Chapter 1 Flashcards
Point A: 10 apples and 20 pairs
Point B: 7 apples and 21 pears, whats the opportunity cost of moving from point A to point B?
3 Apples
Where on a graph would a point that is productive inefficient be?
Under the ppf
Where would a point that’s unattainable be?
Above the ppf
What is a person who is waiting to be called back from a job which they were laid off consider?
Unemployed
Where would a point that illustrates productive efficiency be?
On the ppf
What would happen to a ppf if there is a significant loss of resources?
It would move a left (smaller)
What is the opportunity cost to move from a point inside the ppf to one on the ppf?
Zero
What does a bowed out ppf mean?
Increasing opportunity cost
If an economy is operating on its ppf, are they any unemployed resources in the economy?
No, bc if they were if they were any unemployed resources it would be producing below its ppf
As the price of good A rises, the demand for good B rises. what kind of goods are these?
Substitutes
Oil producers expect that oil prices next year will be lower than this year, what are they most likely to do?
Place more oil on the market this year, shifting the supply curve of oil rightward
What’s an inferior good?
Income goes up, demand goes down
X is an inferior good and Y is a substitute for X
Income rises, the demand for X falls, the price of X falls and the demand of Y falls
If the demand for a good falls by less than the supply of the good rises, then the equilibrium price will _______ and the equilibrium quantity will ______.
Fall ; rise
Quantity and demand are ______ related
Inversely
If more people begin to favor science fiction novels, the demand curve will
Shift rightward
Resource X is necessary to the production of good Y. If the price of resource X rises,
The supply curve shifts leftward
At a price below the equilibrium price, there is a
Shortage
If the supply of and demand for a product both decrease, then equilibrium
Quantity must decline, but equilibrium prices may either rise, fall or remain the same
A vertical curve represents..
An independent relationship between price and quantity supplied
If a demand for a good increases by more than the supply of the good increase, then the price will ____ and the quantity will ____
Rise and rise
The space on the freeway is fixe at any instant. A supply curve that shows this would be…
Perfectly vertical
The higher the price of medical care in general, the lower ________ medical care and the ________ specific items that make up medical care
Quantity demanded of, lower the demand for
A toll of $1 per car is imposed on a road regardless the time of the day, if the toll creates equilibrium travel flows at the busiest time of the day, it will create a _______ at all other times
Surplus of space
