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| The fundamental problem with economics is: |
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Definition
| b. that productive resources are scarce relative to material wants. |
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| Which of the following groups represents scarce resources? |
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Definition
| d. land, labor, capital, entrepeneurship |
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| Which of the following is the best example of the economic meaning of the word "capital?" |
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Definition
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| Economics is primarily the study of: |
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Definition
| c. the allocation and use of scarce resources in human society. |
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Term
| If a nation has a comparative advantage in the production of a good, |
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Definition
| a. it can produce that good at a lower oppurtunity cost than its trading partner. |
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Definition
| b. built with assumptions |
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Term
| Which of the following will not shift a country's production possibilities curve outward? |
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Definition
| c. A reduction in unemployment. |
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| For an economist, the idea of making assumptions is regarded generally as a |
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Definition
| c. good idea, since doing so helps to simplify the complex world and make it easier to understand. |
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| In the market for goods and services, |
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Definition
| c. households are buyers and businesses are sellers. |
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Term
| Production is efficient if the economy is producing at a point |
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Definition
| a. on the production possibilities frontier. |
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Term
| When an economy is operating inside its production possibilities frontier we know that |
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Definition
| a. there are unused resources or inefficiencies in the economy. |
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Term
| If Iowa's oppurtunity cost of corn is lower than Oklahoma's oppurtunity cost of corn, then |
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Definition
| a. Iowa has a comparative advantage in the production of corn. |
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Term
| The principle of comparative advantage does not provide answers to certain questions. One of those questions is as follows: |
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Definition
| d. What determines the price which trade takes place? |
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Term
| Which of the following statements in NOT correct? |
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Definition
| d. Absolute advantage is the driving force of specialization. |
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Term
| The location of the supply curve depends upon all of the following except |
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Definition
| a. the price of the product |
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Term
| If the price of the product decreases, the demand for a close substitute will: |
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Definition
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Term
| Products or services that have uses similar to those of other goods and services are called: |
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Definition
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Term
| Suppose roses are currently selling for $40.00 per dozen, while the equilibrium price of roses is $30.00 per dozen. We would expect a |
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Definition
| d. surplus to exist and the market price of roses to decrease. |
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Term
| In competitive markets a surplus or shortage will: |
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Definition
| b. cause buyer and seller reactions which tend to eliminate the shortage or surplus. |
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Term
| The Law of Supply states that an increase in the price of a good |
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Definition
| d. increases the quantity supplied of that good. |
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Term
| A very hot day in Atlanta will cause |
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Definition
| c. the demand for jackets to decrease. |
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Term
| There are several critisms if the minimum wage. Which of the following is not one of the critisms? |
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Definition
| d. The minimum wage fails to raise the wage of any employed person. |
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Term
| When a government imposes a price ceiling or a price floor in a market, |
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Definition
| a. price no longer serves as a rationing device. |
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Term
| Lead is an important input in the production of crystal. If the price of lead decreases, other things equal, we would expect the supply of |
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Definition
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Term
| A supply curve slopes upward because |
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Definition
| d. an increase in price gives producers in incentive to supply a larger quantity. |
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Term
| If free trade is allowed, a country will export a good if |
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Definition
| b. the world price is above the before-trade domestic price of the good. |
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Term
| Suppose the world price is below the before-trade domestic price for a good. If a country allows free trade in this good |
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Definition
| a. consumers will gain and producers will lose. |
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Term
| Suppose the world price is below the before-trade domestic price for a good. If a country allows free trade in this good |
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Definition
| a. consumers will gain and producers will lose. |
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Term
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Definition
| c. raises the domestic price of the imported good above the world price. |
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Term
| If one person's consumption of a good diminishes other people's use of the good, the good is said to be |
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Definition
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Term
| Public goods are difficult for a private market to provide due to |
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Definition
| d. the free-rider problem. |
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Term
| If a person can be prevented from using a good, the good is said to be |
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Definition
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Term
| To promote a positive externality, an apporpriate public policy response would be to: |
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Definition
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Term
| When an individual buys a car in a congested urban area, it generates: |
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Definition
| d. a negative externality. |
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Term
| A Pigouvian Tax (corrective tax) on pollution: |
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Definition
| a. sets the price of pollution. |
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Term
| Tradable pollution permits |
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Definition
| b. sets the quantity of pollution. |
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Term
| When negative externalities are present in the market, |
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Definition
| b. producers will supply too much of the product. |
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Term
| To internalize a negative externality (reach social optimum), an appropriate public policy response would be to |
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Definition
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Term
| The implicit costs include |
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Definition
| d. none of the above (not labor,materials, or rent, or income or profit) |
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Term
| The profit shown in the income statement is referred to as |
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Definition
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Term
| A market is competitive if |
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Definition
c.(ii) and (iii) only
(ii) each buyer is small compared to the market. and (iii) each seller is small compared to the market. |
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Term
| Which of the following is included in the measure of U.S. GDP? |
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Definition
| a. a 2003 Grand Am produced and sold as a new car in the United States in 2003 |
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Term
| A reasonable measure of the standard of living in a country is |
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Definition
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Term
| The Consumer Price Index measures the average of the prices paid by urban consumers for a fixed basket of |
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Definition
| d. Consumer goods and services. |
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Term
| When the price level rise ---, the inflation rate is ---. |
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Definition
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Term
| An example of formula bias (outlet substitution bias) in the calculation of the CPI is a price increase in |
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Definition
| d. textbooks bought through the campus bookstore relative to textbooks bought from Amazon.com. |
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Term
| In the long run, a higher saving rate |
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Definition
| c. increases productivity |
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Term
| All else equal, when people become more optimistic about a company's future, the |
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Definition
| c. demand for stock and the price will both rise. |
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Term
| In the language of economics, investment refers to |
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Definition
| b. the purchase of new capital. |
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Term
| The labor force equals the |
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Definition
| c. number of people employed plus the number of people unemployed. |
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Term
| Who would NOT be included in the labor force? |
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Definition
| b. Mike, who has retired and is not looking for work. |
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Term
| Required reserves of banks are fixed percentages of their |
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Definition
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Term
| Which of the following policy actions by the Fed is likely to increase the money supply? |
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Definition
| a. Reducing reserve requirements |
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Term
| At a Price of $250 per ton of steel |
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Definition
| d. there will be a surplus of 4,000 tons of steel. |
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Term
| The equilibrium price and quantity of steel are: |
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Definition
| c. $200 and 9,500 tons of steel. |
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