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Microeconomics > Exam 1 > Flashcards

Exam 1 Flashcards

1
Q

The opportunity cost of playing tennis with your friend is

A

the next-best alternative use of your time that is forgone

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2
Q

The primary concern of economics is the study of

A

how best to allocate scarce resources among competing uses

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3
Q

The market mechanism

A

uses prices as a means of communication between consumers and producers

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4
Q

Given that resources are scarce

A

opportunity costs always exist whenever choices are made

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5
Q

Economic theories can be used to do all of the following except

A

determine exact economic outcomes

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6
Q

In economics, which of the following is the best example of capital?

A

a computer used by a lawyer to prepare legal documents

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7
Q

Government intervention designed to address market failure

A

may either improve or worsen the mix of output produced

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8
Q

Most Americans do not trust the federal government to do the right thing. If they are correct, then government intervention results in

A

a less desirable mix of output

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9
Q

Which of the following is the best example of the “what” economic question?

A

What is the optimal mix of output?

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10
Q

Welfare programs are designed to address the

A

“for whom” question

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11
Q

Which of the following is associated with microeconomics?

A

an increase in sales for a chain of pet supply stores

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12
Q

A shift in a curve indicates that

A

a change has occurred in the underlying relationship between the two variables

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13
Q

Which of the following is an example of labor as a factor of production?

A

the skills and abilities of workers

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14
Q

Investment refers to all of the following except:

A

the purchase of stock by an individual

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15
Q

Which of the following is an example of a negative externality?

A

an increase in the incidence of cancer due to pollution

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16
Q

In the figure, a grade-point average of 3.0 is associated with how many hours of study time per week?

A

30 hours

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17
Q

The essential signal of the market mechanism is

A

price

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18
Q

An economist who says that “there is no such thing as a free lunch” means that

A

Both we cannot have everything we want, even if the price is $0, and even when a meal is free, we give up the chance to do something else with that time

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19
Q

Pollution is an example of:

A

market failure

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20
Q

Which of the following statements is consistent with central planning?

A

Government planners play the dominant role in deciding how resources are allocated

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21
Q

Which of the following is true if there is a surplus of a particular good?

A

Both the market price is above the equilibrium price and the quantity supplied is greater than the quantity demanded

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22
Q

Ceteris paribus, the law of demand says that

A

price and quantity demanded are inversely related

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23
Q

Ceteris paribus, according to the law of supply, if the price of product Z increases from $6 to $8, then the

A

quantity supplied of Z will increase

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24
Q

The goals of the principal participants in the economy are to maximize

A

happiness for consumers, profits for businesses, and general welfare for government

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25
Q

At the equilibrium market price, which of the following is true?

A

Quantity demanded and quantity supplied are equal

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26
Q

In the market for gym equipment, what would we expect to happen if the price of gym equipment rises?

A

A decrease in the quantity demanded of gym equipment

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27
Q

The equilibrium price and quantity depicted in the figure are, respectively,

A

$30 and 15 units

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28
Q

In the U.S. economy, foreigners participate in

A

both the product and factor markets

29
Q

According to the law of demand, a change in _________ causes a movement along the demand curve

A

the price of the good

30
Q

Taylor Swift’s “Reputation” tour, proved that

A

dynamic pricing helped her fill the stadium

31
Q

For government, most market activity can be explained by the goal of

A

public welfare maximization

32
Q

Which of these would cause both the supply and demand curves of a product to shift?

A

change in expectations of future prices

33
Q

Which of the following participates in the product market?

A

consumers, governments, and foreigners

34
Q

Which of the following situations is sufficient to represent current demand for a car?

A

You have enough money to buy it and you are willing to spend the money on the car

35
Q

The equilibrium price and quantity are determined by the

A

market mechanism

36
Q

In a market, the equilibrium price is determined by

A

the interaction of both demand and supply

37
Q

When there is a surplus in a market, prices are likely to fall because

A

sellers would rather lower their prices to sell some of their goods or services than keep prices higher and be stuck with unsold products

38
Q

People benefit by participating in the market because

A

it facilitates specialization, increased production, and increased consumption

39
Q

A demand curve doesn’t convey

A

why a consumer is willing to pay specific prices for various amounts of the desired good

40
Q

Ceteris paribus, according to the law of supply, if the price of lawn mowing services decreases from $50 per lawn to $45 per lawn, then the

A

quantity supplied of lawn mowing will decrease

41
Q

Consumers provide money as an inflow to which of the following markets?

A

product markets

42
Q

Shortages are the same thing as excess

A

demand

43
Q

Assume that pens and pencils are substitutes for each other. In the market for pens, what would we expect to happen if the price of pencils rises?

A

An increase in the demand for pens

44
Q

Which of the following is true about American spending habits?

A

Teenagers spend their money on electronics, cars, and clothes

45
Q

The law of demand and the law of diminishing marginal utility are related since both

A

assume that the first units consumed have more utility than subsequent units

46
Q

According to the law of demand

A

as the price of a good falls, the quantity demanded will increase in a given time period, ceteris paribus

47
Q

Socio-psychiatric explanations of consumer demand for a good or service include the

A

desire for ego and status

48
Q

If quantity demanded rises only slightly following a moderate price cut, then the response would be considered

A

inelastic

49
Q

Which of the following is a determinant of demand for a good?

A

consumer income

50
Q

Which of the following is true about demand?

A

In order to demand a good, a person must be willing and able to buy the good

51
Q

Price elasticity of demand shows how

A

quantity demanded responds to price changes

52
Q

A good with relatively elastic demand is more likely to be a _________blank, or a good with _________blank substitutes

A

luxury; many

53
Q

The demand for _________blank is relatively elastic

A

vacation travel

54
Q

Socio-psychiatric theories are

A

not sufficient to explain which goods will be purchased because they tell us why consumers desire certain goods but not what they are willing and able to pay for it

55
Q

If marginal utility is positive, then total utility must be

A

increasing

56
Q

If demand is elastic, then

A

quantity demanded is very responsive to changes in price

57
Q

At some point during a meal, each extra bite provides less and less additional satisfaction. This can be explained by

A

the law of diminishing marginal utility

58
Q

The assumption of ceteris paribus is important because it

A

allows us to focus on the effects of a change in one variable at a time on another variable of interest

59
Q

The difference between total utility and marginal utility is that

A

total utility is the complete satisfaction from consuming a product while marginal utility is the satisfaction from consuming one additional unit of a product

60
Q

Which of the following are determinants of price elasticity?

A

All of these choices are correct

61
Q

If the marginal utility of one more piece of candy is positive, then the

A

total utility will increase with additional consumption

62
Q

Marginal utility is an important economic concept because it

A

can be used to predict the amount of a good a rational consumer will purchase

63
Q

The law of diminishing marginal utility helps to explain the

A

downward-sloping demand curve

64
Q

Which of the following is true about consumer spending over time?

A

Spending habits are likely to change when new products enter the market

65
Q

A survey about American spending habits of the young (under 25) by the BLS shows that

A

young women are more likely to go into credit card debt because of their spending than are young men

66
Q

Recent prices increases for Starbucks coffee will cause an increase in revenue for the company if

A

All of these choices are correct

67
Q

Which of the following causes the market demand curve for a good to shift?

A

the number of buyers in the market

68
Q

The following table shows the utility (enjoyment) that Joyce receives from eating ice cream cones on a hot summer day:

A

diminishing marginal utility

Microeconomics (4 decks)

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