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| The phenomenon of scarcity stems from the fact that |
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Definition
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| Which of the following statements about trade is false? |
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Definition
| With trade, one country wins and one country loses. |
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| Suppose that a country that has a high level of output per person agrees to trade with a country that has a low level of output per person. Which country can benefit? |
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| Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by |
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Definition
| the actions of government central planners |
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Term
| Both The Wealth of Nations and the Declaration of Independence share the point of view that |
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Definition
| individuals are best left to their own devices without the government guiding their actions. |
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Term
| Which of the following statements does not apply to a market economy? |
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Definition
| Government policies are the primary forces that guide the decisions of firms and households. |
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Term
| One reason we need government, even in a market economy, is that |
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Definition
| the invisible hand is not perfect. |
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Term
| In conducting their research, economists often substitute historical events and historical episodes for |
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Definition
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Term
| The circular-flow diagram is an example of |
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Definition
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Term
| which markets are represented in the simple circular-flow diagram? |
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Definition
| markets for goods and services and markets for factors of production |
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Term
| Which of the following is a correct statement about production possibilities frontiers? |
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Definition
| An economy can produce at any point on or inside the production possibilities frontier, but not outside the frontier. |
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Term
| Which of the following statements best captures the relationship between microeconomics and macroeconomics? |
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Definition
| Microeconomics and macroeconomics are distinct from one another, yet they are closely related. |
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Definition
| claims about how the world is. |
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Term
| You know an economist has crossed the line from policy adviser to scientist when he or she |
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Definition
| makes positive statements |
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Term
| Economists at the Department of the Treasury |
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Definition
| provide advice on tax policy to the President. |
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Term
| A duty of economists at the Department of Labor is to |
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Definition
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Term
| The demand for a good or service is determined by |
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Definition
| those who buy the good or service |
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Term
| The quantity demanded of a good is the amount that buyers |
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Definition
| are willing and able to purchase. |
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Term
| Which of the following is not held constant in a demand schedule? |
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Definition
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Term
| A decrease in the price of a good would |
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Definition
| increase the quantity demanded of the good. |
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Term
| An increase in the number of college scholarships issued by private foundations would |
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Definition
| increase the demand for education. |
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Term
| The belief that tobacco is a “gateway drug” is consistent with |
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Definition
| most of the available evidence. |
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Term
| Which of these statements best represents the law of supply? |
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Definition
| When the price of a good decreases, sellers produce less of the good. |
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Term
| The supply curve for a good is |
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Definition
| a line that relates price and quantity supplied. |
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Term
| A market supply curve shows |
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Definition
| the total quantity supplied at all possible prices. |
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Term
| When a shortage exists in a market, sellers |
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Definition
| raise price, which decreases quantity demanded and increases quantity supplied, until the shortage is eliminated. |
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Term
| What will happen to the equilibrium price and quantity of traditional camera film if traditional cameras become more expensive, digital cameras become cheaper, the cost of the resources needed to manufacture traditional film falls, and more firms decide to manufacture traditional film? |
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Definition
| Price will fall and the effect on quantity is ambiguous. |
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Term
| The demand for Neapolitan ice cream is likely quite elastic because |
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Definition
| other flavors of ice cream are good substitutes for this particular flavor. |
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Term
| Which of the following statements is correct? |
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Definition
1. The demand for flat-screen computer monitors is more elastic than the demand for monitors in general.
2. The demand for grandfather clocks is more elastic than the demand for clocks in general.
3. The demand for cardboard is more elastic over a long period of time than over a short period of time. |
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Term
| Which of the following statements is correct? |
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Definition
| The demand for bourbon whiskey is more elastic than the demand for alcoholic beverages in general. |
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Term
| Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is |
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Definition
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Term
| The difference between slope and elasticity is that |
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Definition
| slope is a ratio of two changes, and elasticity is a ratio of two percentage changes. |
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Term
| When quantity demanded responds strongly to changes in price, demand is said to be |
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Definition
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Term
| Demand is said to be inelastic if the |
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Definition
| quantity demanded changes proportionately less than price. |
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Term
| Suppose that 50 candy bars are demanded at a particular price. If the price of candy bars rises from that price by 4 percent, the number of candy bars demanded falls to 46. Using the midpoint approach to calculate the price elasticity of demand, it follows that the |
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Definition
| demand for candy bars in this price range is elastic. |
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Term
| A perfectly elastic demand implies that |
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Definition
| any rise in price above that represented by the demand curve will result in a quantity demanded of zero. |
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Term
| As price elasticity of supply increases, the supply curve |
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Definition
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