Exam 1 Questions Flashcards
A headline reads “Lumber Prices Up Sharply.” In a competitive market, this situation would lead to a
Increase in the price of new homes and decrease in quantity
What does “there is no such thing as a free lunch” mean in economics?
Scarce resources are used up to provide “freebies” and giveaways
An “increase in the quantity supplied” suggests a
movement up along the supply curve
Who determines the price and quantity traded in a market?
buyers and sellers
One major part of the opportunity costs of one’s decision to go to college after high-school graduation is the
full-time job that one could have gotten instead of going to college
From an economic perspective, when consumers leave a fast-food restaurant because the lines to be served are too long, they have concluded that the
marginal cost of waiting is greater than the marginal benefit of being served
What is consistent with the law of demand?
An increase in the price of hamburgers causes buyers to buy fewer hamburgers
If a tax is levied on the production of good X, this will shift the
supply curve for X to the left
Which question is an illustration of a microeconomic question?
Is the volume of wine produced in 1 year dependent on the price of wine?
Assume there is no way to prevent someone from using an interstate highway, regardless of whether or not he or she helps pay for it. This characteristic is called
nonexcludability
Graphically, producer surplus is measure as the area
above the supply curve and below the actual price
An improvement in production technology will
shift the supply curve to the right
An increase in demand for oil along with a simultaneous decrease in supply of oil will
Increase price, but whether it increases quantity depends on how much each curve shifts
The expectation by consumers that gasoline prices will be higher in the future would
increase demand for gasoline
In a free-market economy, a product that entails a positive externality will be
underproduced
