definitions
Real-life Situations
Chapter 1 Review
Chapter 2 Review
Chapter 4 Review
100
It is the study of how society manages its scarce resources.
What is Economics?
100
In a certain economy, toys and greeting cards are produced, and the economy currently operates on its production possibilities frontier. Which of the following events would allow the economy to produce more toys and more greeting cards, relative to the quantities of those goods that are being produced now? What is the answer?
Select one and state the answer as a question:
a. The economy experiences economic growth.
b. There is a technological advance in the greeting card industry, but the toy industry experiences no such advance.
c. There is a technological advance in the toy industry, but the greeting card industry experiences no such advance.
Is the answer that the economy experiences economic growth?
100
The adage, "There is no such thing as a free lunch," means
Select one and state the answer as a question:
a. people face tradeoffs.
b. all costs are included in the price of a product.
c. even people on welfare have to pay for food.
d. the cost of living is always increasing.
Does it mean that people face tradeoffs?
100
They are inputs into the production process.
What are the factors of production?
100
It is a situation in which quantity supplied is greater than quantity demanded.
What is Surplus?
200
It is the study of economy-wide phenomena, including inflation, unemployment, and economic growth.
What is Macroeconomics?
200
The famous observation that households and firms interacting in markets act as if they are guided by an "invisible hand” that leads them to desirable market outcomes comes from who's 1776 book?
Select one and state the answer as a question:
a. Adam Smith
b. David Ricardo
c. John Maynard Keynes
d. Thorstein Veblen
Who is Adam Smith?
200
It refers to the quantity of goods and services produced from each unit of labor input.
What does the term productivity refer to?
200
Can shift if there is a technological improvement.
When can a production possibilities frontier can shift outward?
200
It is the amount of a good that buyers are willing and able to purchase.
What is quantity demanded?
300
It is a model that shows how dollars flow through markets among households and firms.
What is a circular-flow diagram?
300
Suppose that you have received $300 as a birthday gift. You can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is
Select one and state the answer as a question:
a. $305.
b. $0.
c. $315.
d. $5.
Is $315 the opportunity cost?
300
Bill is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $6,200. Bill discovers that he needs to do an additional $2,400 of work to make the car worth $6,200 to potential buyers. He could also sell the car now, without completing the additional work, for $3,700. What should he do?
Select one and say the answer as a question:
a. He should sell the car now for $3,700.
b. It does not matter if Bill sells the car now or completes the work and then sells it at the higher price because the outcome will be the same either way.
c. He should complete the additional work and sell the car for $6,200.
Should Bill complete the additional work and sell the car for $6,200?
300
Refer to the figure.
Efficient production is represented by which point(s)?
Select one and state the answer as a question:
a. C
b. A, B
c. A, B, C
d. A, B, D
Are the Points A & B the correct points that represent efficient production?
300
It is the claim that, other things being equal, the quantity demanded of a good falls when the price of the good rises.
What is the law of demand?
400
It is a good for which, other things being equal, an increase in income leads to a decrease in demand.
What is an inferior good?
400
The following table contains the production possibilities for an economy for a given year:
TennisRackets TennisBalls
10 80
20 65
30 ?
If the production possibilities frontier is bowed outward, then "?" could be
(Hint: Apply the law of increasing opportunity cost---- by how much should the production of tennis balls fall, so that the opportunity cost increases)
Select one and state the answer as a question:
a. 60.
b. 55.
c. 45.
d. 50.
Would "?" be 45?
400
Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should
Select one and say the answer as a question:
a. sell the ticket because the marginal cost is less than the marginal benefit.
b. not sell the ticket because the marginal cost exceeds the marginal benefit.
Should the airline sell the ticket because the marginal cost is less than the marginal benefit?
400
Refer to the figure.
Which arrow represents the flow of income payments?
Select one and state the answer as a question:
a. C
b. B
c. D
d. A
Is the answer Arrow D?
400
1. Input prices
2. Technology
3. Expectations
4. The number of sellers.
What are the 4 types of shifts in the supply curve?
500
It is two goods for which an increase in the price of one leads to a decrease in the demand for the other.
What is complements?
500
Suppose a frost destroys much of the Florida orange crop. At the same time, suppose consumer tastes shift toward orange juice. What would we expect to happen to the equilibrium price and quantity in the market for orange juice?
Select one and state the answer as a question:
a. Price will increase; quantity is ambiguous.
b. Price will increase; quantity will increase.
c. Price will increase; quantity will decrease.
d. Price will decrease; quantity is ambiguous.
e. the impact on both price and quantity is ambiguous.
Would we expect that Price will increase and that quantity is ambiguous?
500
In a particular country in 1999, the average worker had to work 20 hours to produce 56 units of output. In that same country in 2009, the average worker needed to work 30 hours to produce 77 units of output. In that country, the productivity of the average worker
Select one and say the answer as a question:
a. increased between 1999 and 2009.
b. decreased between 1999 and 2009.
c. Cannot be calculated from the data given.
d. remained unchanged between 1999 and 2009.
Can we assume that the productivity cannot be calculated from the data given?
500
Suppose two economists are arguing about policies that deal with unemployment. One economist says, "The government should fight unemployment because it is the greatest social evil." The other economist responds, "Nonsense. Inflation is the greatest social evil." These economists
Select one and state the answer as a question:
a. Disagree because they have different scientific judgements.
b. Disagree because they have different values.
c. Really don't disagree at all. it just looks that way.
d. None of the above.
Are the economists disagreeing because they have different values?
500
1. Income
2. Prices of related goods
3. Tastes
4. Expectations
5. The number of buyers
What are the 5 influences in a demand curve?