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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
At the equilibrium market price, which of the following is true?
Quantity demanded and quantity supplied are equal
26
In the market for gym equipment, what would we expect to happen if the price of gym equipment rises?
A decrease in the quantity demanded of gym equipment
27
The equilibrium price and quantity depicted in the figure are, respectively,
$30 and 15 units
28
In the U.S. economy, foreigners participate in
both the product and factor markets
29
According to the law of demand, a change in _________ causes a movement along the demand curve
the price of the good
30
Taylor Swift's "Reputation" tour, proved that
dynamic pricing helped her fill the stadium
31
For government, most market activity can be explained by the goal of
public welfare maximization
32
Which of these would cause both the supply and demand curves of a product to shift?
change in expectations of future prices
33
Which of the following participates in the product market?
consumers, governments, and foreigners
34
Which of the following situations is sufficient to represent current demand for a car?
You have enough money to buy it and you are willing to spend the money on the car
35
The equilibrium price and quantity are determined by the
market mechanism
36
In a market, the equilibrium price is determined by
the interaction of both demand and supply
37
When there is a surplus in a market, prices are likely to fall because
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
People benefit by participating in the market because
it facilitates specialization, increased production, and increased consumption
39
A demand curve doesn't convey
why a consumer is willing to pay specific prices for various amounts of the desired good
40
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
quantity supplied of lawn mowing will decrease
41
Consumers provide money as an inflow to which of the following markets?
product markets
42
Shortages are the same thing as excess
demand
43
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?
An increase in the demand for pens
44
Which of the following is true about American spending habits?
Teenagers spend their money on electronics, cars, and clothes
45
The law of demand and the law of diminishing marginal utility are related since both
assume that the first units consumed have more utility than subsequent units
46
According to the law of demand
as the price of a good falls, the quantity demanded will increase in a given time period, ceteris paribus
47
Socio-psychiatric explanations of consumer demand for a good or service include the
desire for ego and status
48
If quantity demanded rises only slightly following a moderate price cut, then the response would be considered
inelastic
49
Which of the following is a determinant of demand for a good?
consumer income
50
Which of the following is true about demand?
In order to demand a good, a person must be willing and able to buy the good
51
Price elasticity of demand shows how
quantity demanded responds to price changes
52
A good with relatively elastic demand is more likely to be a _________blank, or a good with _________blank substitutes
luxury; many
53
The demand for _________blank is relatively elastic
vacation travel
54
Socio-psychiatric theories are
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
If marginal utility is positive, then total utility must be
increasing
56
If demand is elastic, then
quantity demanded is very responsive to changes in price
57
At some point during a meal, each extra bite provides less and less additional satisfaction. This can be explained by
the law of diminishing marginal utility
58
The assumption of ceteris paribus is important because it
allows us to focus on the effects of a change in one variable at a time on another variable of interest
59
The difference between total utility and marginal utility is that
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
Which of the following are determinants of price elasticity?
All of these choices are correct
61
If the marginal utility of one more piece of candy is positive, then the
total utility will increase with additional consumption
62
Marginal utility is an important economic concept because it
can be used to predict the amount of a good a rational consumer will purchase
63
The law of diminishing marginal utility helps to explain the
downward-sloping demand curve
64
Which of the following is true about consumer spending over time?
Spending habits are likely to change when new products enter the market
65
A survey about American spending habits of the young (under 25) by the BLS shows that
young women are more likely to go into credit card debt because of their spending than are young men
66
Recent prices increases for Starbucks coffee will cause an increase in revenue for the company if
All of these choices are correct
67
Which of the following causes the market demand curve for a good to shift?
the number of buyers in the market
68
The following table shows the utility (enjoyment) that Joyce receives from eating ice cream cones on a hot summer day:
diminishing marginal utility

Microeconomics (4 decks)

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