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Econ 1101 Test 1
Chapters 1, 2, and 3
| Question | Answer |
|---|---|
| Microeconomics deals with | individual decision makers in the economy |
| The primary emphasis in macroeconomics is on | the national economy |
| Scarcity exists when | individuals can have more of one good but only at the expense of another |
| A resource is anything that | can be used in production |
| Opportunity cost is | the value of the best alternative forgone in making any choice |
| The best measure of the opportunity cost of any choice is | whatever you have given up to make that choice, even if no monetary costs are involved |
| The cost of going to college is | tuition, the cost of books, and forgone income |
| The economic way of thinking uses | making choices at the margin |
| The concept of the margin deals with | making incremental choices |
| Marginal analysis | refers to decision about whether to do a bit more or a bit less of an activity |
| A simplified representation that is used to study a real situation is called | a model |
| When building a model, economists | simplify reality in order to highlight what really matters |
| The importance of an economic model is that it allows us to | focus on the effects of only one change at a time |
| The production possibility frontier illustrates that | if all resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced |
| Technological improvements will | shift the production possibility frontier outward |
| A production possibility frontier illustrates the _____ facing an economy that ______ only two good | trade-offs; produces |
| All points inside the production possibility frontier represent | inefficient production points |
| All points on the production possibility frontier are | efficient production points |
| All points outside the production possibility frontier are | infeasible production points |
| If Poland decides to increase the production of steel - and decrease the production of vodka - the bowed out production possibility frontier would suggest that there will be ______ opportunity cost of production more steel | an increasing |
| The market for corn in Kansas is considered to be competitive. This means there are _____ buyers and _____ sellers of corn in Kansas | many; few |
| The law of demand states that other things equal | as the price increases, the demand will decrease |
| Which of the following examples illustrates the law of demand | Consumer buy more personal computers because prices have fallen |
| A shift of the demand curve for thin-crust pizza would not be caused by a change in | the price of thin-crust pizza |
| If goods A and B are substitutes, a decrease in the price of good B will | decrease the demand for good A |
| A good is normal if | demand increases when income increases |
| A good is inferior if | demand decreases when income increases |
| The demand curve for videos has shifted to the right. What could have caused it? | An increase in the income of the buyers |
| The typical supply curve illustrates that | other things equal, the quantity supplied for a good is positively related to the price of a good |
| Which of the following is not a determinant of supply | consumer tastes |
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