Exam 1 Flashcards
An increase in the price of an input will cause supply to increase T/F?
False
In a MARKET system, the ultimate decision about what to produce is left to
sellers
A situation where limited resources make it impossible to fulfill all of our wants is known as
scarcity
Tobacco companies did not resist the advertising can instituted in 1970 because they actually increased profits by not being allowed to advertise. This ban forced these companies to abondon their dominant strategy of advertising and wind up at a cooperative outcome of not advertising. Prior to the ban, the tobacco companies were involved in playing
a prisoner’s dilemma game
Incentives
can be used to either encourage or discourage particular behaviors
Incentives work by changing the trade-offs faced by individuals T/F?
True
If a company could spend $3 per bicycle on a safety device that would prevent $2,000 worth of harm for every 1,000 bicycles sold, spending the $3 would be a cost-justified precaution. T/F?
False
Taxes can be adversely affect free exchange T/F?
True
Ultimately, quotas ______ prices for imported goods and ______ prices for domestic goods.
raise; raise
If supply is elastic, the supply curve is relatively _______, and if demand is elastic, the demand curve is relatively _______.
flat; flat
The amount Jacqueline recieves for selling cupcakes beyond the minimum she would be willing to sell the cupcakes for is called
producer surplus
Markets are forums where buyers and sellers conduct transactions T/F?
True
Gerald is deciding what kind of light bulbs to install in the light fixtures in his new home. He has it narrowed down to compact fluorescent bulbs (CFLs) or LED bulbs. The CFLs will cost $350 and the LEDs will cost $900. Gerald estimates that the energy-saving benefits from the CFLs will be $750 and the energy-saving benefits from the LEDs will be $1,250. Based on these numbers, Gerald should purchase the
CFLs because the net benefit is greater
Andrea: one bracelet takes 2 hrs, 1 tiara takes 12 hrs
What is Andrea’s opportunity cost of producing one bracelet?
1/6 of a tiara
If a product is a normal good, an increase in your income will
increase your demand for the product
You decide to spend time studying for a philosophy exam, even though you have offers to go to see a movie, go out to dinner, or go to a poetry reading. This is a difficult choice for you because you really want to go to the poetry reading and would choose that overseeing the movie or going out to dinner. Your opportunity cost of spending time studying for your philosophy exam is
going to the poetry reading
Prices help coordinate all phases of production, so producers have the right quantities of resources they need, in the right place, to operate. T/F?
True
All of the following are factors that will shift the demand curve EXCEPT
a change in the price of inputs
A supply schedule is a table that reports:
the different quantities of a good that producers are willing to sell at different prices
Globalization has given U.S. consumers a wider variety of gourmet food products from which to choose and has lowered the prices of these products in general. This, in turn, has encouraged consumers to buy more gourmet food items, which has ________ the amount of cooperative surplus for the buyers and sellers of gourmet food products.
increased
According to the U.S. National Safety Council, a person has a better chance of being killed in which of the following situations?
while walking
In a COMMAND economy, the ultimate decision about what to produce is left to
the government
Who faces trade-offs?
all of the above
If Carla can pick more oranges in one hour than Benjamin, then Carla definitely has a comparative advantage in picking oranges. T/F?
False
An economy’s resources include
all of the above
Which of the following is not a characteristic of a battle of the sexes game?
each player has a dominant strategy
Claudia’s Copy Shop is deciding which 3-D printer to purchase, and it only has room for one printer. It can purchase the “Mini-Me” small-object printer, which would generate benefits of $50,000 at a cost of $5,000, or it can purchase the “Gargantuan” large-object printer which would generate benefits of $250,000 at a cost of $25,000. Based on these numbers, Claudia’s Copy Shop should purchase
the “Gargsntuan” printer
A chain saw manufacturer can make its chain saws safer by adding a titanium chain guard to its products. Adding the titanium chain guard costs $35 per chain saw. The manufacturer estimates that this will prevent 10 injuries for every 5,000 chain saws sold and that, on average, each injury causes $15,000 of harm. The injury cost per chain saw is
$30.00.
Property rights connect effort with reward T/F?
True
Your opportunity cost of attending a lecture on the number of brain cells lost by binge-watching episodes of Tiger King is
the value of attending a meditation class, which is your next-best alternative.
Which of the following is not a characteristic of a chicken game?
When both players play their tough strategy, they can receive their best possible payout.
Economies can be organizations such as
households, states, and countries
Which of the following is likely to use the concepts of game theory?
International trade negotiation
Human beings are generally very good at accurately estimating probabilities T/F?
False
Which of the following is a key question that must be addressed by an economy?
How will we distribute our products?
The process of making the best of our limited resources by doing the things we are best at and hiring other people to do the things we are not particularly good at is called
specialization
In 2009, Samoa changed from everyone driving on the right side of the road to everyone driving on the left side of the road. Although everyone agreed that it was important to drive on the same side of the road, some Samoans were not happy about the change. This created a disagreement about which Nash equilibrium was the best equilibrium, and therefore represented
a battle of the sexes game
Which of the following is a key question that must be addressed by an economy?
What will be made with our resources?
If Jacqueline is willing to accept $1 for a cupcake and Jameson is willing to pay $3 for a cupcake, the cooperative surplus will ________ if the negotiated price is $1.50 as opposed to $2.00.
not change
