Exam 1 Flashcards
The basic economic problem is
economic scarcity and unlimited economic wants
the individual who brings together economic resources and assumes the risk in a capitalist economy is called the
entrepreneur
which is not an economic resource?
Money
if an economy is being “productively efficient” then that means the economy is using
the least costly production techniques
with allocative efficiency
resources are used in their most appropriate and acceptable application
which is one of the four simplifying assumptions made in the chapter about the construction of the production possibilities model?
the economy is fully employed and is using the least cost methods of production
refer to the table. the total opportunity cost of the three units of steel is
45 wheat
refer to the above graph. the marginal opportunity cost of the fourth units of bread is
0 drill presses
The graph above shows the production possibilities curve for an economy producing two goods X and Y. which of the points of the graph indicate unemployment resources?
E and A
If an economy that produces capital and consumer goods is operating at a point on its production possibilities curve, this indicates that
more capital goods can be produced only at the cost of some consumer goods.
The private ownership of property resources and use of prices to direct and coordinate economic activity is characteristic of
the market system
the institution which coordinates actions of consumers and producers to establish prices for goods and services is known as
a market
in a competitive market for corn, the law of demand indicates that , other things equal, as
the price of corn decreases, the quantity of corn demand will increase.
a result of a fall in the price of gasoline, consumers buy more gasoline and take more driving vacations. this situation is an illustration of
income effect
the horizontal axis of a graph which shows a market demand curve indicates the
quantities which consumers will be willing and able to buy at various prices
refer to the above table. the quantity demanded for wheat is
37 bushels at 4 and 52 bushels at 3
refer to the above table. at a price of 6, the market demand for bushels of wheat among the three buyers in the market is
17
which is a determinant of demand>
income
which will not cause a change in the demand for product a
a change in the price of A
which goods would usually be an inferior good?
generic goods
for some products, purchases tend to decrease as the buyers income increases such products are known as
inferior goods
refer to the above diagram, which shows three demand curves for coffee. which would cause the change in the demand for coffee illustrated by the shift from D1 to D2
decrease in the price of tea
if two goods are close substitutes
a fall in one will decrease the demand for the other
Which factor will increase the demand for product
quantity demanded
if the price of K declines, the demand curve for the complementary product J will
shift to the right
refer to the above graph, which shows the market for chicken where D1 and D2 represent different demand curves. A change from E1 to E2 is most likely to result from
a decrease in consumer incomes
when economists say that the demand for a product has decreases, they mean that
the product price has increased and as a consequence consumers are buying less product
an increase in the price of product G will result in
a smaller quantity of G demanded
Refer to the above graph. An increase in quantity demanded would be a movement from point
line A to line B
Suppose that the demand curve for wheat is downward sloping and the price per bushel increases from 4.50 to 5.50. we would expect
the quantity demand of wheat to fall
the law of supply is illustrated by a supply curve that is
upward sloping
which is a determinant of supply?
technology
refer to the above diagram illustrating the market for corn. the equilibrium price and quantity in this market are
8 bushels for 3
refer to the above diagram illustrating the market for corn. if the price in this market were ti be fixed at 4 per bushel, the part of the line marked A would represent
surplus of 8000 bushels
select the graph above the best shows the change to demand or supply in a particular market given the following situation: in the market for coats, the wearing of leather coats becomes more fashionable among young consumers
graph a
sole proprietorship constitute approximately what proportion of business firms in the United States
75 percent
What basic economies function does the government perform when it protects product quality
maintaing competition
if the production of a product results in sizable spillover costs, an appropriate government policy might be able to
tax the producers and thus shifting the supply curve to the left
what type of economic flow would be illustrated by the purchase of a mexican candy making factory by a US corporation
financial flow
specialization and international trade will
result in a rightward shift in a nations production possibilities curve
the depreciation of the US dollar relative to the French franc would make a vacation trip
the united states less expensive for the french
the dollar price of a euro in the above market would be
50
a person receives a paper asset from a corporation that is a promise from the corporation to repay a loan at a fixed rate of interest. this type of asset is referred to as a
bond
the term double taxation refers to the fact that
taxes are paid on corporate profits and then stockholders pay taxes on the dividends they receive
the two largest sources of revenue for the federal government are
corporate and personal income tax
