Test 1 Flashcards
Microeconomics….
Examines how individuals, households, and firms make economic economic decisions
Which of the following is a positive statement?
When per capita income falls, fewer meals are consumed at restaurants
At which point is it impossible for the economy to produce?
Point outside the graph
At which point is the economy under utilizing the it’s resources
Point inside the graph
If most people in a society have more of one good than the other, which point most likely represents the optimal mix of output
Point highest on one axis, lowest on another
The opportunity cost of any activity can be measured by
Value to the best alternative to that activity
When all resources used in production are not perfectly substitutable
The production possibility frontier will be concave (bowed outward)
Who has the absolute advantage?
Bon has absolute advantage in celebrity jokes
Who has the comparative advantage?
Tom has comparative advantage in political jokes, Bob has comparative advantage in celebrity jokes
If every country specialized in the goods in which they have comparative advantage, who benefits
Everyone could benefit and consume outside of their ability to produce
According to the law of Demand
There is a negative relationship between quantity demand and price (negative slope)
Market demand is the
Horizontal sum of each individual demand curve
Which of the following would not cause a shift in the demand curve for apples?
A decrease in the supply of apples
Which of the following would cause a leftward shift of the supply curve for computers?
An increase in the price of printed circuit boards used to build computers
When Qd>Qs there is excess ______ and _______ pressure on the market price.
Demand, upward
The equilibrium price is where
Qd=Qs
The demand curve intersects the supply curve
Every buyer who wanted to purchase the unit can find a buyer to sell it
Ceteris Paribus means
Everything else held constant
Graph when the cost of something increases
Supply curve moves left, price increases
The height of the demand curve represents
The maximum price that buyers will pay for the last unit
The area below the price that sellers receive and above the supply curve represents
Producer surplus
A price floor set above the equilibrium price would
Cause of a surplus of goods
Customers waiting in a line is a form of…
Non price rationing
The long run price elasticity of demand for a good is…
More elastic than short run price elasticity
If the cross price of elasticity of demand of laptop computers with respect to the price of network routers is -.2 then…
Laptop computers and network routers at compliments
If buyers of ole miss football season tickets are inelastic then an increase in price will be met by a proportionally _____ decrease in tickets sold
Smaller
As a result of he scenario in 30, the revenue to the athletic department from season ticket sales would….
Increase
When the price of cruises falls by 30%, cruise lines expect to sell 15% more cruise tickets, therefore price elasticity of demand is…
-.5
Economics is the study of choice under the conditions of
Scarcity
