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- more clean air is wanted than is available in large polluted metropolitan areas such as Mexico City
- there is usually more than one use of your "free" time in the evening
- there are many competing uses for the annual budget of your city, county, or state
- there is usually more than one use of your "free" time in the evening
- there are many competing uses for the annual budget of your city, county, or state
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what illustrates the concept of scarcity
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- land (natural resources)
- labor (human capital, entrepreneurship)
- capital (constructed inputs such as factories)
- labor (human capital, entrepreneurship)
- capital (constructed inputs such as factories)
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what are factors of production
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a person's skills and abilities
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what is NOT capital input
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how a society chooses to allocate its scarce resources
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define economics
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a labor economist notices that unemployment tends to be higher among teenagers than more experienced workers, develops a model, and gathers data to test the hypothesis in the model
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illustration of the model-building process to economics
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Quantity demanded goes up when price falls because lower prices increase consumers purchasing power, and because some consumers of substitute goods switch
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what represents causality rather than association
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if we decrease the price of a good and observe that there is an increase in the quantity demanded, holding all other factors that influence this relationship constant
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what is the ceteris paribus assumption
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- cannot be eliminated
- prevails in poor economies
- prevails in rich economies
- prevails in poor economies
- prevails in rich economies
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the condition of scarcity...
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what best describes an entrepreneur
a person who combines the factors of production to produce innovative products
a person who combines the factors of production to produce innovative products
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what best describes an entrepreneur
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they are a type of land resource such as forests, range-lands, and marine fisheries that naturally regenerate and thus can tolerate a sustained harvest, but can be depleted from excessive harvest
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what is true about renewable natural resources
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it is impossible to satisfy every desire and choices must be made
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because of scarcity,
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if policy A is followed, then outcome B results
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what represents positive economics
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what is the last step in the model-building process
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what is the last step in the model-building process
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resources
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what is NOT a type of economic analysis
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if-then
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which word or phrase indicates that an economist is using positive economics
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you cannot eliminate scarcity
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what would eliminate scarcity as an economic problem
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stocks or bonds
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what resource is NOT an example of capital
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develop a model based on simplified assumptions
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what is the second step in the model-building process
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positive
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what is a type of economic analysis
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- management
- banking
- government
- banking
- government
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what careers could result from majoring in economics
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a horizontal or vertical line
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what is used to illustrate an independent relationship between two variables
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the price of a concert and the number of tickets people purchase
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what is the most likely to exhibit an inverse relationship
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inverse
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according to exhibit 1A-5, the relationship between the price and the quantity purchased of pizza is
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- 1/4
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what is the slope of the line
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A fall in household incomes
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what would cause a leftward shift in the relationship shown
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also rises
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suppose two variables are directly related. if one variable rises, then the other variable
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downward-sloping
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when an inverse relationship is graphed, the resulting line or curve is
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there is a direct relationship
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straight line AB in exhibit 1A-6 shows what kind of relationship between X and Y
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positive
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the slope of line AB is (value)
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1/2
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the slope of line AB is (number)
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constant with changes in X
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the slope of line AB remains
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direct
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as X increases along the horizontal axis, the Y values increase. The relationship between X and Y variables is
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inverse
answer
as X increases along the horizontal axis, the Y values decrease. The relationship between X and Y variables is
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-increasing X reduces Y
-decreasing X increases Y
-inverse relationship
-decreasing X increases Y
-inverse relationship
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straight line AB in exhibit 1A-7 shows that the relationship means
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remains constant with changes in X
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the slope of the straight line AB (result of changing x)
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-1
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the slope of the straight line AB is (number)
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negative
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the slope of straight line AB is (value)
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independent
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As X increases, Y doesn't change. What is the relationship between X and Y?
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zero
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the slope of the straight line A-D is
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leftward shift in curve A to curve B
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Exhibit 1A-9 represents a three variable relationship. As the annual income of consumers falls from $50,000 (line A) to $30,000 (line B), the result is
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what, how, for whom
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what describes the three fundamental economic questions
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A, B, C, D
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in exhibit 2-6 which points on the ppc are full employment production points
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watching two half-hour sitcoms
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suppose that the alternative uses of an hour of your time in the evening, ranked from best to worst, are (1) study economics, (2) watch two half-hour sitcoms, (3) play pool. You can only choose one activity. What is the opportunity cost of choosing to study economics?
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zero
answer
in exhibit 2-6, to move from U to B the opportunity cost would be
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positive or negative
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Marginal analysis means evaluating _____ changes from a current situation
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A, B, C, D
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in exhibit 2-6 which points are efficient with the ppc
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a government official considering about what effect an increase in military good production will have on the production of consumer goods
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example of organization using marginal analysis
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B, C, D, U
answer
from the information in exhibit 2-6 which of the points are attainable with the currently available resources and technology
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an economy can produce
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a production possibilities curve shows the various combinations of two outputs that
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what happens when you change the the current situation
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what is not one of the three fundamental economic questions
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decrease the production of food. this forgone production of food is the opportunity cost of increasing production of shelter
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if an economy can produce various combinations of food and shelter along with a PPC. We first increase the production of shelter, what is true?
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accumulation of capital that is used to produce goods and services
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investment means
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opportunity cost will increase because as more shelter is produced, labor and capital that is used to produce food will be used for shelter now. more and more food is being given up for more and more shelter
answer
if an economy can produce various combinations of food and shelter along with a PPC. we first increase the production of shelter along the ppc. if we continue to increase production of shelter more and more, what will happen to the opportunity cost of a unit of shelter
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greater production of capital goods than what is needed to replace worn-out capital
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what is most likely going to produce the greatest growth in the ppc
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the ppc will rotate outward along the food axis, but will not shift on the shelter axis
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if an economy can produce various combinations of food and shelter along with a PPC. suppose a technology innovation resulted in a higher yield of crop. if this innovation did not affect shelter production what would be true?
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the ppc would shift outward on the fish axis but would not change on the bread axis
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suppose that an economy can produce various combinations of fish and bread. if more people with strong fishing skills became employed in the economy how would the ppc change?
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greater emphasis on the production of capital today leads to greater outward shifts in the ppc, thus increasing the wealth of people in the future
answer
if a ppc has capital on the vertical axis and consumer goods on the horizontal axis, what is true?
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they are not attainable given our existing stock of resources and technology
answer
combinations of goods outside the ppc have what characteristics?
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because of unemployment or underemployment of labor, perhaps due to discrimination
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what would explain why an economy would be operating inside its ppc?
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an increase in the price of tofu-burgers, perceived as a substitute by veggie-burger consumers
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which of the following causes the demand for veggie-burgers to increase?
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$40
answer
in exhibit 3-13, if there is a shortage of video games of 200 units, the current price of video games must be
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an increase in the price of a substitute
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Which of the following would NOT cause market demand for a normal good to decline
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excess demand; rise
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in exhibit 3-13, at any market price of video games below $50, a(n) _______ would result, causing price to ________
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inferior goods
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low income families consume proportionately more of which of the following kinds of goods
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excess supply; fall
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in exhibit 3-13, at any market price of video games above $50, a(n) _________ would result, causing price to _________
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28 (7 dwarfs x 4 mugs)
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suppose that each of the seven dwarfs buys 4 mugs of ginger ale per wee from Snow White's cafe, when the price per mug is $2. If the seven dwarfs are the entire market demand for Snow White's ginger ale, then which of the following is the correct value for the market quantity demanded for ginger ale?
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excess demand; 100
answer
in exhibit 3-13, if the price of video games was currently $45, there would be an _________ of ________ video games in this market
question
farmers that grow soybeans can also grow corn, and the price of soybeans drops by 75%
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which of the following increases the supply of corn?
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excess supply; 400
answer
exhibit 3-13 presents supply and demand data for the video game market. if the price of video games was currently $70, there would be an _______ of ________ video games in this market
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a decrease in price results in an increase in supply
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with an upward-sloping supply curve which of the following is true?
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a direct
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the law of supply is the principle that there is _____ relationship between the price of a good and the quantity sellers are willing to offer for sale in a defined time period, ceteris paribus.
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an increase in demand
answer
a rightward shift in the demand curve is called...
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a decrease
answer
under the law of demand, any increase in price will cause _______ in quantity demanded
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price is above equilibrium
answer
a surplus occurs when
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a decrease in demand
answer
a leftward shift in the demand curve is called
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price is below equilibrium
answer
a shortage occurs when
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market supply
answer
a curve is derived by summing horizontally individual demand curves called
question
pizza shop employees successfully organize a union and negotiate a pay increase
answer
which of the following decreases the supply in the market for pizza?
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an inverse
answer
the law of demand is the principle that there is _______ relationship between the price of a good and the quantity buyers are willing to purchase in a defined period, ceteris paribus.
question
an increase in demand for vacations at resorts on Caribbean islands
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which of the following results from an increase in the price of a one-week vacation at beach resorts on the coast of Mexico?
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price rises
answer
in moving from shortage toward the market equilibrium, which of the following is true?
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expectations
answer
There is news that the price of Tucker's root beer will increase significantly next week. If the demand react only to this factor and shifts to the right, the position of this demand curve has reacted to a change in..
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a decrease in price
answer
which of the following causes a shortage to become larger?
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demand for motel rooms is higher
answer
which of the following is true in ski-towns such as crested butte, Colorado, and whistler, British Columbia during the peak winter ski season as compared to the months of May and June?
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