Pearson Microeconomics HW Ch.1-3

question

Every day, we make many choices.
We can't avoid having to make choices because ________.

answer

we can't afford to do all the things we'd like to do

question

An incentive is _______.

answer

a reward that encourages an action or a penalty that discourages an action

question

Choose the definition that gives the best overview of economics.
Economics is the social science that studies the choices _______.

answer

that we make as we cope with scarcity

question

Factors of production are grouped into four categories, which are _______.

answer

land, labor, capital, and entrepreneurship

question

______ is an example of ______.
A.
A salmon river;
capital
B.
Architect Daniel Liebeskind;
labor
C.
Hoover dam;
land
D.
The teenager who cuts neighborhood lawns in the summer holidays;
entrepreneurship

answer

The teenager who cuts neighborhood lawns in the summer holidays;
entrepreneurship

question

Land is the _____ that we use to produce goods and services.

answer

gifts of nature or natural resources

question

The _____ that people devote to produce goods and services is
labor.

answer

work time, and work effort

question

Human capital _____ that people obtain from education, on-the-job training, and work experience.
_____ that have been produced in the past and that businesses now use to produce goods and services is capital.

answer

is the knowledge and skill;
Tools, instruments, machines, buildings, and other items

question

Which of the following is an example of entrepreneurship?
A.
Sam Walton created the multinational retail corporation brand Walmart in 1962.
B.
Honda Civic and Toyota Corolla are the best-selling compact cars in North America.
C.
Facebook is a social networking site.
D.
Industrial output in China is increasing.

answer

A. Sam Walton created the multinational retail corporation brand Walmart in 1962.

question

Resource use is efficient when _______.

answer

it is not possible to make someone better off without making someone else worse off

question

Which of the following illustrates a
tradeoff?

answer

I will study for my exam instead of going to the movie tonight.

question

The benefit of something is the _____.
Benefit is determined by preferences - by what a person _____ and the intensity of those feelings.

answer

gain or pleasure it brings;
likes and dislikes

question

A rational choice is _______.

answer

one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

question

Choose the statement that is incorrect.
A.
To live off campus instead of on campus is a rational choice if the benefit from living in residence near the library is less than the cost of living with all-night parties in residence.
B.
To quit college and train to become a plumber is a rational choice if the benefit received from working with your hands exceeds the cost of spending hours and hours trying to learn economics.
C.
To spend the weekend at home with your family is a rational choice if the benefit from your mother's cooking exceeds the cost of traveling home.
D.
It is never a rational choice to decide to enter the labor force immediately following high school.

answer

D.
It is never a rational choice to decide to enter the labor force immediately following high school.

question

All of the following are incentives for you to take a class in summer school except______.
A.
the course fits more easily into your summer schedule than your fall schedule
B.
your failure in the winter does not allow you to continue your education until you earn a credit for this course
C.
the smaller class size in the summer, which makes it easier to get help from the professor
D.
you prefer summer outdoor activities to winter outdoor activities

answer

D.
you prefer summer outdoor activities to winter outdoor activities

question

A benefit from your decision to attend summer school is ______ and a cost of your decision is ______.

answer

the credit you earn; the tuition fee you pay

question

A choice on the margin is a choice that is made by comparing all the relevant _____ systematically and _____.
Marginal cost is the _____ that arises from one unit _____ in an activity.
Marginal benefit is the _____ that arises from one unit _____ in an activity.

answer

alternatives; incrementally;
opportunity cost; increase;
benefit; increase

question

Byron,
a physics
student, buys five cups of coffee a day, which costs him $17.50.
He
decides to buy one more cup each day and his expenditure on coffee increases to $21.00.
The marginal cost to Byron of a cup of coffee is _______.

answer

$3.50

question

Amber
plays video games five nights a week and her current grade in economics is 80 percent.
She
decides to play video games for six nights each week and her economics grade falls to 75 percent.
The marginal cost to Amber of playing video games one more night each week is_______.

answer

5
percentage points

question

People make rational choices by comparing _______.

answer

benefits and costs

question

You can spend the weekend at college or you can go home.
You have an incentive to spend the weekend at college if ______.

answer

the marginal benefit from
spending the weekend at college
is greater than the marginal cost of
spending the weekend at college

question

Which of the following is the opportunity cost of attending a ball game?
A.
The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.
Your answer is correct.
B.
Only the things you would alternatively have done with your time.
C.
Only the things you would alternatively have done with your time if you had been working.
D.
Only the ticket price and bus fare.

answer

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

question

You plan to travel in Europe this summer.
If you do, you won't be able to take your usual summer job that pays $11,000 for thesummer, and you won't be able to live at home for free.
The cost of transportation is $2,000, visas cost $200, and living expenses are $1,100.
What is the opportunity cost of your plan to travel in Europe?
Your opportunity cost is what you would have purchased with $_______ if you did not go to Europe.

answer

$14,300

question

The night before an economics test, you decide to watch television instead of studying for your test.
You get 60 percent on your test compared with the 75 percent that you normally score.
You ______, and the opportunity cost of your evening watching television was ______.

answer

faced a tradeoff between a higher test score and an evening watching television;
the 15 percent fall in your grade

question

Which of the following statements are positive?
1. Most household production is done by women
2. The United States should do more to stop global warming
3. People who wear glasses look intelligent
4. Most iPods are purchased by teenagers

answer

statements 1 and 4 are positive

question

Which of the following statements is a positive microeconomic statement?
A.
The price of an iPad will fall over the next year.
This is the correct answer.
B.
Lower taxes might increase employment.
Your answer is not correct.
C.
Apple should lower the price of its iPad to discourage competitors from entering the market.
D.
Interest rates will rise as the economy expands.

answer

The price of an iPad will fall over the next year.
This is the correct answer.

question

Which of the following statements is a normative macroeconomic statement?
A.
State governments should lower taxes on cigarettes.
B.
More generous unemployment benefits will increase the unemployment rate.
C.
A decrease in cigarette taxes will encourage more people to smoke.
D.
The U.S. government should increase unemployment benefits.

answer

The U.S government should increase unemployment benefits

question

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

answer

can be produced and the combinations that cannot be produced

question

Harry produces 2 balloon rides and 4 boat rides an hour.
Harry could not produce more balloon rides without producing fewer boat rides.
Harry is ______ his production possibilities frontier.

answer

producing on

question

Why does the PPF bow outward and what does that imply about the relationship between opportunity cost and the quantity produced?
The PPF bows outward because as we move from point A to point B to point C, the opportunity cost of producing a pair of blue jeans ______.

answer

increases. Resources are not equally productive in all activities

question

Distinguish between production efficiency and allocative efficiency.
_______ efficiency occurs when we produce goods and services at the lowest possible cost.
_______ efficiency occurs when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

answer

Production; Allocative

question

All points on the PPF are points of ______ efficiency.
When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

answer

production; allocative

question

The marginal benefit of a good or service is the _____.

answer

benefit received from consuming one more unit of it.

question

The marginal cost of a good or service is the _____.

answer

opportunity cost of producing one more unit of it

question

Microsoft's marginal cost of the 100th copy of Microsoft Windows 10 is _______.

answer

calculated as the slope of the PPF at the point where the 100th copy of Windows 10 is produced

question

Which of the following is an example of absolute advantage?

answer

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

question

In an hour, Jim can catch 5 pounds of salmon or pick 10 pounds of bananas.

In an hour, John can catch 3 pounds of salmon or pick 12 pounds of bananas.

The opportunity cost of catching a pound of
salmon
is ______ for
Jim
than for
John,
and the opportunity cost of picking a pound of
bananas
is ______ for
Jim
than for
John.

answer

A.
lower; higher

question

In an hour, Jim can catch 5 pounds of salmon or pick 10 pounds of bananas.

In an hour, John can catch 3 pounds of salmon or pick 12 pounds of bananas.

So ______ has a comparative advantage in producing ______.

answer

.Jim;
salmon

question

Martha can produce 80 quilts or 320 batches of chocolate chip cookies in a month.
Jane can produce 7 quilts or 14 batches of chocolate chip cookies in a month.
Distinguish between comparative advantage and absolute advantage.

_______ has an absolute advantage in both goods.
______ has a comparative advantage in quilts. ______ has a comparative advantage in chocolate chip cookies.

answer

Martha

jane

Martha

question

Why do people specialize and trade?
With specialization and trade, people can _______.

answer

consume at a point outside their PPF

question

Big Lobster sells lobster and fish, and so too does H Salt.
If H Salt's opportunity cost of preparing lobster exceeds Big Lobster's opportunity cost of preparing lobster, then ______.

answer

Big Lobster
has a comparative advantage in preparing lobster

question

If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.

answer

B.
divergent opportunity cost

question

In one hour, Sue can produce 50 caps or 10 jackets and Tessa can produce 70 caps or 7 jackets.
Sue's opportunity cost of producing a cap is ______ jackets and Tessa's opportunity cost of producing a cap is ______ jackets.

answer

1/5 and 1/10

question

______ has a comparative advantage in producing caps.
If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______.

answer

Tessa; both Sue and Tessa gain

question

Ed
and Sharon grow strawberries and raspberries.
Ed
has a comparative advantage in producing strawberries if _______

answer

Ed's opportunity cost of producing raspberries is greater than sharons oppurt cost of producing raspberries

question

If Ed also has an absolute advantage in growing
strawberries and raspberries, he will _______.

answer

have a comparative advantage in one activity but not both.

question

emma owns an ice cream parlor. In an hour she can produce 15 milkshakes or 90 ice cream sundaes.
Betsy
also owns an ice cream parlor. In an hour she can produce 10 milkshakes or 40 ice cream sundaes.
Calculate Emma's and Betsy's opportunity cost of producing a milkshake.

Emma's
opportunity cost of producing 1 milkshake is _____ice cream sundaes.
Betsy's
opportunity cost of producing 1 milkshake is _____ ice cream sundaes.

______ has a comparative advantage in milkshakes and ______ has an absolute advantage in both goods.

answer

6

4

Betsy
has the lower opportunity cost in producing milkshakes, so Betsy has the comparative advantage in producing milkshakes.
A person has an absolute advantage when they are more productive than others.
So Emma has an absolute advantage in both goods.
When Emma spends an hour producing only milkshakes, she produces more milkshakes than Betsy.
And when Emma spends an hour producing only ice cream sundaes, she produces more ice cream sundaes than

question

Two countries, Antarctica and Arctica, produce only two goods: frozen fish and party ice.
The table gives their production possibilities.
_______ has a comparative advantage in frozen fish and _______ has a comparative advantage in party ice.

answer

The table gives the production possibilities for two countries, Antarctica and Arctica, that produce only two goods: frozen fish and party ice.
We calculate the opportunity cost of producing frozen fish as the decrease in party ice divided by the increase in frozen fish as we move up the table.
And we calculate the opportunity cost of producing party ice as the decrease in frozen fish divided by the increase in party ice as we move down the table.
The country with the lower opportunity cost has the comparative advantage.
Antarctica
has the comparative advantage in frozen fish and Arctica has the comparative advantage in party ice.

question

Question Facts
In a year, Claire can produce 40 tons of beef or 80 bushels of corn.
In a year, Doug can produce 40 tons of beef or 120 bushels of corn.

To maximize their total output of beef and corn _______.

answer

specializes in beef and
Doug
specializes in corn

question

Tony and Patty produce skis and snowboards. The tables show their production possibilities.
Tony produces 2 snowboards and 16 skis a week; Patty produces 4 snowboards and 2 skis a week.

Patty
has a comparative advantage in producing snowboards.

answer

true

question

Economic growth is defined as the _____ .

answer

sustained expansion of production possibilities

question

Technological change is _____ new goods and of _____ of producing goods and services.

answer

the development of; of better ways

question

Capital accumulation is the _____, including _____ capital.

answer

growth of capital resources; human

question

What generates economic growth?
Economic growth comes from _______.

answer

capital accumulation and technological advance

question

The opportunity cost of economic growth _______.

answer

is fewer consumption goods today

To expand production possibilities in the future, a nation must devote fewer resources to producing consumption goods and some resources to accumulating capital and developing technologies.
And the faster we make our production grow, the greater is the opportunity cost of economic growth.

question

When
the quantity of capital in an economy increases,
_______.

answer

When the quantity of capital in an economy increases, economic growth occurs.
Economic growth occurs, but it is not free.

question

the opportunity cost of economic growth is ______.

answer

Economic growth brings enormous benefits in the form of increased consumption in the future.
But it does so with the opportunity cost of forgone current consumption.
The more resources we devote to capital accumulation, the fewer resources we have to devote to the production of current consumption goods.

question

An economy that uses new technology _______.

answer

An economy that uses new technology experiences economic growth and an opportunity cost of current consumption.
Its PPF shifts outward, and the standard of living rises.
Scarcity is not eliminated. People will still experience the inability to get everything they want.

question

Firms are institutions that organise _____ of goods and services.

answer

the production

question

A market is an arrangement that brings _____ together and enables them to get information and do business with each other.

answer

buyers and sellers

question

Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts.

answer

factors of production

question

Social institutions such as firms, markets, property rights, and money _______.

answer

Social institutions such as firms, markets, property rights, and money are necessary to make decentralized coordination work and are required for society to enjoy the benefits of specialization and trade.

question

_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent.
_______ choose the quantities of factors of production to hire.

answer

Households choose the quantities of labor, land, capital, and entrepreneurial services to sell or rent to firms in exchange for wages, rent, interest, and profits.
Households also choose how to spend their incomes on the various types of goods and services available.
Firms choose the quantities of factors of production to hire and the quantities of goods and services to produce.

question

Demand is _____, when all other influences on buying plans remain the same.

answer

Demand is the relationship between the quantity demanded of a good and the price of the good, when all other influences on buying plans remain the same.

question

A demand curve shows the relation between the _____ and _____ when all other influences on buying plans remain the same.

answer

A demand curve shows the relation between the quantity demanded a good and its price when all other influences on buying plans remain the same.

question

Which of the following statements by Tom demonstrates that his buying plans obey the law of
demand?

answer

The law of demand states: Other things remaining the same, if the price of a goodrises, the quantity demanded of that good decreases; and if the price of the goodfalls, the quantity demanded of that good increases, and the statement, "The only thing that's changed is the price of textbooks: they've become more expensive and now I'm not buying as many" demonstrates that Tom's buying plans obey the law of demand.

question

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?

answer

The quantity demanded of any good is the amount that people are willing and able to buy during a specified period at a specified price, so Jeb's statement, "At a price of $1 per pack, I plan to buy 2 packs of peanuts per week" describes his quantity demanded in the peanut market.

question

The quantity demanded of a good or service is ______.

answer

Measured as an amount of unit per time

the quantity demanded of a good or service is the amount that consumers plan to buy during a given time period at a particular price.
The quantity demanded is not necessarily the same as the quantity actually bought.
Sometimes the quantity demanded exceeds the amount of goods available, so the quantity bought is less than the quantity demanded.

question

Which of the following statements about the market for chicken describes a change in the quantity demanded and which describes a change in demand?
I People are buying less chicken because the price of beef has fallen.
II People are buying less chicken because the price of chicken has increased.
III People are buying more chicken because the price of chicken has fallen.
IV The cost of chicken feed has increased.

answer

A.
I is a change in demand and II and III are changes in the quantity demanded.

question

In January 2010, the price of gasoline was $2.70 a gallon. By spring 2010, the price had increased to $3.00 a gallon.
Assume that there were no changes in average income, population, or any other influence on buying plans.
Explain how the rise in the price of gasoline would affect
a. The demand for gasoline.
b. The quantity of gasoline demanded.
Given the law of demand, you would expect the rise in the price of gasoline to ______ the quantity of gasoline demanded and ______ the demand for gasoline.

answer

decrease and not change

The graph shows the daily demand for gasoline in the United States.
When the price of gasoline rises, there is a movement up along the demand curve, which is a decrease in the quantity demanded.
The demand curve does not shift. There is no change in the demand for gasoline.
The law of demand tells us that the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded.

question

The law of demand states that other things remaining the same, the _______ the price of a good, the _______.

answer

higher; smaller is the quantity demanded

The law of demand states:
Other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of a good, the greater is the quantity demanded.

question

A demand curve that illustrates the law of demand ______.

answer

A demand curve that illustrates the law of demand is downward sloping—as the price falls, the quantity demanded increases, and as the price rises, the quantity demanded decreases.

question

As the average income in China continues to increase, explain how the following will change:
a. The demand for beef
b. The demand for rice
As the average income in China continues to increase, we would expect the demand for beef to _______ and the demand for rice to _______.

answer

increase if beef is a normal good; decrease if rice is an inferior good

A normal good is one for which demand increases as income increases.
If beef is a normal good, then the demand for beef increases when income increases.
An inferior good is one for which demand decreases as income increases.
If rice is an inferior good, then the demand for rice decreases when income increases.

question

substitute is a good that is _____ another good, and a complement is a good that is _____ another good.

answer

A substitute is a good that is consumed in place of another good, and a complement is a good that is consumed together with another good.

question

Which of the following statements is about a normal good, which is about an inferior good, which is about both, and which is about neither?
I With incomes falling in the recession, people are buying more chicken.
II People are buying more beef now that incomes have increased.
III People are buying more chicken because the price of chicken has fallen.
IV With higher incomes people are switching from chicken to beef.

answer

I is inferior, II is normal, III is neither, and IV is both

A normal good is one for which demand increases when income increases and demand decreases when income decreases.
An inferior good is one for which demand decreases when income increases and demand increases when income decreases.
So, statement I describes an inferior good, II a normal good, III neither because itdoesn't describe the effect of a change in income, and IV both.
Next Question

question

The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded.

answer

The law of demand states that other things remaining the same, the higher the price of a good, the smaller is the quantity demanded; and the lower the price of agood, the greater is the quantity demanded.

question

Taking a smartphone to the gym when you work out becomes less popular.

What is the result of this event?
As a result, _______.

answer

the demand of smart phones decreases

question

If, as the price of
soup
decreases,
the quantity of
chili
that people buy
decreases,
then
soup
and
chili
are _______.

answer

substitute

A substitute is a good that can be used in place of another good.
A complement is a good that is used in conjunction with another good.
If, as the price of soup decreases, the quantity of chili that people buy decreases, then soup and chili are substitutes.

question

If, as
Gustavo's
income
decreases,
his
demand for
magazines
decreases,
then for
Gustavo,
magazines
are
_______.

answer

normal good

question

If the price of a milkshake falls, a ______ the demand curve occurs.
If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs.

answer

.
movement down along; shift of

When the price of a good changes, a movement along the demand curve occurs and there is a change in the quantity demanded.
When any factor that influences buying plans changes other than the price of the good, there is a change in demand and the demand curve shifts.

question

sport cars and gasoline are complements.
If the price of a sports car decreases, how does the demand for gasoline change?
If the price of a sports car decreases, the demand for gasoline will _______.

answer

increase, and the demand curve for
gasoline
will shift

sport cars and gasoline are complements.
When the price of a complement decreases, the demand for the other good increases.
So if the price of a sports car decreases, the demand for gasoline increases, and when the demand for gasoline increases the demand curve for gasoline shifts rightward.

question

Johnny
graduates from college and his income increases by $20,000 a year. Nothing else changes.
Johnny
decreases the quantity of T-shirts and bread rolls that he buys and increases the quantity of stuffed olives that he buys.
For Johnny, _______.

answer

T shirts and bread rolls are inferior goods

An inferior good is one for which demand decreases as income increases.
And a normal good is one for which demand increases as income increases.
When Johnny's income increases, other things remaining the same, he decreases the quantity of T-shirts and bread rolls that he buys and increases the quantity of stuffed olives that he buys.
For Johnny, T-shirts and bread rolls are inferior goods and stuffed olives is a normal good.
Next Question

question

A laptop
is a normal good.
If income is expected to increase next year, you predict that the demand for laptops _______ now.

answer

will increase

question

Along the supply curve, _______.

answer

the price changes but all other influences on producers' planned sales remain the same

The supply curve shows the relationship between the quantity supplied of a good and its price when all other influences on producers' planned sales remain the same.
As we move along the supply curve, the price of the good changes. All other influences on producers' planned sales remain the same.

question

A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.

answer

A supply curve shows the relationship between the quantity supplied of a good and its price, when all other influences on selling plans remain the same.

question

What does the supply curve tell us about the producer's minimum supply price?
A supply curve _______.

answer

A supply curve can be interpreted as a minimum-supply-price curve—a curve that shows the lowest price at which someone is willing to sell.
And this lowest price is marginal cost.
If a small quantity is produced, the lowest price at which someone is willing to sell one more unit is low. But as the quantity produced increases, the marginal cost of each additional unit rises and the lowest price at which someone is willing to sell also rises along the supply curve.
Next Question

question

Supply is _____, when all other influences on buying plans remain the same.

answer

Supply is the relationship between the quantity supplied and the price of a good when all other influences on selling plans remain the same.

question

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled watermarket?

answer

The quantity supplied is the amount of any good, service, or resource that people are willing and able to sell during a specified period at a specified price. So when Aqua Springs says "At a price of $1 bottle, we plan to sell 2,000 bottles per day," the firm is describing a quantity supplied.

question

Which of the following statements describes a change in the quantity supplied and which describes a change in supply?
I Farms are selling less chicken because the price of turkey has increased.
II Farms are selling less chicken because the price of chicken has fallen.
III Farms are selling more chicken because the price of chicken has risen.
IV Farms are selling more chicken because the cost of chicken feed has fallen.

answer

A change in supply is a change in the quantity that suppliers plan to sell when any influence on selling plans other than the price of the good changes. Statements I and IV describe events that change supply.
"
A change in the quantity supplied is a change in the quantity of a good that suppliers plan to sell that results from a change in the price of the good. Statements II and III describe changes in price and quantity supplied.

question

What happens to the quantity of smartphones supplied and the supply of smartphones if the price of a smartphone
rises?
Draw a supply curve of smartphones. Label it.
Use any prices and quantities you wish but make your supply curve obey the law of supply.
Then draw an arrow to indicate what happens to the quantity of smartphones supplied when the price of a smartphone rises.

answer

The law of supply states that other things remaining the same, the higher the price of a good, the greater is the quantity supplied.
The supply curve slopes upward, like the supply curve that you have drawn.
When the price of a smartphone rises there is a movement up along the supply curve.
This movement is illustrated by an arrow drawn along the supply curve.
OK

question

A
rise
in the price of a smartphone ______ the quantity supplied and ______ supply.

answer

When the price of a smartphone rises there is a movement up along the supply curve.
A movement along the supply curve is a change in the quantity supplied.
The supply curve does not shift. Supply does not change.

question

A substitute in production is a good that is _____ another good, and a complement in production is a good that is _____ another good.

answer

A substitute in production is a good that is produced in place of another good, and a complement in production is a good that is produced together with another good.

question

Dairies make low-fat milk from full-cream milk. In the process of making low-fat milk, the dairies produce cream, which is made into ice cream.
The graph shows the supply curve of low-fat milk.
Suppose dairy farmers decide to switch from producing full-cream milk to growing vegetables.
Draw a new supply curve that shows the effect of this event. Label the curve.

answer

When dairy farmers switch from producing full-cream milk to growing vegetables, the supply of full−
cream milk decreases, so the price rises. The supply of low-fat milk decreases because of the rise in the
price of a factor of production. The supply curve shifts leftward.

question

If as the price of
a tank top
increases,
the quantity of
T-shirts
that firms plan to sell
decreases,
then
tank tops
and
T-shirts
are _______.

answer

Substitutes in production are goods that can be produced by using the same resources.
Complements in production are goods that must be produced together.
When the price of a substitute in production rises, the supply of the other good decreases.
When the price of a complement in production rises, the supply of the other good increases.
A T-shirt and a tank top
are substitutes in production.
So if as the price of a tank top increases, the quantity of T-shirts that firms plan to sell decreases, then tank tops and T-shirts are substitutes in production.
Next Question

question

In the market for
books,
the supply of
books
will
increase
if ______.

answer

The supply of
books
will
increase
if there is
an increase
in the number of
book publishers.

question

New Maple Sap Method
With the new way to tap maple trees, farmers could produce 10 times as much maple syrup per acre.
Source: cbc.ca, February 5, 2014
Will the new method change the supply of maple syrup or the quantity supplied of maple syrup, other things remaining the same? Explain.

answer

When farmers use the new technology, they can produce more maple syrup per acre from their current trees.
The supply of maple syrup increases. The supply curve of maple syrup shifts rightward.

question

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

answer

The equilibrium price is the price at which the quantity demanded equals the quantity supplied and the equilibrium quantity is the the quantity bought and sold at the equilibrium price.

question

Why is the equilibrium price the best deal available for both buyers and sellers?
The equilibrium price is the best deal available for both buyers and sellers because buyers ______ and sellers ______.

answer

At the equilibrium price, neither buyers nor sellers can do business at a better price.
Buyers pay the highest price they are willing to pay for the last unit bought, and sellers receive the lowest price at which they are willing to supply the last unit sold.
The price coordinates the plans of buyers and sellers, and no one has an incentive to change it.

question

The equilibrium quantity _______.

answer

The equilibrium price is the price at which the quantity demanded equals the quantity supplied.
The equilibrium quantity is the quantity bought and sold at the equilibrium price.
The equilibrium quantity and equilibrium price are determined at the intersection of the supply curve and the demand curve.

question

f the price of a pizza is $12, a ______ exists and the price ______.

Buyers want to pay the lowest possible price, so they are willing to pay more than $12 for a pizza because ______.

answer

The graph shows the market for pizza.
The equilibrium price, at the intersection of the demand curve and the supply curve is $14 a pizza.
When the price is $12 a pizza, the quantity of pizzas supplied is 100 a day and the quantity of pizzas demanded is 300 a day.
A shortage occurs in the pizza market.
And when a shortage occurs, the price rises to return the market to equilibrium.

Buyers are willing to pay more than $12 for a pizza because at $12 a pizza, theycan't buy the number of pizzas that they want to.

question

When a shortage arises, the price ______ to its equilibrium, which_______.

answer

When a shortage arises, powerful forces operate to increase the price and move it toward the equilibrium price.
Some producers, noticing lines of unsatisfied consumers, raise the price.
Some producers increase their output.
As producers push the price up, the price rises toward its equilibrium.
The rising price reduces the shortage because it decreases the quantity demanded and increases the quantity supplied

question

When a surplus arises, the price ______ to its equilibrium, which_______.

answer

When a surplus arises, powerful forces operate to lower the price and move it toward the equilibrium price.
Some producers, unable to sell the quantities they have planned to sell, cut their prices.
In addition, some producers scale back production.
As producers cut the price, the price falls toward its equilibrium.
The falling price decreases the surplus because it increases the quantity demanded and decreases the quantity supplied.

question

Why is the price at which the quantity demanded equals the quantity supplied the equilibrium price?
The price at which the quantity demanded equals the quantity supplied is the equilibrium price because _______.

answer

The price at which the quantity demanded equals the quantity supplied is the equilibrium price because at this price the plans of producers and consumers are coordinated and there is no influence on the price to change.

question

The price of a music-streaming subscription rises.
What is the effect on the price and quantity of smartphones?
The equilibrium quantity of smartphones _______ and the equilibrium price _______.

answer

decreases; falls

question

A decrease
in the demand for golf clubs and a decrease in the supply of golf clubs occur together.
What is the effect on the price and quantity of golf clubs?
A decrease
in the demand for golf clubs together with a decrease in the supply of golf clubs ______ create a surplus or a shortage of golf clubs at the original price.
The equilibrium price of golf clubs ______.

answer

A decrease in the demand for golf clubs shifts the demand curve for golf clubs leftward, and a decrease in the supply of golf clubs shifts the supply curve of golf clubs leftward.
Because both the demand curve and the supply curve shift leftward, whether there is a surplus or a shortage of golf clubs depends on which curve shifts farther.
A surplus brings a fall in price and a shortage brings a rise in price, but we don't know which occurs or even if either occurs.
So a decrease in the demand for golf clubs together with a decrease in the supply of golf clubs might create a surplus or a shortage of golf clubs at the original price, and the price might fall, rise, or not change.

question

"As more people buy gym memberships, the demand for running shoes will increase and the price of a pair of running shoes will decrease. The fall in the price of a pair of running shoes will decrease the supply of running shoes."
This statement is ______ because ______.

answer

When the demand for running shoes increases, the demand curve for running shoes shifts rightward and the price of a pair of running shoes will rise.
As the price of a pair of running shoes increases, there is a movement along the supply curve.
There is a change in the quantity of running shoes supplied along the supply curve. But there is no change in the supply of running shoes.

1 of 106

question

Every day, we make many choices.
We can't avoid having to make choices because ________.

answer

we can't afford to do all the things we'd like to do

question

An incentive is _______.

answer

a reward that encourages an action or a penalty that discourages an action

question

Choose the definition that gives the best overview of economics.
Economics is the social science that studies the choices _______.

answer

that we make as we cope with scarcity

question

Factors of production are grouped into four categories, which are _______.

answer

land, labor, capital, and entrepreneurship

question

answer

The teenager who cuts neighborhood lawns in the summer holidays;
entrepreneurship

question

Land is the _____ that we use to produce goods and services.

answer

gifts of nature or natural resources

question

The _____ that people devote to produce goods and services is
labor.

answer

work time, and work effort

question

answer

is the knowledge and skill;
Tools, instruments, machines, buildings, and other items

question

answer

A. Sam Walton created the multinational retail corporation brand Walmart in 1962.

question

Resource use is efficient when _______.

answer

it is not possible to make someone better off without making someone else worse off

question

Which of the following illustrates a
tradeoff?

answer

I will study for my exam instead of going to the movie tonight.

question

The benefit of something is the _____.
Benefit is determined by preferences - by what a person _____ and the intensity of those feelings.

answer

gain or pleasure it brings;
likes and dislikes

question

A rational choice is _______.

answer

one that compares costs and benefits and achieves the greatest benefit over cost for the person making the choice

question

answer

D.
It is never a rational choice to decide to enter the labor force immediately following high school.

question

answer

D.
you prefer summer outdoor activities to winter outdoor activities

question

A benefit from your decision to attend summer school is ______ and a cost of your decision is ______.

answer

the credit you earn; the tuition fee you pay

question

answer

alternatives; incrementally;
opportunity cost; increase;
benefit; increase

question

answer

$3.50

question

answer

5
percentage points

question

People make rational choices by comparing _______.

answer

benefits and costs

question

You can spend the weekend at college or you can go home.
You have an incentive to spend the weekend at college if ______.

answer

the marginal benefit from
spending the weekend at college
is greater than the marginal cost of
spending the weekend at college

question

answer

The things you would have bought with what you spent on the ticket and bus fare getting to the game plus the things you would alternatively have done with your time.

question

answer

$14,300

question

answer

faced a tradeoff between a higher test score and an evening watching television;
the 15 percent fall in your grade

question

answer

statements 1 and 4 are positive

question

answer

The price of an iPad will fall over the next year.
This is the correct answer.

question

answer

The U.S government should increase unemployment benefits

question

The production possibilities frontier is the boundary between the combinations of goods and services that _____, given the available factors of production and the state of technology.

answer

can be produced and the combinations that cannot be produced

question

Harry produces 2 balloon rides and 4 boat rides an hour.
Harry could not produce more balloon rides without producing fewer boat rides.
Harry is ______ his production possibilities frontier.

answer

producing on

question

answer

increases. Resources are not equally productive in all activities

question

answer

Production; Allocative

question

All points on the PPF are points of ______ efficiency.
When we produce at the point on the PPF that we prefer above all other points we achieve ______ efficiency.

answer

production; allocative

question

The marginal benefit of a good or service is the _____.

answer

benefit received from consuming one more unit of it.

question

The marginal cost of a good or service is the _____.

answer

opportunity cost of producing one more unit of it

question

Microsoft's marginal cost of the 100th copy of Microsoft Windows 10 is _______.

answer

calculated as the slope of the PPF at the point where the 100th copy of Windows 10 is produced

question

Which of the following is an example of absolute advantage?

answer

Tom does his math homework in 2 hours while Harry takes only 30 minutes to do the same task.

question

answer

A.
lower; higher

question

answer

.Jim;
salmon

question

answer

Martha

jane

Martha

question

Why do people specialize and trade?
With specialization and trade, people can _______.

answer

consume at a point outside their PPF

question

Big Lobster sells lobster and fish, and so too does H Salt.
If H Salt's opportunity cost of preparing lobster exceeds Big Lobster's opportunity cost of preparing lobster, then ______.

answer

Big Lobster
has a comparative advantage in preparing lobster

question

If H Salt and Big Lobster decide to specialize and trade, then the source of the gains from the trade between H Salt and Big Lobster is _______.

answer

B.
divergent opportunity cost

question

answer

1/5 and 1/10

question

______ has a comparative advantage in producing caps.
If Sue and Tessa each specialize in producing the good in which they have a comparative advantage and trade 1 jacket for 7 caps, ______.

answer

Tessa; both Sue and Tessa gain

question

Ed
and Sharon grow strawberries and raspberries.
Ed
has a comparative advantage in producing strawberries if _______

answer

Ed's opportunity cost of producing raspberries is greater than sharons oppurt cost of producing raspberries

question

If Ed also has an absolute advantage in growing
strawberries and raspberries, he will _______.

answer

have a comparative advantage in one activity but not both.

question

answer

question

answer

question

answer

specializes in beef and
Doug
specializes in corn

question

answer

true

question

Economic growth is defined as the _____ .

answer

sustained expansion of production possibilities

question

Technological change is _____ new goods and of _____ of producing goods and services.

answer

the development of; of better ways

question

Capital accumulation is the _____, including _____ capital.

answer

growth of capital resources; human

question

What generates economic growth?
Economic growth comes from _______.

answer

capital accumulation and technological advance

question

The opportunity cost of economic growth _______.

answer

question

When
the quantity of capital in an economy increases,
_______.

answer

When the quantity of capital in an economy increases, economic growth occurs.
Economic growth occurs, but it is not free.

question

the opportunity cost of economic growth is ______.

answer

question

An economy that uses new technology _______.

answer

question

Firms are institutions that organise _____ of goods and services.

answer

the production

question

A market is an arrangement that brings _____ together and enables them to get information and do business with each other.

answer

buyers and sellers

question

Property rights are legally established titles to the ownership, use and disposal of _____ and goods and services that are enforceable in the courts.

answer

factors of production

question

Social institutions such as firms, markets, property rights, and money _______.

answer

question

_______ choose the quantities of labor, land, capital, and entrepreneurship to sell or rent.
_______ choose the quantities of factors of production to hire.

answer

question

Demand is _____, when all other influences on buying plans remain the same.

answer

Demand is the relationship between the quantity demanded of a good and the price of the good, when all other influences on buying plans remain the same.

question

A demand curve shows the relation between the _____ and _____ when all other influences on buying plans remain the same.

answer

A demand curve shows the relation between the quantity demanded a good and its price when all other influences on buying plans remain the same.

question

Which of the following statements by Tom demonstrates that his buying plans obey the law of
demand?

answer

question

Jeb makes the following four statements about peanuts. Which statement best describes his quantity demanded in the peanut market?

answer

question

The quantity demanded of a good or service is ______.

answer

question

answer

A.
I is a change in demand and II and III are changes in the quantity demanded.

question

answer

question

The law of demand states that other things remaining the same, the _______ the price of a good, the _______.

answer

question

A demand curve that illustrates the law of demand ______.

answer

A demand curve that illustrates the law of demand is downward sloping—as the price falls, the quantity demanded increases, and as the price rises, the quantity demanded decreases.

question

answer

question

substitute is a good that is _____ another good, and a complement is a good that is _____ another good.

answer

A substitute is a good that is consumed in place of another good, and a complement is a good that is consumed together with another good.

question

answer

question

The law of demand states that ______, the ______ the price of a good, the smaller is the quantity demanded.

answer

question

Taking a smartphone to the gym when you work out becomes less popular.

What is the result of this event?
As a result, _______.

answer

the demand of smart phones decreases

question

If, as the price of
soup
decreases,
the quantity of
chili
that people buy
decreases,
then
soup
and
chili
are _______.

answer

question

If, as
Gustavo's
income
decreases,
his
demand for
magazines
decreases,
then for
Gustavo,
magazines
are
_______.

answer

normal good

question

If the price of a milkshake falls, a ______ the demand curve occurs.
If any factor that influences buying plans other than the price changes, then a ______ the demand curve occurs.

answer

question

sport cars and gasoline are complements.
If the price of a sports car decreases, how does the demand for gasoline change?
If the price of a sports car decreases, the demand for gasoline will _______.

answer

question

answer

question

A laptop
is a normal good.
If income is expected to increase next year, you predict that the demand for laptops _______ now.

answer

will increase

question

Along the supply curve, _______.

answer

question

A supply curve shows the relationship between the ______ and _____ when all other influences on selling plans remain the same.

answer

A supply curve shows the relationship between the quantity supplied of a good and its price, when all other influences on selling plans remain the same.

question

What does the supply curve tell us about the producer's minimum supply price?
A supply curve _______.

answer

question

Supply is _____, when all other influences on buying plans remain the same.

answer

Supply is the relationship between the quantity supplied and the price of a good when all other influences on selling plans remain the same.

question

Aqua Springs makes the following four statements about bottled spring water. Which statement best describes the firm's quantity supplied in the bottled watermarket?

answer

question

answer

question

answer

question

A
rise
in the price of a smartphone ______ the quantity supplied and ______ supply.

answer

question

A substitute in production is a good that is _____ another good, and a complement in production is a good that is _____ another good.

answer

A substitute in production is a good that is produced in place of another good, and a complement in production is a good that is produced together with another good.

question

answer

question

If as the price of
a tank top
increases,
the quantity of
T-shirts
that firms plan to sell
decreases,
then
tank tops
and
T-shirts
are _______.

answer

question

In the market for
books,
the supply of
books
will
increase
if ______.

answer

The supply of
books
will
increase
if there is
an increase
in the number of
book publishers.

question

answer

When farmers use the new technology, they can produce more maple syrup per acre from their current trees.
The supply of maple syrup increases. The supply curve of maple syrup shifts rightward.

question

The equilibrium price is the price at which _____ and the equilibrium quantity is the _____.

answer

The equilibrium price is the price at which the quantity demanded equals the quantity supplied and the equilibrium quantity is the the quantity bought and sold at the equilibrium price.

question

answer

question

The equilibrium quantity _______.

answer

question

f the price of a pizza is $12, a ______ exists and the price ______.

Buyers want to pay the lowest possible price, so they are willing to pay more than $12 for a pizza because ______.

answer

question

When a shortage arises, the price ______ to its equilibrium, which_______.

answer

question

When a surplus arises, the price ______ to its equilibrium, which_______.

answer

question

answer

question

The price of a music-streaming subscription rises.
What is the effect on the price and quantity of smartphones?
The equilibrium quantity of smartphones _______ and the equilibrium price _______.

answer

decreases; falls

question

answer

question

answer

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