Econ midterm 1 Flashcards
Suppose the price of train tickets is lowered from $4 to $2, and the price of hot dogs remains the same at $1. What happens to the opportunity cost of train tickets?
Decrease
Can a nation be producing in a way that is allocatively efficient, but productively inefficient?
No
Suppose there is new technology that allows Brazil to be able to produce the same amount of wheat per acre as the US. (However, Brazil still can produce more sugarcane per acre than the US.) Which country now has the comparative advantage in wheat?
U.S
Positive or Normative?
A decrease in wages will reduce the number of people who are willing to work.
Positive
Positive or Normative?
The government should make state universities and colleges tuition-free for U.S. citizens.
Normative
Positive or Normative?
High interest rates discourage many newlywed couples from buying their first home.
Positive
Positive or Normative?
Increasing funding to the Border Patrol is the best policy for national security.
Normative
Effect of sudden popularity of rollerskates on demand for rollerskates
Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift
Demand curve shifts rightward
Effect of the rollerskate fad ending on demand for rollerskates
Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift
Demand curve shifts rightward
Effect of consumer expectations that gasoline will be in short supply next week on demand for gasoline today
Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift
Demand curve shifts rightward
Effect of consumer expectations that many new houses will be constructed by next year on demand for house purchases today
Demand curve shifts leftward
Demand curve shifts rightward
Demand curve does not shift
Demand curve shifts leftward
Effect of new manufacturing methods reducing cost of producing cars on supply of cars
Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift
Supply curve shifts rightward
Effect of war destroying innovation hubs on supply of artificial intelligence (AI) services
Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift
Supply curve shifts leftward
Effect of climate change causing more droughts in California on supply of vegetables
Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift
Supply curve shifts leftward
Effect of climate change causing a warmer climate in Canada on supply of maple syrup
Supply curve shifts leftward
Supply curve shifts rightward
Supply curve does not shift
Supply curve shifts rightward
At a price of $5.50 per gallon, 460 million gallons of gasoline are supplied and 320 million gallons of gasoline are demanded.
Prices will increase Prices will decrease Prices will stay the same
Prices will decrease
The price of Japanese chili peppers is $1.60 per pound, but the equilibrium price is $3.20 per pound.
Shortage
Surplus
Equilibrium
Shortage
At a price of $100, 200 thousand TVs are demanded and 200 thousand TVs are supplied.
Prices will increase Prices will decrease Prices will stay the same
Prices will stay the same
At a price of $1.00 per can, 3 million cans of cola are supplied and 5 million cans of cola are demanded.
Prices will increase Prices will decrease Prices will stay the same
Prices will increase
The price of laptops is $250, but the equilibrium price is $120.
Shortage
Surplus
Equilibrium
Surplus
At a price of $6 per can, 4 million cans of chickpeas are supplied and 4 million cans of chickpeas are demanded.
Shortage
Surplus
Equilibrium
Equilibrium
Impact of dramatically decreased price of AI services on electricity market
Demand curve affected
Supply curve affected
BOTH demand curve AND supply curve affected
NEITHER demand curve NOR supply curve affected
Demand curve affected
Impact of dramatically decreased price of AI services on electricity market: how will demand be affected?
Demand curve will shift to the left Demand curve will shift to the right
Demand curve will shift to the right
Inferior good
a product or service that people buy more of when their income decreases
Income Rises, Demand falls (left)
Income falls. Demand rises (right)
Normal good
a product that people buy more of when their income increases
Income rises, Demand rises (right)
Income falls, Demand falls (left)
Substitute
a good that competes with another good for consumer purchases
ex) pepsi v.s coca cola
Complement
a good that is jointly consumed with another good
ex) computers and internet service
Law of Supply
rise in price- increase in quantity demand
fall in price- decrease in quantity supplied
Ceteris Paribus
The affect
Production possibilities frontier (PPF)
Graph that shows
Law of increasing opportunity cost
The more you produce of one good the opportunity cost of producing an additional unit of that good increases
Sunk Costs
Costs that were incurred in the past and cannot be
recovered
Macroeconomics
the branch of economics that focuses on broad issues
Microeconomics
the branch of economics that focuses on actions of particular agents
Economic Systems
Traditional, Command, Market
Marginal analysis
weighing benefits of choosing more or less of a good
law of diminishing marginal utility
the more we get a of a good the total satisfaction decreases
law of diminishing returns
as you increase one factor of production (like labor) while keeping other factors constant, the additional output gained from each additional unit of that factor will eventually become smaller
monetary policy
a set of actions taken by a central bank to control the money supply and interest rates
fiscal policy
a government’s use of taxation and spending to influence a country’s economy
