Studies human behavior when scarcity exists and choices must be made
Provides the only reasonable explanation of how people make decisions
Is better at showing the way things ought to be than the other social sciences are
Is the only social science that can explain the existence and behavior of public institutions
The behavior of large firms in the marketplace
The economic behavior of individual decision makers
The behavior of the economy as a whole
The actions and reactions of the rest of the world
The impact of aggregate demand on recession.
The reasons for the increase in the price of a soft drink.
The effect that money supply has on the interest rate.
The tradeoff between inflation and unemployment.
Description of all variables affecting a situation.
Positive analysis of all variables affecting an event.
Simplified description of reality to understand and predict an economic event.
Prediction based on historical evidence.
Only in terms of money spent
As the sum of the values of all alternatives not chosen
As the value of the best alternative not chosen
As the difference between the benefits of your choice and the costs of your choice
Inside its production possibilities frontier
Somewhere on and along its production possibilities frontier
Outside of its production possibilities frontier
More of one product with no decrease in the production of any other product
Total output of all goods and services
Market value of final goods and services produced in a nation in a given year
Value added to the economy by intermediate goods and services minus original cost
Production by the rest of the world
Purchase of 100 shares of General Motors stock.
Purchase of a used car.
Purchase of an intermediate good.
None of the above would be included.
GDP = C + I - G + X + M.
GDP = C + I + G + X + M.
GDP = C + I + G + X - M.
GDP = C + I + X - M.
The price level has increased by 3 percent
Real output/production has increased by 3 percent
The increase might have been caused by an increase in the price level or output, but we cannot tell for sure
Government spending increased by 3 percent
|National income account||(billions of dollars)|
|Personal consumption expenditures (C)||$500|
|Government expenditures (G)||50|
|Gross private domestic investment (I)||300|
Want the good very much
Be both willing and able to pay for it
Think that the good has significant utility
Be aware of the opportunity costs
A change in quantity demanded is shown by a movement along a given demand curve.
The demand curve shifts whenever the quantity demanded changes.
Quantity demanded is the single response to a price change.
The lower the price of a product, other things constant, the higher the quantity demanded.
Negative slope because price and quantity demanded are inversely related
Zero slope because price and quantity demanded are not related
Positive slope because price and quantity demanded are positively related
Infinite slope because price and quantity demanded are not related
Increase because the goods are substitutes
Decrease because the goods are substitutes
Decrease because the goods are complements
Increase because the goods are complements
Rightward shift of the supply curve.
Increase in supply.
Increase in quantity supplied at any given price.
All of the above are true.
Trading in markets can only occur at the equilibrium price and quantity
The behavior of buyers and sellers will automatically guide the market toward the equilibrium price and quantity
It represents a compromise between sellers hoping for low prices and buyers searching for high prices
It is the only price-quantity combination that guarantees that the poorest members of society can purchase the good or service
Higher, its price will be lower, and demand for coffee will go up
Higher, its price will be higher, and demand for coffee will go up
Higher, its price will be higher, and demand for coffee will go down
Higher, its price will be lower, and demand for coffee will go down
Total utility is the satisfaction from the entire consumption of a good.
Utility measures the satisfaction obtained from a good.
Marginal utility is the additional satisfaction from consuming the last unit of a good.
All of the above are true.
Diminishing marginal utility
Increasing opportunity costs
Exceptional marginal utility
Be successful if demand is elastic.
Be successful if demand is inelastic.
Be successful if supply is elastic.
Be successful if supply is inelastic.
None of the above
In which the availability of at least one resource is fixed.
That is long enough to permit changes in the all the firm’s resources.
In which production occurs within one year.
In which production occurs within six months.
Equal to the average output of a worker
The additional utility a consumer gets from the last unit of a product
The additional output from using one more unit of labor
Equal to the total product of labor
Law of demand
Diminishing marginal returns
Returns to scale
Total cost divided by the quantity produced
Cost of production that remains constant when the rate of output changes
Market value of all resources used to produce a good or service
Increase in the total cost because of a one unit increase in production
A large number of buyers and sellers
A homogeneous/identical product
Easy entry and exit
The demand curve facing each seller is horizontal.
The demand curve facing each seller is vertical.
The demand curve facing each seller is downward sloping
The demand curve facing each seller is upward sloping
It has no control over the selling price of its product
It has strong market power
Market demand curve is downward sloping
Its products are differentiated
Price equals average revenue
Price equals marginal revenue
Price equals total revenue
Marginal cost equals marginal revenue
Stay at current output.
One of a large number of small firms producing a homogeneous good
One of a small number of large firms producing a differentiated good
One of a small number of large firms producing a homogeneous good
A single seller of a product with no close substitutes
The marginal revenue curve lies below the demand curve, i.e. P>MR.
Marginal revenue equals price.
Economic profits are zero in the long-run.
The marginal revenue curve lies above the demand curve
Charges a higher price and produces a lower output
Charges a lower price and produces a higher output
Produces identical amounts of output at the lower price.
Produces higher amounts of output at an identical price
Many firms producing a similar but differentiated product.
One firm producing a unique good.
A few firms producing a slightly differentiated product
Many firms selling an identical product
A few independent firms
A few mutually interdependent firms
Many interdependent firms
Many independent firms
All units of labor whose marginal physical product is 44
Only units of labor whose marginal revenue product is $44
All units of labor whose marginal revenue product is greater than or equal to $44
All units of labor whose marginal revenue product is less than $44
Also decreased because the demand for cattle ranchers is a derived demand
Increased because the demand for cattle ranchers is a derived supply
Also decreased because the supply of cattle ranchers has increased
Increased because the supply of cattle ranchers has increased
An additional unit of labor should be employed
An additional unit of labor should not be employed because it costs more than it is worth
The employer should lower wages and accept less employment of labor
Product price must be increased if profits are to be made
Is set below the equilibrium wage.
Causes the quantity supplied of workers to be greater than the quantity demanded
Creates a shortage of workers.
Is established by the intersection of labor demand and labor supply.
Combination of outputs demanded by the consumers
Most desirable combination of output attainable with available resources, technology and social values
Combination of outputs produced by firms
Combination of output based on government surveys
Market prices signal producers to produce the optimal mix of output.
The economy produces at a point on the production possibilities curve.
Producers supply the goods that earn the greatest profit.
An imperfection in the market mechanism prevents an optimal outcome.
Can be denied to those who do not pay for it.
Is one in which consumption by one person does not preclude consumption by another person
Is always produced by private firms
Can be consumed by just one person
The free rider problem
A natural monopoly
The link between payment and consumption is broken
The free-rider dilemma exists
People are reluctant to pay for what they can get for free
All of the above